I had the pleasure of interviewing John Hood, President, and Kirk Chritton, Director of Marketing, of MCH. MCH is a leading compiler of business-to-institution (B2i) databases and mailing lists.
I wanted to interview John and Kirk for a couple of reasons. First, institutions are an important market segment for many of our clients. Yet, we do not necessarily speak about B2i marketing being any different than B2B marketing. Therefore, I wanted to hear about how B2i marketing and data differ from B2B. Also, there is a trend for external B2B data to be integrated with internal data sources and I wanted to gain their perspective on how B2i external data and data integration fit together.
The following are my questions and MCH’s responses. In many cases, MCH had a lot of information on the topic and therefore I have included links to their website so that you can gain a more in-depth response on the topic:
Allthingsdata.com: How is B2i sales and marketing different than B2B?
MCH: There are many differences between B2i organizations and B2B companies. Here are just a couple of the differences. B2i organizations are Not-For-Profit where B2B is For-Profit. B2i organizations do not pay taxes while B2B organizations do. The B2i organization’s primary purpose is to serve patrons while B2B’s primary mission is to sell customers. Therefore, the B2i marketer must develop marketing campaigns that appeal to the motivations of the B2i decision makers and these motivations are usually very different than the B2B decision makers. Editor’s Note: For a more detailed view on this subject, please refer to MCH’s White Paper: Beyond B2B—A New View Of The Institutional Market.
Allthingsdata.com: How does B2i compiled data differ from general B2B data?
MCH: Another important difference between B2i and B2B marketing is where the decisions are made. In B2B, typically purchase decisions are made at high level managerial positions. In B2i, line level service providers can make purchase decisions. Consequently, it is important to be able to know the contact names of the line level service providers. Since B2i compilers are focused on a smaller universe than general B2B providers, they are able to provide the contact names for the line level service providers. Further, other data criteria that can be critical to a marketer’s success, such as differentiating between a school and school district, can be made by the B2i compiler specialist since they are focused on a specific market.
MCH has a variety of ways that we are able to gather this specificity of data. For example, we will call a hospital four times a year to conduct telephone surveys and verify information. We also have other methods and the methods that we use are specific to each market. A general B2B compiler has a “one size fits all approach” and therefore the compilation of hospitals is done in the same manner that they compile for auto mechanics.
Allthingsdata.com: We have some clients who are utilizing free compiled data from the government. How does a fee-based compiled list compare to a free government list?
MCH: Even in a market where there is a government list that can be downloaded for free, the government’s list is just a starting point. For example, let’s take schools. First, the government list has issues in the compilation of private schools and private schools can be over 20% of the market. Even the public school list is two years old and therefore does not include new schools. Many times a school district may be organized in a certain way for legal purposes, but in reality, it is organized in a different way for purchasing. However, the government list will provide the legal organization while the compiler can provide the information in the way that the schools actually do business. Further, the government does not provide contact names which are essential for B2i marketing. MCH sometimes may use a government list as a starting point and then we build on it to provide the necessary information for a B2i marketer to be successful.
Allthingsdata.com: Besides businesses that provide products and services that are specific to Institutions, what kind of businesses should consider B2i markets?
MCH: Most businesses are already in the game selling to Institutions, they just may not be doing it well. For example, most B2B companies are using SIC Codes from a general data provider, yet SIC Codes do not do a good job of identifying Institutions. Consequently, the typical B2B marketer is under exploiting the opportunity in B2i. Many B2B marketers may not realize that the B2i market is one-third of the economy. Most B2B marketers assume that B2i decision makers act just like B2B decision makers. However, B2i decision makers are different. They have different motivations. Further, many B2i organizations are large and complex and make purchasing decisions in a collaborative way.
Allthingsdata.com: When choosing a B2i data provider, what should someone look for?
MCH: If the data provider is talking about things like SIC Codes, sales revenue, number of employees, and other data elements that are typically provided for B2B marketers, then they really do not understand the B2i market. For example, if you market to hospitals, then the number of beds may be the critical data element to understand the market opportunity. For churches, congregation size is more important than number of employees especially since most of the workers for a church are volunteers. Understanding enrollment and demographics are critical when marketing to schools. Institutional data providers should provide specific data elements based on the market.
Allthingsdata.com: How do you suggest a B2B marketer go about taking advantage of the Federal Stimulus?
