Online Compiled Lead Sourcing Providers – Assessing Their Value and Understanding Their Evolution

My recent blog post on the inbound marketing / marketing content management crowd has gotten me thinking quite a bit about the holistic lifecycle of leads and of the role of marketers in this process.  The rapid ‘death’ of the consultative sale means that marketing organizations increasingly are playing a more-pervasive role in the lifecycle of leads – blurring the traditional lines between marketing and sales organizations.  “Who builds a [target] list, is it a sales person or a marketing person?” posed Rand Schulman, CMO of InsideView, in a meeting with me in his office in San Francisco a little over a week ago.  Good question.  Also, how should this list be built?

The new marketplace reality requires marketing organizations and their technology systems to be more engaged than ever before in all aspects of lead generation and of lead nurturing.  Thus, an emerging key partner for marketing organizations is the growing roster of what I refer to as the ‘online compiled lead sourcing providers.’  The roots of this category are grounded in the world of opt-in target list builders, prospect data miners and syndicated lead directory/database vendors – this traditionally included firms such as Dunn & Bradstreet (D&B), as well as media organizations and the credit bureaus.  This industry has evolved, though, and it increasingly looks more different than it once did, with an explosion of new market entrants and of new techniques for sourcing and aggregating prospect insight.  Today this emerging group includes firms such as Demandbase, idExec, Jigsaw, Lead411, NetProspex, OneSource, SalesGenie, Selectory (a D&B company), Zapdata (also a D&B company) and ZoomInfo.

It’s a pretty exciting time for this segment, but it’s worth tempering the excitement a bit – making sure we’re analyzing these providers in the context of where they fit into the overall marketing mix.  As with any new data or system provider in the world of Marketing 2.0, these providers are not a panacea.  Leads can come from many sources, and it’s important to recognize the trade-offs.

Source: Adam Needles, Propelling Brands (original); click to enlarge graphic

The new marketplace reality, thus, also requires marketers to assess all of their lead-generation-oriented marketing programs against a number of alternatives and in the context of the net impact of these programs.  As I was thinking through this, I built this chart to conceptualize the landscape.  On the x-axis I have made a relative assessment of the net credibility various programs bring in the eyes of the prospect – i.e., the degree to which a lead is pre-disposed to being interested in that brand-company and a relative indication of how hard marketing and sales will have to work to nurture a lead.  On the y-axis I have made a relative assessment of the net estimated cost per lead of different types of lead-generation-oriented marketing programs.  In doing so I considered both time and money, as it is critical to look at both.  For example, inbound marketing may have low dollar cost but it is not a no-cost activity; successful content and engagement requires time and energy, which translates into real dollars via salaries, overhead, etc.  This is why I have it at roughly the same cost level as paid sourcing.  What do you think about this matrix and where I’ve placed various types of marketing programs?

I hope this framework helps you better think about where the online compiled lead sourcing providers fit into the mix and provides a frame of reference as you dig into the status of this segment.  I believe it is particularly instructive because it speaks to some of the opportunity for evolution in this segment and is indicative of the segment’s overall trajectory – particularly predicting moves that will help improve the net credibility of leads while maintaining low net cost per lead.

So what’s new with the online compiled lead sourcing crowd, and how do we break down the vendor landscape?  Moreover, how are they innovating to keep pace with the tidal wave of change in integrated marketing management technology?  And what does this mean for marketers?

As I indicated earlier, there certainly is a lot of activity around this segment, and my goal with this piece is to get my arms around the key points.  So I’ve done my usual research; however, a few highlights include:

• I reviewed a report by Ruth P. Stevens and Bernice Grossman, titled “Online Sources of B-to-B Data:  A comparative analysis,” which helped me break down the current community of lead sourcing providers and better understand the rapid evolution of their capabilities.  (If you are a marketer evaluating providers I highly recommend this report, which has a very thorough and thoughtful methodology.)
• I also got a deeper picture of how the industry is evolving via my conversation with Schulman at InsideView as he outlined how his company is hoping to change the dynamics of lead sourcing and qualification through greater value-added content and context.

You will notice as we dig into this segment that a key trend is the blurring of the line between these providers and the integrated marketing management platform providers, particularly advanced CRM.  For example, in January I noted in a blog piece that SugarCRM had announced its new Cloud Connectors, which allow the platform to tie into the systems of lead sourcing providers such as Crunchbase, Hoover’s, Jigsaw, LinkedIn and ZoomInfo.  The other key trend seems to be the increasing granularity of insight and contact information provided – drilling down more accurately and in a more targeted way than ever before to improve the value of prospect information to marketers and to raise the net credibility, as identified above.  So let’s dig in …

    

What is an online compiled lead sourcing provider, and how are they differentiated?

