Vendor Selection Is Like a Mail Test
Marketers use business profiles to identify their best customers. The prime demographics for most marketers are the number of employees, annual sales and the industry as described by the Standard Industry Classification, or SIC. Marketers use the profile to direct creative, choose lists and target industries and job functions.
Sales personnel also use the profile. There were two departments in this sales area: a telesales group and a direct sales group. The publisher's product was an enterprise system supplying information for the business traveler. The challenge was for the sales and account representatives to be aware of the demographics of the prospect firm, which ranged in size from a smaller business to a division to an international multilevel enterprise. Additionally, the sales reps needed to be aware of all products sold to individuals of the enterprise as part of their proposal content.
In addition to the address (site) level data, the vendor also needed to supply enterprise hierarchal linkages. Usually, there are three components to these linkages: identifying numbers for the site, for the parent company and for the ultimate headquarters. The linkages enable the computer system the sales force uses to roll up sales from the marketing database to generate the sales at each level.
Further, the demographics can be obtained for prospect sites at any of those levels, empowering the sales rep and sales management with the potential sales of a complete account penetration.
One additional note: There may be a fourth linkage for the global ultimate if the prospect is one of the international behemoths. Of course, this is useful if you are selling to the international market; the trend toward globalization requires more marketers to take this aggressive posture or fall behind the pack.
Many fine firms are selling demographic data on businesses; but several years ago there were only two vendors that also sold the hierarchal linkages. They were Dun and Bradstreet and ABI (now InfoUSA). Which one to pick? All account reps will extol the accuracy of their data and the strenuous efforts that they engage in to ensure that accuracy. But, in the real world, these lists are compiled from sources that overlap but are not identical. There are also judgment calls and errors. Thus, the process used by each vendor to assign SICs and determine the number of employees at a site may, for a portion of the list, come up with different results. Which compilation is the best for you?
The data overlay for a large file costs a significant amount of money. The accuracy of the data affects the productivity of your sales staff and marketing efforts. In other words, this decision will affect your bottom line. How will you spend your company's money to achieve the best result? This is where the basic concept of a direct mail test comes in. All direct marketers are familiar with testing the control package and offer against other creative and offers in a cycle of improvement to obtain the best response and highest-value customers. I applied this concept to a head-to-head contest between these two vendors.
Here is how to structure your vendor test: Request the vendors to overlay a sample of your marketing database. Choose a random sample, but include all the important segments of your database, nth-ing them differently if necessary. Give each vendor the exact same sample. Then, compare the results on the demographics that are important to your business. If the vendors' data are nearly identical, then your key factors are service and price. But assume that a significant portion of the two give different results. Which of the competing sample overlays is the better choice?
The first step in deciding is to scan the differences. If you are familiar with the industries that your customers are in, you may have an immediate feel for which vendor is more accurate for your purposes. Better yet, leverage the expertise of your sales reps who have been dealing with these companies. Lean on them to tell you which vendor is more accurate where there is a difference. Tally the score. Each vendor will have its wins. If they come close, then you may consider how different the demographics are. Are the demographics that the sales reps judge less accurate off equally for each vendor, or is one vendor just slightly off and the other wildly off?
If on each measure the results are close, then you are back to service and price considerations. For my test, one vendor did significantly better, and that drove the decision.
If the data is important enough to purchase, then it is important to evaluate it for your needs. After all, as direct marketers, testing is what we do.