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Data Mining for B2B

  
If your company operates in a B2B (business-to-business) market segment, you probably have a few marketing challenges. Price competition, prospects who hide from salespeople, too much clutter in the media and more all conspire to prevent your dreams for your business from coming true. But it may also be because virtually all of the promotional tools available today - whether you're talking about email marketing, SEO, advertising, SEM, PPC or almost anything else - are either optimized for consumer products companies, or they're so expensive or ineffective that only the biggest and best-funded competitors in your industry can afford to use them.
Data mining, however, can level the playing field. And it can provide you with a cost-per-lead that is at least an order-of-magnitude - a factor of 10 - lower than what you can get using traditional methods.

And by driving down the cost-per-lead, data mining can bring you more sales, and better sales, for less money, less risk and less hassle. This leads to higher profits and greater market share - while also gives you the side benefit of greater pricing flexibility.

Data mining, in short, is the single most powerful tool you can use to drive down your cost-of-sales.

The Problem

While it has virtually destroyed many traditional advertising media such as print and trade advertising, the Internet has provided the B2B business with a vast new medium in which to get its message out. Unfortunately, with now 20+ years of experience, most B2B business owners have come to the conclusion that the Internet is mostly just a siren song, more often leading disaster than success.
Too often we read about investors who poured millions of dollars into a venture that ultimately fails to get traction. Or we hear about a small business owner who can't grow past their initial sales. Daily we hear complaints about skyrocketing pay-per-click rates that only deliver tire-kickers, and call centers that book bogus appointments. Or we meet salespeople who can't - or won't - make cold calls, while they point their fingers at marketing departments that can't generate qualified sales leads. And then there are the so-called "marketing experts" who preach the virtues of content marketing, or SEO, or this or that new technology, while ducking even the remotest accountability for sales results.
It's no wonder that turnover among marketing people is so high. The industry is in a war of attrition, and most people are simply running away from their most recent failures.

What's Missing?

When Philip Kotler wrote his seminal textbook on Marketing Management, among its highlights were the discussions on market segmentation and target marketing. And, to be sure, the idea of concentrating your marketing resources on "likely buyers" made tremendous sense for B2B companies. For example, a business that sold mostly to construction companies, Kotler pointed out, should invest their ad budget in Construction News, not advertise on TV. Or companies that sold mostly to car manufacturers should advertise in Automotive Week, and they should and avoid the waste of advertising in mass market journals like Life Magazine or Look.
Today, however, such targeting has taken a perverse turn. On the one hand, putting up a Web site makes your message available to the whole world. At the same time, it also means that your message is vying for attention against billions of other Web sites.

Similarly, while inbound marketing (which is really nothing more than advertising) alleges to bring you pre-qualified buyers, it does so at a Darwinian cost. And it mostly doesn't bring in pre-qualified buyers anyway.

For all the good that the Internet is supposed to do, it's pretty much a mess for most businesses.
The sad fact is that techniques such as email marketing, telemarketing or direct marketing that can theoretically employ Kotler's target marketing approach, however, are rarely able to do so in practice because the quality of the data (illustrated by their infinitesimal response rates) is usually so bad as to make the effort and the investment almost worthless.
There are, in our experience, three reasons why this happens. First, most data sources, such as email or company lists, are so old and inaccurate as to be little more than junk. For example, we've found that a commonly used database of "sales leads" is over 60% inaccurate at the company level, and over 90% inaccurate at the contact level. This occurs, of course, because the vendor can't afford to invest in the quality of research necessary to maintain accuracy while still being price competitive in their own data market.
Second, at the other end of the spectrum are premium services that do charge enough to compensate for the cost of research. The problem with them is that most SMBs can't afford their cost - which often rises into the multiple tens of thousands of dollars per year.
And, third, there are the social sources where you can trade your data for access to other people's data. This minimizes the cash outlay for the data, of course, and can improve its quality. But it does so at the cost of the time you spend contributing data.

The irony, though, is that all three of these approaches actually miss the whole point of market segmentation and target marketing. That is, it isn't the contact information that matters. What matters is whether the people you're targeting actually need your product or service, at the time you're trying to sell it, in the first place.
In other words, having accurate contact information on people who have no need for your product doesn't help. The "waste" involved will ultimately doom the program from a cost perspective. This is because the real problem is that most of the people on your list simply don't have a need for your product or service. So in addition to the waste in your marketing program is the waste of time trying to develop accounts that will never close - which condemns not only the marketing program, but the sales program as well.

The Solution: Data Mining

Fortunately, Kotler points us to a solution. Specifically, while largely a lost art today, or viewed as a luxury, secondary market research - of which data mining is its modern form - is the fastest, best and least expensive way to improve the efficiency and effectiveness of your marketing programs. It can enable you to virtually eliminate waste. And it can enable you to target only people who need your company's products or services when you're trying to sell them. As a result, data mining can dramatically reduce your cost-per-lead while increasing your revenues, your sales margins and your Marketing ROI.
The key to effective data mining, if there is one, is to recognize that a consequence of the over-sharing rampant in today's society is that there is a virtual ocean of data available on the Internet. One only needs the right tools and analytical techniques to sift through it in order to find prospects who need your company's products or services.
Therein, of course, is our "secret sauce." But recent campaigns by LeadGen.com employing the technique have produced dramatic and early results. For example:
  • A lead generation program for a financial services firm saw a reduction in cost-per-qualified-lead through data mining of over 90% - from nearly $1,000 per appointment to less than $100 per appointment.

  • A lead generation program for a consulting company saw its cost-per-appointment drop by almost 2/3 due to data mining; while it also enabled them to penetrate a new market in less than two months - instead of the nearly 12 months it had previously taken to open a new territory.

  • And for a software company, we were able to generate dozens of new, qualified sales leads in less than a month using data mining - after they had floundered in the market for over a year burning through multiple salespeople, and hundreds of thousands of dollars in marketing expense.
And in all three cases, close rates are more than double what they had been before - all because data mining reduced the waste in their marketing programs.

Conclusion

If your current marketing strategy includes "throwing as much s*** against the wall as possible and hoping something sticks," you should consider adding data mining to your process. B2B companies today can't afford the waste in their marketing program - either of money or time.

Or looked at another way, with all the data that's out there, not taking advantage of it is tantamount to marketing suicide.


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