Data? B-to-B Mailers Have It

Dec 10, 2007 9:03 PM  By

When it comes to database use, you might think business-to-business marketers trail their consumer counterparts. Well, think again.

The range of database applications in B-to-B is as broad and creative as B-to-B marketing itself.

To find out more, we recently conducted a survey of business marketers to see how they employ their databases.

The No. 1 database marketing application reported by our sample was prospecting, which we define as pre-sale cultivation of potential customers and inquirers. With long sales cycles and complex buying processes, it’s fitting marketers would use their databases to build pre-sales relationships.

Of course, consumer marketers don’t do prospecting from their house files. In consumer, there’s little sense in importing rental names when it’s much easier to mail the name once and import the customer response.

But the definition of prospecting in B-to-B is somewhat different. Here it means nurturing an inquirer until that account converts. This is a process that can take time—and many touches. And it’s really worth doing from a marketing database.

However, database marketing can be more challenging in B-to-B:

• B-to-B files often are small, which can limit opportunities to do split testing and data modeling.

• B-to-B data degrades more quickly than consumer, causing greater uncertainly in analytical operations.

• Business data is complex and harder to work with.

• B-to-B files frequently contain incomplete records. For example, a billing address might be shown as “See Judy in Accounting.” A modeling challenge, to be sure.

KEY FINDINGS

• Where are databases managed? Only 6% of respondents said they didn’t have a database. Of those with a database, the vast majority (86%) maintain it in house, and 14% outsource its management. This was to be expected since business marketers are intent on creating and nurturing a sales pipeline.

Large companies (those with 1,000-9,999 employees) were somewhat more likely (91%) to maintain their databases in house. But the biggest firms (with 10,000 or more workers) reported the same level of in-house management as the average. So we can’t say for sure that a company’s size is a factor in the matter of outsourcing a database.

• Legacy systems vs. modern databases. Of those that manage databases in house, 41% use legacy systems and 59% claim to have a flexible database designed for querying and campaign selection.

Here size plays a part: Large companies as defined above use legacy systems at a significantly higher rate (57%) than average. On the other hand, just 25% of the biggest organizations have legacy systems.

It appears, then, that smaller companies have newer tools. Everyone needs robust systems for campaign management and closed-loop results reporting. Large firms are building such systems in house or seeking outside solutions.

• Database use. Prospecting was the leading application noted by business marketers, a finding that no doubt surprises those on the consumer side that rarely find it profitable to bring prospects into their databases. This is because prospect lists typically are rented one time only, and are easy to rent as needed for acquisition campaigns. In B-to-B a prospect name takes much longer to convert to a sale, and that customer’s value frequently is much higher. Therefore, business marketers find it effective to move prospects along the sales cycle using database-driven communications.

It’s no surprise that nearly half (45%) of respondents said they use their databases for campaign response tracking and analysis. Most B-to-B campaign responses come in without key codes, so matching back data is an important activity here.

Some 61% of respondents said they use databases for inquiry management, reflecting the criticality of pipeline management in B-to-B.

We are concerned that only 31% of B-to-B marketers seem to be focused on data hygiene. The volatility of business data and the potential for lost conversions caused by missing or incorrect contact information requires constant vigilance and aggressive maintenance.

But we’re gratified that so many modeling and analytical techniques are being used by B-to-B marketers. At the same time, the rather low rate of model use points up the difficulty of campaign replication in most business marketing situations. Since campaign conditions change so rapidly, modeling is used less to predict campaign results and more to understand the nature of a customer file.

APPLICATIONS

Prospecting, profiling, querying and campaign selection were reported across companies of all sizes. Large organizations tend to place a higher value on data hygiene and are more likely to do segmentation.

While all industries named prospecting an important area for database marketing, technology firms reported an unusually strong interest. Manufacturers placed the highest value on inquiry management; perhaps the industry’s maturity means each lead needs to be treated with special care.

Ruth P. Stevens consults on customer acquisition and retention, and teaches marketing to graduate students at Columbia Business School. She is the author of “The DMA Lead Generation Handbook” and “Trade Show and Event Marketing.”

Bernice Grossman is president of DMRS Group Inc., a New York database marketing consultancy. She is past chair of the Direct Marketing Association’s B-to-B Council.