Wednesday, April 01, 2009

DemandBase Creeps Up the Value Chain

I had a nice little chat with DemandBase two weeks ago. I’d been aware of them since they were founded in 2006 but in their original incarnation as a data provider. That is, they take business data from sources including Hoovers, D&B, LexisNexis, AccuData, BusinessWatch Network, Jigsaw) and merge it into one big contact list that people can use for outbound promotions or to enhance their own files. It’s a perfectly reasonable business, but not one I find especially exciting.

But it turns out that DemandBase has been inching its way up the value chain. Some time ago they released a free widget, DemandBase Stream, that shows the companies visiting your Web site in a news ticker on your computer desktop. That’s somewhat entertaining and can be useful to salespeople who might notice and reach out to current clients or prospects. But the technology is nothing special: a page tag sends the visitor’s IP address to DemandBase, which looks up its owner in standard Internet registries. In any case, being free, it's really just a promotion for DemandBase.

Their new product, DemandBase Professional, is another matter. It also captures the visitor stream to a company Web site and uses the IP address to identify the company. But now it matches that company against the main DemandBase database to actually apply details such as location, company size, industry, and further finds contact names that marketing or salespeople can reach out to. That’s not much more entertaining, but a lot more salable.

DemandBase Professional actually goes further than simply looking up the information, by letting clients specify the industries, company sizes, geographic regions, search terms and number of page views they care about, and only returning information on visitors who fit those parameters. It can also import a client’s list of target accounts from and issuing alerts when those companies visit. The good news is that clients only pay for alerts that meet their specified parameters, keeping both the cost and volume within reason. The company only charges for incremental prospect names, so you pay don't again if someone visits your Web site twice.

I was impressed by the sheer cleverness of all this, precisely because the underlying technology (page tags, IP owner lookup, name matching, simple filtering) is so straightforward. There’s no identification of actual visitors and no cookies.

Ok, some of the underlying database preparation and matching is actually pretty demanding. In fact, DemandBase told me that they can use only about 20% of the data they get from their partners because quality problems with the rest. But Rodney Dangerfield on a bad day got more respect than data hygiene experts.

One obvious question is how many useful new names can DemandBase actually provide. According to the company, it typically finds that 50-60% of the Web site visitors come through a generic Internet Service Provider connection and thus can’t be traced to a particular company. Of the remainder, 10-20% fall within the target company sizes, industries or regions. Thus, DemandBase might send information on 5-10% of total visitors.

This is still twice the 2-4% of visitors who DemandBase says typically identify themselves directly. DemandBase said they hadn’t made a formal study of the quality of those leads, but felt confident they were more than worth the cost.

DemandBase plans to continue adding value, possibly by pushing automated messages to selected visitors. But they don’t intend to become a lead management system. We discussed social media briefly; they aren’t using social data (e.g. blog, Facebook, Twitter posts) but are considering trying to find degrees of separation in social networks like Linked In. They didn’t mention it, but I could also see them providing input to Web site personalization systems, so the site itself would tailor its content to what DemandBase infers about the visitor.

The company said that about one thousand companies have set up its free widget and a couple hundred are testing DemandBase Professional. Pricing for Professional depends on volume and starts around $200-$300 per month.

I suppose I could just say this is a useful-sounding product and let it go at that. But if you’re looking for Some Larger Significance: it’s also an example of how the traditional distinction between sales and marketing is dissolving. DemandBase is mostly a salesperson’s tool, but it is identifying names much earlier than sales typically gets involved. Even more to the point, a particular name might go to either sales or marketing depending on the situation. This means that sales and marketing have to agree on rules for who does what—requiring considerably more cooperation than just throwing a lead over the wall once it's deemed “qualified”. I'd say that's significant.


Jep Castelein said...

I agree that Demandbase Professional is nifty, and makes good use of fairly standard technology. However, I see several practical problems for this system to be useful.

First of all, many people who visit your website are not looking for the solution you offer: they will read the info on the website to determine if they're interested, and often they decide that they are not (even if they visit several pages). What if you buy contacts and spend a lot of time calling and emailing, while the visitors already decided they weren't interested? A total waist of time.

Second: it is often really hard to locate the right person in large companies: if a company has thousands of employees, who are you going to call? Unfortunately the IP database works best for medium and large companies who have T1 internet connections and up. Cable or DSL connections cannot be traced back to company names.

So in my opinion you will often be chasing ghosts.

David Raab said...

Very solid points. I'll let DemandBase respond directly if they choose. My own feeling is there's some value to putting out a feeler to a company after a contact like this, so long as you don't spend much on the name or the message. Intensive phone calling probably isn't worth it, but a couple of emails might well be.

Jason Stewart said...

Hi, David....

I'm Jason Stewart from Demandbase. Jep brought up some good points, let's see if I can address them:

"many people who visit your website are not looking for the solution you offer"
- You're absolutely right! But many people who visit your site ARE interested in your solutions. There's something going on at that company that led for someone to search you out. They just weren't ready to convert yet, or it is too early in the cycle. But without getting in front of them, without making sure they remember you, by not accelerating the process of driving them back to your site you run the very real risk of not being "invited to the party" when they do get serious.

"What if you buy contacts and spend a lot of time calling and emailing, while the visitors already decided they weren't interested? A total waste of time."
- Another good point, but it's not unlike what marketers and salespeople are already doing! That's the driving force behind lead management tools like Marketo and Eloqua. At least with Demandbase, and the filters we put in place on your profile you are going to be on the right track with:
a) who you call (because we get more granular with our data filters than any other company in the business)
b) when you call (because again, something is going on there that made YOU interesting to THEM)

And you don't need to buy contacts with Demandbase Professional. They're already there, included in your subscription. And you can see what pages they visited, how long they were there, what search terms they used to find you, and more. If they searched on a term that's not indicative of a solid selling opportunity you don't need to call them....if they spent all of their time on the careers page looking for a job you don't need to call them, if they spent all of their time on the leadership page looking for people at your company to contact, you don't need to call them.

" is often really hard to locate the right person in large companies: if a company has thousands of employees, who are you going to call?"
- Demandbase handles this in two ways. Firstly, we give you the location of the business office that visited you. You'll be able to see if it was the HP office in Silicon Valley, or the HP office in Corvallis, OR and buy the appropriate contacts. Secondly, our business contact filters allow you to get very specific with the specialties of the contacts you are looking for. For example, within Human Resources you can search for contacts that specialize in benefits, payroll, recruiting, training, compensation, or pension and within IT you can search for contacts categorized as architect, systems administration, database administration, hardware technician, software development, QA, information security, data processing, webmaster, IT Support, network infrastructure, or product management.

You'll be able to find the right people at the right locations.

"Unfortunately the IP database works best for medium and large companies who have T1 internet connections and up. Cable or DSL connections cannot be traced back to company names..."
For these very reasons, Demandbase focuses exclusively on business contacts from companies in the United States with revenues of $5M or more. David mentioned our attention to detail when it comes to the data from providers, and we simply have not found good sources for information on companies with lower revenues than $5M. Although we are constantly expanding our database, and vetting new data companies for potential partnership. Stay tuned!

I hope these answers address some of Jep's concerns. Thanks, Dave!

Jep Castelein said...

Jason, that addresses a lot of my concerns. Thanks for the clear explanation. Jep