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Gauging appropriate database size is a function of defining the relevant universe of potential contacts, then comparing quality and volume levels against that goal.
“Close only counts in horseshoes and hand grenades” goes the old saying, and it’s very true that pinpoint accuracy is essential when a goal is clear and finite. There are notable exceptions, however, where the task in question has no discernable finish line; in the world of b-to-b marketing, building the marketing database is a prime example of such a task.
Just because the job of building a best-in-class database never ends doesn’t mean that marketing shouldn’t be taking steps to continually assess its progress. In this issue of SiriusPerspectives, we describe how to use database size and quality as proxy measures of success.
SIZING THINGS UP
Truly assessing whether your database has been optimized begins by estimating the potential number of relevant contacts it could contain. Historically, marketing has calculated total market size by the number of companies and revenue potential across a wide range of segments. In prior research, we introduced the concept of relative targeting, or prioritizing marketing spend and effort around only those segments that currently hold the most promise, and that the organization is most prepared to sell into. This concept is critical to database assessment; while organizations may have names across a wide range of possible targets, its penetration within probable targets may be higher or lower.
To determine your quantity goal, start with the number of companies that fall into the strongest relative segments. Next, determine the database-relevant roles within these companies, including the champions that are your entry points into a buying/sales process as well as influencer, end user and CXO roles that must be targeted as well. Because buying processes typically become more complex as organizations grow, stratifying companies by revenue or employee size will be helpful; while a company under $100 million in revenue may feature five target titles to pursue, the number may grow to 10 for organizations between $100 million and $500 million, and so on. Multiply the number of contacts by the number of companies, and you have achieved a rough estimate for what we call relative database size.
While such an exercise may seem simplistic, it actually does achieve a number of aims. First, it highlights to senior management the difference between having a lot of names vs. the right names in the right marketplaces. Second, by breaking relative targets down into core segments (size and audience), it identifies into which marketplaces and company types your organization is strongly penetrated, and where there is work to be done. And third, while some may quibble over the total universe calculation, it puts a stake in the ground by which the organization can measure the progress of data gathering initiatives over the quarters to come.
BIGGER DOESN’T MEAN BETTER
While more names in the database should mean more possible responses to your offers, volume alone doesn’t tell the whole story. Once you have counted the names in a particular segment and compared them to the total estimate, run the count through four key data quality filters to get a “real world” calculation, including duplicates, incomplete records (lack of physical address, telephone number and email are three places to start, as they hamstring marketing’s ability to use multiple channels with the prospect), bad records (hard bounces observed over the past 90 days) and opt outs.
Conventional b-to-b wisdom suggests that between 2 and 2.5 per cent of a typical b-to-b database goes bad every month, or roughly 25 to 30 percent each year. Alterations at the contact level can occur due to either an explicit action (e.g. an opt-out or other deliverability problem) or a change (e.g. title, role, new location). On the flip side, additions come from a range of activities designed to get individuals to identify themselves, or from outside sources such as list vendors or contact databases.
As part of your normal database reporting, compare the number of names and the percent of total database added each month (deduped from existing contacts) to the number of contacts lost or no longer usable. This not only shows whether the database is growing or shrinking, but at how rapid a pace movement is taking place. The calculation also can be used to determine incremental return on investment for specific addition efforts; for example, a demand creation program might create 100 leads on a cost of $5,000, for a cost per lead of $50. But if it also resulted in the addition of 500 new names to the database and the completion of 250 more records as well, there is incremental value that should be identified and reported.
The question of how many contacts should be in a database is certainly one we often hear. For many reasons, it is challenging to make an apples-to-apples comparison, including how differently companies handle data quality; the fact that bad processes lead to higher counts but poor overall effectiveness; and the degree to which selling is direct or done through partners. To you, what this means is there is no more valuable source to compare to than an initial benchmark in your own organization. While the numbers may never be perfect, tracking them over time will show trends, and point you in the right direction to make improvements. In a marketing world that retains a significant art component that must be blended with a growing scientific nature, this is likely the best you can hope for. It’s close enough for horseshoes and hand grenades to be sure.
SiriusDecisions continues to see a widening gap between the skills of b-to-b marketers and the processes and technologies they are now being expected to employ. To fill this gap, we have created SiriusDecisions Learning – a modular, high-impact skills development program for a new age of b-to-b marketers. To hear a discussion about changing marketing skills and how SiriusDecisions can help, click here.
About the Author:
SiriusDecisions, a leading source for business-to-business sales and marketing best-practice research and data. SiriusDecisions Executive Advisory Services, Consulting Services, Benchmark Assessment Services, Learning and Events provide senior-level executives with the sales and marketing operational intelligence required to maximize top line growth and performance.
©Sirius Decisions, 2010. Reproduced with permission.
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