Why you should segment your prospects with official revenue figures and employee data and not with estimates
Huge corporates and SMEs alike have higher chances to overcome their competitors once they get ahold of accurate information. Nowadays, this puts heavier importance on data providers, yet unfortunately not all of them are worth the trust.
‘Knowledge is power. Information is liberating.’ as Kofi Annan once said. Be it when you’re developing on your own, or competing with others, the data you have in hand should be a solid asset on the way to achieving results. Of course, it is great when you have access to loads of data, especially if it is exactly the data you need; even better when it is all structured, decipherable, scannable, applicable, and on top of this — accurate… Many a data analyst’s dream!
However, we all know that it is not always the case. We should also know that even if a dataset does look good, is well structured and seems reliable, it is not unless you are sure that the data is accurate and was compiled from official sources. There are providers that do not spare their clients and dare to list imprecise and outdated information, resulting in a wide range of mistaken decisions. On top of all, there are enterprises that sell company directories containing data built on assessments which, in their turn, are estimated on industry, type or other criteria-based perspectives.
Essential business resolutions should not only be data-driven, but these should also rely on information fetched from trustworthy sources solely. However, the next logical question here would be — what data sources one can actually trust? Official ones, as well as datasets of providers that collect the information they offer from official sources exclusively.
A quite common yet incorrect opinion regards the (usually monetary) value of company intelligence as well as its accessibility. First and foremost, this data is publicly available. The flip-side is that it’s oftentimes hard and time-consuming to find, process, structure and ongoingly keep up-to-date. Therefore, for those who are looking for data in bulk, it might prove ineffective to do so manually. Second, especially when researching a new market, one can never be sure of the completeness of the data they get, most usually due to the lack of aggregators that would at least let them know about the total number of businesses on the given market, region and/or industry. In such a way, the researchers’ task is encumbered by the fact that, initially, they have to collect as many companies’ data as possible, and then pick those that best fit the required criteria or scoring qualifications. Amplify all these efforts by continuous accuracy maintenance… Can this come free or cheap? My point exactly. All these processes require a lot of resources, so a genuinely reliable database cannot be low-priced or costless.
This does not imply that all average to expensive business directories offer you high-quality company intelligence, and this is something that concerns me most.
First, let’s look into the most obvious risks a user takes when employing data fetched from non-official sources. The main ones here could be grouped as follows:
- Illegality comes with exploiting data that is not compliant with GDPR and other legal acts and regulations. One way to obtain personal data is in exchange for various goodies available online (e.g. whitepapers) — you are offered a free piece in exchange for your email address. Or even worse — they ask you for your email address, be it corporate or personal one, to send you that very piece, and all they request is to agree with their terms and conditions. Let’s be honest, many of us do not read those, and we simply agree just to get what we want as fast as possible. Therefore, you may not even be aware that your personal data will be sold/transmitted to third parties because in your personal understanding they are just asking you the email address to send you that piece. The dangers brought to the user of this data reside within the risk of being reported by the owners of that personal data once you contact them. You can not use a person’s contact information unless it is publicly and officially available or provided by the entities that collect them from these sources.
- Objections. Even if the data you own is compliant with all regulations, it does not mean that the people you will be reaching out to will be happy about it. So be ready to both face distraught reactions and argue that you got their data legally.
- Incompleteness. You should not hope to see reliable complete datasets, in the case when the providers cannot or do not want to disclose the sources. However, having incomplete data in hand does not always imply that the dataset will be of no use to you. Yet, the chances to obtain reliable results and make respective conclusions are significantly lower.
- Falsehood. A disturbing fact, from my personal point of view, is that some of the providers display information based on simple assumptions, be it due to lack of data or any other reason. Whether they do or do not disclose that — together with the basis of these hypothetical numbers — no decision or business strategy should rely on something that is not real.
- Inaccuracy. No information is useful when outdated. Do not forget, that the average B2B company data decay is about 2%-3% per month(!). Therefore, directories that have not been updated in over a year can bring more harm than use. No matter how good was the data at the point you got it or when it was collected, it is useless when it is not updated for a while. The time wasted to prepare for a demo with the wrong person, reaching out to a CEO and addressing them by the former CEO’s name, creating and launching a whole campaign and hitting non-existing email addresses (dramatic for your spending and sender reputation) are just a few of the plethora of risks you face when using inaccurate data.
The other risks, which are not as obvious as the ones described above, come from the nonscience or lack of understanding of how credible a source is. For example, there is LinkedIn. It is a well-known platform, great for both recruiting and finding potential business partners and for a wide range of other goals. However, not everyone takes into consideration that the information featured on each profile is presented by the owner of that profile, and there is no guarantee at all that the jobs, titles, skills and other entries are truthful. Therefore, either compiling that kind of data from LinkedIn or acquiring it from those providers that collect it for you is not always the best idea. Just be sure that if some entries are false, it will be of no harm and will not impede you in achieving your goals.
Yet another troublesome discovery I came upon is the usage of approximations by ‘trustworthy’ data providers. These are based on various averages, be it by industry, company size, type of company, its location and/or other data points. The experiment of choosing a sample of random companies and comparing displayed data with the official one submitted to authorities unveiled that the data based on estimations, in most cases, is far from the truth.
Here are just a few of the possible outcomes caused by the usage of estimations-based company intelligence:
- Misguided assessment of the total addressable market due to its erroneous estimation. Before targeting or entering a new market, a thorough analysis should be made. When the latter relies on inaccurate data, the results obtained will be unreliable, and the consequences for your company — ruinous.
- Wrongful targeting determined by misleading input. Most data providers’ intelligence platforms come with various filters for an easier segmentation of the millions of companies they feature. However, a wrong input will categorize various companies accordingly, and therefore the output will be deceiving too.
- Poor due diligence. One cannot argue the importance of proper due diligence as part of any action or transaction. No matter what type of operation we would be talking about — lead scoring or upcoming M&A deal, the magnitude of consequences of improper due diligence, made on data based on estimations and fetched from non-official sources can be colossal.
All in all, I’d advise you to rely on official sources only for your goals, and to trust only those data providers that offer you a guarantee of the data accuracy they offer.