At their core, these providers are all aggregators of individual and corporate information.  They aggregate this information into compiled records for individual people and individual companies, and they sell these compiled records to marketers that are trying to reach specific segments of people and companies.  And to improve the efficiency of access, they make it available online – through a browser and increasingly through common ‘Web services’ APIs.  This is where the similarities among these providers end.

What differentiates one provider from another is its sources, its aggregation methods and the relative degree to which it keeps its compiled records up to date.  For example, let’s take a look at four popular but different providers and how they approach their businesses, in their own words (courtesy of the report by Stevens and Grossman, cited above):

• Jigsaw:  “Jigsaw is a user-generated B2B database built and maintained by its … B2B community members (marketers, sales, recruiters, analysts, business owners).”
• NetProspex:  “NetProspex, is a … sales contact trading system that uses the power of the Internet to let sales and marketing executives buy or trade business contacts.  All user-contributed contacts are validated before being published.”
• OneSource:  “OneSource combines and organizes content from over 2,500 information sources supplied by 50 content providers creating an unequalled information resource. This includes public and private company profiles, executives, corporate families, industries, financials, news, analyst reports and trade and business press articles.”
• ZoomInfo:  “Because ZoomInfo crawls the Web 24-hours-a-day, 365-days-a-year, we’re able to deliver customers the freshest business information available.”

This cross-section of information on providers speaks to the fact that this is a complex segment, which requires that marketers first, get to know their provider before engaging their services and second, ensure that the nature of a given provider’s approach is really a fit with the marketer’s objectives for pursuing third-party sourced leads.

    

What are the plusses and minuses of using this source of leads, and where does it fit into the marketing mix?

B2B sales guru Mac McIntosh explains in a blog post last year, “Your in-house database of customers, sales rep additions and past inquiries is often your best source of new business sales leads.  /  However, business-to-business marketers often need additional companies and contacts to market to in order to get enough qualified leads into the sales pipeline.”  This is where online compiled lead sourcing providers serve a very real need. 

Stevens and Grossman provide additional insight into the importance of using third-party lead sourcing for B2B marketing through their report, cited above.  I think their comments also would apply in direct marketing to high-value B2C prospects:

Compiled data is critically important to B-to-B marketers for two reasons:

1. Business marketers tend to target relatively narrow audiences.  Compiled data, built from such sources as government records, telephone listings and credit data, generally provides better breadth of coverage, compared to response files. For example, not all machine tool manufacturers will appear on the subscriber files of, say, American Machinist magazine.
2. Each account has a high revenue opportunity, so it’s important to gain access to every potential prospect.

The final major ‘plus’ in partnering with a third-party provider is their ability to add additional insights beyond the basic contact information.  This is a critical capability of services such as Jigsaw and ZoomInfo, and it is the focus of value-added providers such as InsideView.

So the key gap filled by lead sourcing providers is two-fold:  (1.) expanding the number of contacts on the overall prospect list for marketing programs and (2.) deepening the level of information associated with each to improve the effectiveness of marketing segmentation, targeting and execution.

The obvious drawback of any type of third-party-sourced lead is that it is probably still a ‘cold’ lead from a sales perspective, as hinted at in my earlier chart – pointing to the low net credibility for this type of lead.  Without any pre-existing relationship, context or brand awareness, the likelihood of success in directly reaching out to the lead is very low; moreover, outreach via mass e-mail may be limited by government regulations, such as the Can Spam Act. 

“Just because you can now order or append email addresses, doesn’t imply that you will be well-served by blasting out emails to prospects,” comments direct marketing agency principal Robert Lesser in a recent blog post.  “Most of our clients are disappointed with this tactic.  A more rewarding approach is to call the prospect and then send a 1to1 sales-style email that is personalized to the prospect.”

Your problem also may not be that you need more leads, it may be what you’re doing with your existing leads.  Laura Ramos of Forrester commented in a Q&A with BtoB Magazine, “Instead of trying to find new ways to reach untapped buyers, B-to-B marketers need to put the process, technology and discipline in place so they can track prospect interactions over time, assess their level of engagement and continue the dialogue with them by offering relevant content and information.”  This is where demand generation and marketing automation/EMM can play a critical role in lead qualification, lead nurturing and the personalization of communication and offers.

Lesser’s and Ramos’s comments also speak to the underlying role of third-party sourced leads and of e-mail in the overall marketing mix.  Marketers need to invest in programs that will build brand equity and awareness at a broad level, especially via thought leadership initiatives, and that will catalyze a relationship between the brand-company and the prospect at an intermediate level, especially via events and promotions.  This should exist alongside direct, brute-force contact and will serve to amplify these efforts.  This integrated effort is what is most critical, and one cannot achieve maximum success without the other two.  (In fact, I recently saw some data from P&G that indicates that when they run integrated multi-channel campaigns – syncing advertising, promotion, in-store, etc. at the same time – the combined ‘perfect storm’ provides additional gross sales lift from 15 to 25%.)

