Lists and Prospecting: New Business from New Businesses

Excluding temporary seasonal companies, an estimated 3 million businesses open in the U.S. each year, according to David Biddulph, president of New Smyrna Beach, FL-based Market Force Corp., a database provider of new-business lists. For catalogers selling everything from paper clips to computer systems, business start-ups are ideal candidates for prospecting.

Ralph Drybrough, president/CEO of Stamford, CT-based business-to-business list firm MeritDirect, says that more than half of the catalogers his company works with regularly seek the names of new businesses. “New businesses generally respond to most kinds of offers,” he says. Some mailers seek new business names “in religious fashion,” he says, mining compiled lists of new companies as often as once a week. But once a month, Drybrough adds, is more the norm.

In addition to working with their list brokers, most catalogers look for start-ups by turning to list compilers such as Dun & Bradstreet and InfoUSA. These compilers typically find new businesses through credit data compiled by credit rating firms, the Yellow Pages, and local county and municipal filings for real estate or retail licenses.

Such lists can cost as little as $50/M-$60/M for orders of 1 million names a year, based on volume discounting. But they can cost more than $100/M for smaller orders, making them comparable in price with typical b-to-b response and magazine subscriber lists.

Catalogers can even gather the names of new businesses on their own. “You can go to your own city hall or state capital and find the names of new businesses, because they’re a matter of public record,” Biddulph says. “The trick is in finding ways to get the data quickly, because recency is very important. You can’t be the second catalog in the door. You have to be early.”

Getting there first

To reach dentists opening new practices before its competitors do, Greenville, NC-based dental supplies cataloger Practicon begins mailing to these prospects while they’re still in dental school. The company selects student names from dental magazine subscriber files and dental student associations, says vice president of marketing Aaron Hester.

Practicon reps also make contact with dental professors attending professional functions, Hester explains, and encourages them to distribute the catalogs to their students. And although the company targets dental students primarily through its catalog, “we’re slowly shifting more dollars to more efficient channels, such as the Internet and outbound telesales,” Hester says.

Shelf Tag Supply, a Carmel, IN-based cataloger of warehouse signage, learns of new warehouses by renting the attendee lists of warehousing seminars known to attract professionals involved with new facilities. “We obtain background information and can often figure out if they’re starting a new warehouse or redoing an existing one,” says vice president of marketing Pete Blainey. Such lists cost $75/M-$100/M.

The inevitable caveats

Naturally, mailing to new businesses isn’t a guaranteed money maker. “The key is to take two or three compiled files of new businesses and test them broadly,” says Market Force Corp.’s Biddulph. “Then do a response analysis and see what works for you.” Catalogers should also perform a back-end analysis to suppress the kinds of businesses that don’t work for them.

Some products simply aren’t well suited to start-ups. National Business Furniture, a Milwaukee-based multititle mailer, avoids mailing to new businesses altogether. “They’re frequently too small for us,” says president/CEO George Mosher. “At beginning stages, new businesses usually have to go to Office Depot and buy furniture kits and other supplies. We target midsize businesses, so it’s hard for us to get new business lists to work.”

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