ABM Vs Lead Generation: The Better Strategy For Business Growth

Do you know that cold calling had a success rate of just 4.82% in 2024? That means for every 100 calls the business made last year, only 4-5 turned into real customers. Pretty less, right?

It’s an obvious indication that cold calling and other conventional lead generation strategies aren’t working as well as they once did. Companies should reconsider their B2B marketing strategies. And the answer lies in account-based marketing (ABM).

Instead of chasing every lead, ABM focuses on targeting specific accounts that are most likely to turn customers. The marketing professionals then provide them with personalized content at every stage of their buyer journey. For businesses, this means:

1. More effective marketing campaigns
2. Less wasted resources
3. Higher ROI
4. Greater customer satisfaction

So, if you are still thinking about whether to make the switch from traditional lead generation to ABM, this blog will explain how both approaches differ and why ABM emerges as the winner. So, let’s dive in!

ABM vs. Lead Generation: What Sets Them Apart?

The ultimate goal of both traditional lead generation and account-based marketing (ABM) is to push revenue growth for businesses by acquiring new customers. Still, both these approaches take a different route to reach there. So, let’s understand the difference between ABM and traditional lead generation approach in detail:

Targeting Approach

Traditional Lead Generation

It focuses on contacting a large pool of people who may or may not be interested in making a purchase. Businesses generally use these tactics:

1. Email Campaigns: Companies send emails to large lists of contacts with generalized content and offers.
2. Print Advertising: Ads and offers are placed in local publications to direct customers to a landing page or phone number.
3. Referrals: Companies ask loyal clients to spread the word or offer them incentives for the same.

While these are some of the top approaches, their success rate is under question. For email campaigns, the open rate is just 37.27%, whereas the global average referral rate is just 2.35%. Thus, the likelihood of conversion is quite low when using traditional lead generation methods.

Account-Based Marketing

On the other hand, ABM determines certain high-value clients (individuals or companies) that are most suitable for the business’s goods or services. The companies then tailor messaging and strategies to those individual accounts by addressing their pain points and needs. The following are some of the ABM tactics:

1. Account Profiling: Companies use data analytics tools to find target accounts based on industry, company size, revenue, and pain points.
2. Personalized Outreach: Direct mail, content marketing, and ad targeting are used to pinpoint the lead’s pain points directly.

As per Gartner, companies using ABM see a 28% increase in overall account engagement rates.

Cost and ROI

Traditional Lead Generation

Traditional lead generation techniques, such as cold calling, email marketing, and referrals, generally have lower costs. Companies save money using generic materials (like mass email templates, flyers, and blog posts) to attract a large audience. This is because conventional approaches frequently prioritize numbers over quality.

Traditional lead generation techniques can produce a lot of leads, but because many might not match the ideal customer profile (ICP), conversion rates may be usually low. Compared to more focused tactics, this results in a lesser return on investment. So, companies frequently need lead nurturing, which ultimately increases the costs of getting a lead.

Account-Based Marketing

Businesses have higher upfront costs for personalized outreach and custom content that cater to the needs of each account. This cost includes investing in account profiling, gathering detailed data, and utilizing advanced tools to track account behavior.

Since ABM focuses efforts on accounts that closely match the ideal customer profile (ICP), it is more likely to result in high-quality conversions. According to a Forrester study, ABM yielded 21% to 50% higher ROI than non-ABM marketing efforts, with around 23% of all global respondents reporting that the ROI of ABM was 51% to 200% higher.

Scalability

Traditional Lead Generation

Scaling lead generation through cold calling and referrals is tough because it depends on manual effort and personal connections. However, other methods of lead generation (email campaigns, digital ads) are highly scalable if automation tools and digital marketing platforms are used. Mailchimp, HubSpot, Google Ads, and Facebook Ads help businesses to easily target audiences at scale without requiring significant hands-on effort from the marketing team.

Moreover, 84% of the B2B marketers agreed that content marketing helped build brand awareness among people. This is because blog posts and downloadable resources that are created once can be used multiple times. As a result, businesses can reach thousands of potential leads at once.

