After decades of hunch-based, adrenaline-fueled cold calling and Hail-Mary revenue generation, we’ve recently entered an entirely new era. An era steered by intelligent, laser-targeted prospecting, tuned by personalization and driven by data.
Thanks to new technological innovations, a relatively old business selling model has become more common lately: the account-based sales model. With the use of sales intelligence, companies can now more efficiently than ever before discover the most viable accounts based on a wide range of criteria and create a tailored sales and marketing strategy for them.
With this model, every company is treated like a market of one, and great resources are allocated to persuade them into becoming customers. Because this model is so heavy on resources, it isn't for everyone. Here, we’ll dig deeper into the concept of account-based sales, help you figure out if the model is for you and guide you through how to get started if you discover that it’s a fit for your business.
What’s account-based sales?
Account-based sales is a sales model that targets companies – also referred to as accounts – rather than individual leads and treats them as a market of one. This highly personalized strategic prospecting process is used primarily within B2B sales, as it’s usually too high-touch for B2C products. This model has patients in the center – with more emphasis on high-value engagements across a number of platforms than on short-term call-to-actions such as demos.
Account-based sales requires company-wide buy-in and collaboration between not only salespeople but also marketers and the people in customer success, finance and product development as it aims to deliver a tightly integrated experience across departments during the whole buying process and also after the sale is made. Everyone has to align around shared goals and a shared ideal customer profile(s) for account-based sales to work.
No man (or rather salesperson) is an island with account-based selling. Instead of your company’s salespeople targeting one or a few individuals within a prospective customer’s company, an entire sales team is dedicated to process multiple stakeholders at the target company with highly personalized messages. Here’s where sales and marketing alignment gets vital; members of the marketing team have to create tailored content for these target companies for this strategy to be possible.
To build the best possible foundation for a company’s sales team to increase its hit-rate when working with account-based selling, the product should be an unquestionable fit for the short-listed accounts. The product development team should take insights from customer stakeholders into account when planning new features and developing prospective use cases.
If you provide enterprise or complex solutions and don’t already focus solemnly on a selected number of high-value accounts, it’s likely about time that you start doing just that.
There’s a number of different terms included in the account-based model, account-based sales (ABS) or account-based sales development (ABSD) focus just as the names give away on sales teams account-focus. Then there’s the most well-known account-based model, account-based marketing (ABM) – and the holistic approach, account-based everything (ABE), which takes into account that a successful account-based approach requires cross-department coordination.
What are the winnings with an account-based approach?
One individual’s behavioral data does not always tell much about that individual’s company’s readiness to buy, especially if the person isn’t the decision-maker of the company. Going after high-value accounts that you are confident will have success using your product assures you don’t spend precious time on companies that are a poor fit for your offer. Targeting high-value accounts also allows for more time researching and creating highly personalized messaging for a higher close rate. In other words, if you target one or a few types of companies, you’ll soon become an expert in selling towards their type of business.
Another benefit of the account-based approach is that you depend less on an individual stakeholder. The risk that the deal will stall or fall through if your one key-contact person changes jobs, goes on a leave or gets sick is minimized when your work to involve a larger number of decision makers in the purchasing decision.
Is account-based selling for you?
What sales model you follow should depend on what you sell, the size of your average deal and what types of companies you usually sign as customers.
Here’s when you should think twice before making the switch to an account-based sales model:
- You sell to only small or medium sized companies
- Your sales cycle is shorter than three months
- You’re selling a one-time purchase product
- Only one or just a few stakeholders are involved in your average deal
- You’re still trying to find your market fit – and therefore can’t define your ideal customer profile
If you’re selling to small to medium-sized companies where only one or a few stakeholders typically get involved in the deal, you probably can’t – and shouldn’t – justify putting as much manpower and dedication into each prospective customer as the account-based sales model requires.
An account-based approach should deliver a tightly integrated cross-department experience to customers and maintains the account focus also after the sales is made. Therefore, it’s a better fit for subscription-based software companies than for those offering one-time purchase products.
This sales model requires laser precision of target accounts. If you don’t have a customer base large enough yet to identify what features characterize an ideal prospect for your business, or if you’re still determining product-market fit, consider holding off on account-based sales.
How to find out which accounts to target
With the account-based sales model, you’ll put great effort and resources into your high-value accounts. Therefore, it’s essential that you target the right companies, in other words, that you’ve defined a detailed ideal customer profile.
One reason why account-based sales have taken more ground lately is that the new technology that helps you execute this model has entered the market. Smart sales intelligence tools that, like Vainu, index company-data from millions of open and public sources on a daily basis allows salespeople to access plenty of detailed insights about what characteristics fit the companies they’ve had greatest success selling to in the past.
By adding together what firmographic data and technographic data your most happy customers share, along with what buying signals they send out right before they put ink on your contract, you can better understand what your target account should look like. In this article, we give you a step-by-step guide on how to define your Ideal Customer Profile.
This sales model requires laser precision of target accounts. Make sure you don't waste valuable time and resources on the wrong accounts by defining your ideal customer profile.
Once you’ve created your ideal customer profile, creating dynamic target-lists in an account identification software will help you to track changes in companies matching this profile. The dynamic target-list will update automatically as new companies fit the profile and some fall out of the description.
KPI’s you should track when ramping up your account-based selling methodology
As your sales team begins to adapt and ramp up on the account-based selling methodology, it is important to track and measure success in order to make necessary changes and continuously improve.
In traditional outbound selling, salespeople are often measured by activity-based metrics, such as tracking the number of phone calls, emails, contracts over a period of time. With an account-based model, the focus is shifted from quantity to quality. And that has to be reflected in your metrics. With this sales model, outcome-based metrics, e.g. tracking conversion rates between different stages in the sales process and revenue numbers, are more relevant to you.
Account-based sales usually comes with rising customer acquisition costs (CAC), which is a direct result of the fact you now allocate more resources into individual amounts. And this is okay, as long as your average contract value (ACV) and lifetime value (LTV) goes up too. Keep a look at the development of your LTV:CAC ratio. If your former ratio was 2:1 and now it's 3:1, you're on the right track.
You should also track the length of your average deal. It’s not unlikely that it goes up a bit when you implement the account-based sales model. Larger deals with more complicated buying environments take a longer time to close. Though, at the same time, this model takes more time and resources dedicated to each account. Therefore, it shouldn’t go up too much. If it does, that’s a warning sign that you’ll have to tweak something in your approach.
It’s not all or nothing
While account-based selling does demand alignment between every department, it doesn’t have to be applied by exactly every (sales)person in your organization.
If you’re selling to a mixture of mid-sized and enterprise companies, going all-in on account-based sales may not be the approach that leads to the greatest results. The approach may suit the largest accounts you go after is likely way too expensive and extensive for those smaller companies. The same applies if you’re trying to move up-market, putting all your eggs in one (or a few) baskets and only going after big logo companies too early comes with great risk.
If your company isn’t fit for a complete shift to the account-based model (yet), it might be smart to dedicate only parts of your team, one “tiger team”, to work with the account-based model. Let this team focus on potential high-value target accounts and have the rest of your salespeople working broader, trying to pursue more quickly lucrative customers.
The account-based sales model can be a game-changer for your company, or it can – drastically speaking – be your road to failure and bankruptcy. Before you jump into implementing this sales model, make sure it fits your sales model and that it’s a positive economic decision for your entire organization.