Also, marketers need to operate in a multi-channel fashion, anyway, given that customers today make buying decisions cross-channel.  Akin Arikan explains in his recent book, Multichannel Marketing, “[W]hen we aggregate the behavior of groups of buyers, it becomes clear that certain channels are more typically frequented during certain stages of the customer life cycle.”  He notes that channels such as broadcast, out-of-home, events, product placement, Web ads, blogs and search, “… are best at attracting potential buyers but not so apt at converting them to customers and maintaining an ongoing relationship.  The latter purposes are better achieved through …” channels such as Website, e-mail, mobile, direct mail, call centers, stores/salesforces and service teams.

Ramos provides additional validation of Arikan’s point of view in the same Q&A, cited above: 

Our research shows e-mail is not as effective for new customer acquisition or for building awareness. Of the 212 b-to-b marketers who responded to a survey we fielded last October, 85% said they use e-mail in their marketing mix. Of these, only 18% said they found it highly effective for building brand. In contrast, 56% said that they felt e-mail was highly effective for communicating with their existing customers. If you establish a relationship with a prospect or customer, then e-mail is welcome communication, not spam.

Merely having a large number of potential leads does not in any way guarantee success.  There is still quite a bit of marketing ‘polish’ that it takes to turn leads from third-party providers into customers.

    

How are these providers innovating?

Back to the topic of this segment’s evolution and overall trajectory … here are some of the key areas of innovation I’ve noticed through my research:

> User-based record updating:  Lead sourcing providers are increasingly harnessing social media, social networks and user communities to ensure that records are up to date, as opposed to the type of intelligent guessing that many traditional direct marketing providers still engage in to match record information. 

Jigsaw is one example, which leverages its user base for adding and updating contacts.  This also is an integral part of the approach taken by NetProspex.  ZoomInfo, meanwhile, leverages a blend of Web crawling and allowing individuals to update their own records, much like on LinkedIn, which is also getting in on the game.  The SugarCRM Cloud Connectors announcement, above, included access to LinkedIn for lead sourcing and updating. 

The key differentiator of user-based record updating is not only accuracy, but also relevance.  Relying on people who actually know the contact (or may actually even be the contact), versus a common/public database, has the potential for much more accurate and relevant results.

> Cloud access and live contact updates for basic CRM and integrated marketing management platforms:  A major area of innovation is in re-architecting how marketers access the data of lead sourcing providers — moving to a cloud services / Web services model.  The idea is that of simplifying the interface with live data (via common cloud/Web APIs), allowing marketing organizations to easily port this data into their basic CRM systems and/or their integrated marketing management platforms — which is the core of the SugarCRM announcement, cited above.  This way marketers can either populate new target lists or update existing contact lists.

This concept is at the core of the rollout of Jigsaw Clean about 18 months ago.  The company’s press release from when it first launched this service explains:

Jigsaw Clean periodically scans a company’s CRM database in order to update and augment out-of-date contacts. It finds, flags, and deletes dead records by comparing the database to records in the Jigsaw graveyard … . The system also automatically identifies and removes duplicate records. Using the Jigsaw directory as a reference, Jigsaw Clean updates inaccurate data and augments incomplete records with up to date information such as direct-dial phone numbers, email addresses and titles.

> Multi-channel crawling and contextual insights:  Why rely purely on public records or traditional address lists when the Web freely offers a wealth of information about prospects, often self-updated – particularly via social media?  Moreover, what more can you learn about leads that takes your insights from pure demographic information to more-contextual ethnographic and behavioral insights? 

This is, in part, the concept behind InsideView, which is partnering with contact record providers, such as Jigsaw, and then adding additional content and context to improve insight into the prospective leads.  (Note, I have excluded them from the peer group of online compiled lead sourcing providers, given they are value-added and partners with this segment.)  As I mentioned earlier, I had a great conversation with CMO Schulman a little over a week ago, and much of what we discussed really focused on improving the conversion of leads via online compiled lead sourcing providers – a push toward improving the ‘relative truth’ of lead information.

“The more I know about you and the recency of that information, the higher propensity I have to convert to a sale.  It’s personalization,” commented Schulman to me.  He went on to say, “So what we’re doing is we’re raising the conversion rates to revenue because we bring more relevant information to [marketing and sales] users.  Essentially you have to think of us as the Bloomberg terminal for sales and marketing people.”

There’s more under the covers, but that’s the gist.

    

What’s next for providers in this segment?

Per my earlier comments, I believe that a lot of the innovation and trajectory in this segment is being driven by two factors:  a push towards integration (especially with integrated marketing management platform providers) and a drive to improve the net credibility of leads (through greater accuracy, more content/context and better targeting).  This will continue to drive evolution among providers in this segment and are the key capabilities marketers should use to assess potential partnerships with these providers.