However, scaling traditional lead generation also comes with challenges. As the focus is always on maintaining the volume, scaling means gathering more low-quality leads unless the business invests heavily in segmentation.

Account-Based Marketing

In the ABM vs. lead generation discussion, the former is generally perceived as less scalable due to its personalized and account-specific approach. Every account in ABM requires tailored content that will address their specific pain points and needs. This personalization can make ABM resource-intensive and difficult to scale quickly.

Despite its challenges, advanced ABM software such as Demandbase can help marketers scale their efforts. These tools automate the creation of personalized messages, track account engagement, and adjust strategies in real-time. Moreover, companies can scale ABM by targeting new verticals or segments where high-value accounts exist.

Sales Cycle

Traditional Lead Generation

The first interaction through methods like cold calling, email marketing, or paid advertising is generally with everyone, whether they want the product/service or not. If any of these leads express slight interest, they are nurtured further with offers or educational materials. Finally, the sales teams are involved when nurtured leads show higher engagement, such as asking for a demo or trial. Thus, the overall process may take a few weeks to several months, depending on the interest level of the leads.

Account-Based Marketing

ABM often results in higher-value deals and quicker conversions since sales efforts are focused on accounts that have a high chance of converting. The reason is that the account is already very engaged, and the communication is tailored to the individual needs. The process is more effective than traditional lead targeting and thus frequently leads to a shorter sales cycle, typically a few weeks.

Thus, when comparing ABM and lead generation, the former is a more effective strategy than the latter.

Effective Targeting: When to Choose ABM and How Data Powers It?

ABM is best suited for companies that want to target high-value accounts that require enterprise-level and customized solutions. Such companies can include enterprise software solution providers, IT consulting firms, cybersecurity services, B2B service providers, etc.

However, these companies require high-quality & relevant lead data to implement ABM. Businesses can identify the accounts most likely to interact and convert by collecting precise and current data related to their target audience. For this, web scraping, cleaning, enrichment, and validation are some of the essential data procedures. Let’s take a closer look at them:

1. Web Scraping: B2Bdata is collected from online sources like company pages, job portals, news platforms, and social media accounts. The data points include names of high-level executives and managers, their contact information, LinkedIn profiles, company feedback from customers posted on social media or forums, and any information about any recent launches or updates.
2. Data Processing: This step involves removing duplicate entries & outdated information, filling in missing details, and standardizing data formats. After data cleansing and refreshment, cross-referencing is done with existing databases and other sources to check the information.
3. List-Building: Once the data is updated, it is segmented to create target lists of leads or accounts that meet specific criteria for effective marketing and sales campaigns.

Businesses require standardized processes, data scraping and cleansing tools, and a staff of specialists to handle this complete data lifecycle. If handling this internally seems too much work, companies should seek third-party providers.

Selecting the Best Service Providers for ABM

When businesses hire service providers for ABM, it’s essential to choose partners who have not lead-generation services and custom list-building services. Here’s what businesses should look for:

1. ABM providers who have deep knowledge of B2B marketing strategies to identify high-value accounts and decision-makers.
2. Providers who follow ethical and legal data collection practices and adhere to compliance regulations.
3. Providers who offer flexible segmentation of data based on criteria like company size, industry, location, or specific needs
4. Outsourcing teams that update the list regularly to keep up with industry changes or lead status shifts
5. The data provided seamlessly integrates with your existing CRM and marketing tools, allowing easy tracking, segmentation, and follow-up on targeted accounts
6. Providers who can scale marketing and data support as the business grows without compromising on quality

Conclusion

ABM is a better approach for companies targeting high-value accounts with tailored messaging than traditional lead generation. These days, businesses are concentrating on real-time intent data for ABM campaigns, utilizing AI-powered solutions to automate tedious activities, and outsourcing list-building services to obtain precise account data. If you keep all this in mind and target customers using ABM, it will promote more business growth, quicker conversions, and deeper engagement.