If selling to small businesses and startups is like finding needles in a haystack – you know a bigger haystack usually just means … more hay.

The problem with selling to startups

selling to startups and small business is hard

 

In 2009, just two years after DiscoverOrg was started, a client had a request: “We love the data that you have on enterprise companies. But we need support for our small business and startup campaigns, too.”

The client, a Fortune 500 technology company, was already using DiscoverOrg’s data to sell to enterprises, but saw opportunity in the startup space.

The problem? Startup and small-business data is very hard to research.

Challenge accepted!

Our customer sent us a list of 60,000 companies they wanted DiscoverOrg’s research team to build out. 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.

Here’s what we found – over and over and over:

  • 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 SouthPark Mall Cheesecake Factory  in Charlotte, North Carolina isn’t making major tech purchases, that’s for sure!)
  • Start-ups that had failed quickly and were no longer in business.
  • Mom-and-pop shops 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!

Think about that: 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!

A common start-up scenario

how to sell to startup companies and small businesses

 

We were surprised. Our client was an industry 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 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 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. 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 small-business data had a monumental impact on that first customer.

Read it: Cat Meme Queen Strikes Again: Bad CRM Data Quality is Even Worse Than You Think

Finding a competitive advantage

The truth is, it’s very hard to keep up with changes in the small-business space (even for us, and that’s our 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

We’ve solved for these problems a few ways. First, our information is double-checked by real people. With ongoing verification of contact info, conducting interviews, and performing phone research, having a human in the loop avoid the shortcomings of relying on web-scraping and publicly available web-based information.

small business data is often out of data but human quality assurance helps

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 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.

Read it: Sales Intelligence: What to Expect When You’re Prospecting

 

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About the author

Patrick Purvis

As Senior VP of Revenue, Patrick manages sales and customer success at DiscoverOrg, where he is responsible for strategic account growth. Formerly Chief Revenue Officer, Purvis is a graduate of Oregon State University where he studied Economics.