MCH: About half of the Federal Stimulus is inter-government transfers such as money going to institutions like police departments and public schools. There are also regional variations. In some cases, the stimulus money is to help keep existing services going, while in other states that are in better budgetary situations, the stimulus money can be used for new projects. MCH provides BudgetAware Bulletins to help you track the opportunities. Marketers are going to need to track the stimulus closely in order to take advantage of the opportunity. We have also launched stimulusmarketing.com to assist marketers in their efforts.
Allthingdata.com: How often and when should B2i marketing take place?
MCH: It depends on what you market. If you sell a product that is relatively inexpensive, let’s say a $100 seminar, you can market at anytime. Most institutions have some discretionary budgets that can be used for smaller purchases. However, for larger items, such as a school bus, there is a longer lead time. Usually the decision gets made far in advance of the purchase; however, the purchase usually is made by the close of the fiscal year. Further, it’s very important to know when an organization’s fiscal year closes. Institutions typically want to spend all of the money in their budgets, otherwise they will risk losing funding in the future. Therefore, the period right before the close of the fiscal year represents an opportunity to sell discretionary items to those that need to spend their budget before the close.
Allthingsdata.com: Why are SIC Codes inadequate for B2i marketing?
MCH: SIC Codes do not include many important industries. For example, there is not any SIC Code for Diagnostic Centers. Schools and School Districts are in the same SIC Code, yet Schools teach and School Districts administer which are two very different functions. Churches may be spread out in many SIC Codes and therefore you can end up either having incomplete lists by not targeting all of the SIC Codes that contain Churches or you end up marketing to organizations who are in the same SIC Codes as Churches but are not Churches. However, since many B2B marketers use SIC Codes, MCH has created a reference that compares the vertically-compiled B2i lists to the SIC-driven B2B databases used by many business marketers.
Allthingsdata.com: How does data quality impact B2i marketing? MCH: When you are using a list that is organized by such things as SIC Codes and employee size, there may be many issues with the data that impact effective B2i marketing. As previously discussed, industries like Churches and Nursing Homes may be spread out over several SIC Codes. MCH has specific categories just for Churches, Nursing Homes, and other Institutional segments. Even if you have a successful campaign using a B2B list for a B2i marketing initiative, it will be hard to duplicate your efforts since the B2B list is problematic for analytics. Also, it is important to understand job titles. For example, an Acquisition Librarian is not the one who makes the decisions on what books to buy. Instead, this is the responsibility of the Collection Development Librarian. Editor’s Note: MCH’s whitepaper, How Data Quality Issues Impact B2B Marketers and Modelers, provides a more complete discussion of this topic. Allthingsdata.com: How effective is email marketing for B2i marketers?
MCH: Email marketing can be very effective. Since you are emailing professionals at work, if you are sending messages with relevant content and offers, the Institutional decision makers can be appreciative and receptive to receiving useful information that will help them perform their missions. Allthingsdata.com: Besides mailing/emailing for specific campaigns, how else can B2i data help an organization? MCH: Our data is being used in every way imaginable. It used in CRM systems, modeling, validation, homeland security, emergency planning, mapping, and many other uses. Allthingsdata.com: Many of our clients need to organize their data by organization hierarchy. How can B2i data help with this organization? MCH: Our clients use our data to understand which schools are part of a school district, which hospitals are part of a hospital system, what the branches are in a library network, what child care facilities are part of a child care chain, and many other examples. Further, this is an area that we continue to enhance. Allthingsdata.com: There is a trend for B2B external data providers to also provide data integration/data management software and services so that the B2B data can become integrated with the client’s internal data sources and not just be used separately for campaigns. How does this trend impact B2i? MCH: The trend is also relevant in B2i. In B2B, there are roughly 15 million businesses. However, in B2i, there are significantly less organizations. Therefore, many times B2i data is used to supplement and enhance B2B data. Consequently, it is an important trend to integrate B2i data with B2B data along with other internal data sources. Allthingsdata.com: Are there any final thoughts that you would like to provide our readers? MCH: MCH is proud to state that we have not had any layoffs in this economic climate. In fact, we have had a record June as many organizations are seeing the value in targeting Institutions, especially with the Federal Stimulus initiatives.
Allthingsdata.com: Once again, I want to thank John and Kirk for their time and their insight on B2i data. As Institutions are a large and growing part of our economy, especially with the Federal Stimulus, the use of B2i data has become even more important for our clients. We have seen a trend to use Master Data Management to integrate compiled B2i data with compiled B2B data and internal data sources in order to gain a complete view of customers and prospects in order to capitalize on the opportunity in the Institutional Market Segment.
