Live from DMA06: How to Sell to Institutions

(Direct) San Francisco–The nation’s institutions–schools, hospitals, city and county governments, libraries, religious institutions–represent a $4.1 trillion annual market, are largely resistant to recessions, and very often are predictable, steady buyers. But they’re not as easy to reach as some might think, said Mary English, assistant director of strategic alliances at list services firm MCH, at a session Tuesday morning.

Institutional buyers do behave differently from business buyers, English noted, as they’re governed by a different set of accounting principles. For example, most businesses want to save as much money as possible to improve their bottom-line performance, while institutions must spend their entire budgets within their fiscal years or risk losing that money during the next fiscal year, she pointed out.

For this reason, it behooves catalogers targeting school districts, say, to mail between April and June, when their fiscal year typically ends. “You’re not going to reach a school principal in August,” she added.

In addition, institutions have concentrated buying power, so you can spend less money targeting purchase influencers and buyers than when going after these same folks in companies. But, English warned, just sending catalogs to purchasing managers is not likely to result in many sales, because these managers typically don’t know who needs what and when in their organizations.

Instead, when marketing to universities, mailers are likely to do better targeting deans and department heads, she said. Similarly, marketers looking to penetrate elementary and secondary schools should target principals and, in some cases, individual teachers.

One of the more trying problems in targeting institutions is the inadequacy of the Standard Industrial Classification (SIC) codes, which are no longer sufficiently detailed to uncover the right prospects, English said. “Institutions are covered by only 50 SIC codes but account for one third of the gross domestic product.” Part of the way around this is to investigate the numerous specialized databases that exist in the institutional field, she said.