Selling to Startups and Small Business: A Cautionary Tale

A haystack is only as valuable as the number of needles inside it, and often, a bigger haystack just means … more hay. In DiscoverOrg, it’s nothing but needles.

As we re-release our Startup and Small Business (SMB) dataset, which has grown by 400% over the past 12 months, we’ve been thinking about the origin of this popular segment of sales intelligence. It’s an interesting situation that so many companies struggle with – the problem inherent in targeting startups. This is the story of how we solved for it.

The problem with selling to startups

In 2009, just two years after DiscoverOrg was launched, a client contacted us with a request: “We love what you do in midmarket and enterprise companies, but need support for our small-business and start-up efforts, too. Can you help?”

The client, a Fortune 500 tech leader, was already using DiscoverOrg sales intelligence to sell to enterprises, but saw opportunity in the SMB space. The problem? Startup and small-business data is very hard to research.

It was a challenge we couldn’t pass up.

Our customer sent us a list of 60,000 companies they wanted DiscoverOrg’s research team to profile. It was a list they’d gotten from their CRM: a mix of contacts their sales reps had entered over the years, and contacts from other data providers and list vendors.

We hired and trained a research team. That team went through every single company. Over and over again, we encountered:

  • Multiple entries for franchise locations. For example, instead of listing Bob’s Burgers once, with headquarter information, they had hundreds of entries, one for each franchise location. Of course, few companies make purchasing decisions on a franchise level. The Outback Steakhouse in Houston, Texas isn’t making major tech purchases, that’s for sure!
  • Start-ups that had failed quickly and were no longer in business.
  • Companies like Tom’s Auto Body Shop or Transformations Salon – too small to buy our client’s service (or any technology or service).
  • Companies that didn’t have IT departments at all, or who outsourced their IT needs.

Out of the 60,000 companies our client gave us, only 10,000 on their list were even viable opportunities!

A common SMB scenario

The problem with selling to small businessThink about this: Our client’s sales reps had been spending 5 out of 6 outreach efforts on companies that were literally impossible to sell to. Talk about hunting for needles in a haystack!

We were surprised: our client was a top-tier, Fortune 500 leader with hundreds of people employed in sales and marketing. How could they operate with bad, decaying data like that?

Our customer, on the other hand, was not surprised at all. They held a common industry assumption that if you buy sales intelligence, it’s going to be bad. Data decays 30-70% per year, as people change roles and companies go to out of business.

Our customer’s experience was not unique. We’ve been hired many times over the years for custom research projects, and the result is inevitably the same: The vast majority of contacts in a company’s CRM aren’t real prospects – defeating the purpose of using a CRM, crippling sales analysis, and sabotaging marketing efforts and analytics.

The most common issue we’ve encountered is two-fold:

  1. The vast majority of “small businesses” that come from other data providers or homegrown CRMs aren’t real opportunities, because they’re so very small.
  2. Once legitimate, sizable businesses are identified, it’s hard to segment because their information isn’t as visible as that of an enterprise company.

According to the U.S. census, there are 5.8 million firms in the U.S. But if you remove firms with less than 20 employees, that number drops to 619,000. In fact, only 106,000 firms in the U.S. have 100 – 1000 employees. The majority of those are in the DiscoverOrg database.

Odds are, the 3.6 million companies with less than 5 employees aren’t good targets for you. For most businesses, even companies with less than 50 employees aren’t great targets.

If your CRM has 1 million or more accounts, you’ve got a bad data problem.

If your CRM has 1 million or more accounts, you have a bad data problem. When data providers tout their coverage being in the millions of companies – that’s a red flag … not not a good reason to buy.

It was time for industry disruption, so that’s what DiscoverOrg did.

 

We saw an urgent need to add startup and small business sales intelligence to our offering – and thus our SMB dataset was born. It includes IT, Marketing, Sales, Engineering, HR, Finance, and Operations departments.

Imagine how sales teams feel about using and updating contact information, when they know 90% of the data in their CRM is bad.

Now imagine what it’s like to work in a world where 10 out of 10 companies are real, viable opportunities – complete with direct-dial phone numbers and verified email addresses. Fresh, accurate SMB data had a monumental impact on that first customer. Nine years later, it continues to empower sales and marketing teams.

Finding a competitive advantage

The truth is, it’s very hard to keep up with changes in the SMB space – even when, for data providers, that’s your job. New companies are constantly emerging, merging, changing, and being dissolved. People change roles often. None of this gets media coverage or press releases, which has two implications:

  1. This information is not available to the public.
  2. It’s not available to the web-scraping tools most data providers use.

A human research team

DiscoverOrg solves for these problems with our 250-person research team. By continuously verifying contact info, conducting interviews, and performing phone research, our researchers avoid the shortcomings of relying on web-scraping and publicly available web-based information.

Decision-makers only

Another common issue that plagues teams who sell into small-businesses and startups: The contacts they have access to aren’t decision makers. In DiscoverOrg, the majority of contacts in the SMB dataset (and all our datasets) are decision makers: 62% are in mid-level or senior leadership, across all lines of business – including IT, Marketing, Sales, Engineering, HR, Finance, and Operations. No millions of mom-and-pop shops, multiple entries for franchise locations, or shuttered businesses here.

Buying events – as they happen

The small-business and startup dataset includes Triggers – real-time, human-verified buying events. These include funding events, acquisitions, vendor changes, and new initiatives that usually signal a company is buying. Triggers help sales and marketing professionals know when to make the call, and how to frame the conversation. Within the DiscoverOrg platform, Triggers can also be filtered by Department, Industry, Job Title, and more via the robust search functionality of the platform.

Learn more about our much-anticipated SMB dataset, and see just how far sales intelligence has evolved.

 

Empower Your Sales TeamGet a Free Sample of our Data

As Chief Revenue Officer, Patrick manages sales and customer success at DiscoverOrg where he is responsible for ..read more