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ANALYSIS: Is data-pooling the future for B2B?

Data and research provider Abacus has expanded into B2B with the launch of a co-operative database – the Abacus B2B Alliance – targeting DM marketers and catalogue mailers.

The product works as a pooling database into which B2B marketers contribute their customer information, including transactional data. Abacus stipulates that any company wishing to join must provide – at least – a 5000-strong list. According to the supplier this is the practical limit as its statistical analysis requires this quantity to “build strong models.” Only multi-buyers are entered into the database as they are more likely to respond to direct marketing, it claims.

Andy McDermott, managing director of Abacus, comments, “Naturally companies are instinctively reticent about handing over their lists. What B2B marketers need to understand is that they don't own the customer as most are already supplied by other businesses. Once they recognise this, the downside doesn't really exist.”

However members can restrict a head-to-head competitor from viewing their data; this arrangement is reciprocal. McDermott states that this provides a “safety net” but has, so far, found that companies tend not to do this because very few have “head-to-head competitors”.At the time of writing Abacus had 23 B2B members but due to confidentiality would not disclose names. Confidentiality extends to members as well as third parties.

Co-operate or compete?

With six years experience of pooling in the B2C sector (predominantly in the catalogue business), Abacus found that many of its clients had B2B offerings and were looking for a similar database. Its research prior to launch (of 20 B2B direct marketers) found that there was a shortage of new sources of B2B data and that this was impacting on customer recruitment, thus hampering growth. It also found that the office supplies, corporate gifts and training sectors would potentially benefit most.

This model has been greeted with interest by other B2B data experts. Simon Lawrence, joint managing director of Information Arts, states that data pooling is likely to work well in these sectors as they are “non-contentious” however he's unsure it would work so well elsewhere: “Our clients work in very competitive sectors for example energy and manufacturing.” He does not envisage the happy crossover between members that might occur with Abacus' database: “There's an argument that someone who responds to a stationary mailer might also respond to a corporate gift mailer. But in the rest of B2B, where the decisions are more complex and long term, it's different.”

One of the main differences, according to Lawrence, is size: “The volumes in B2B don't drive the need. For example a courier might only need a 100,000-long list so why would they bother go through the pain of pooling when they can just buy it?”

Insight marketing

The answer may lie in the quality of the data. McDermott of Abacus states: “A co-operative database will uncover contacts you'll struggle to get elsewhere. Publicly-held records tend to only hold senior-level management, we can identify the budget holders further down the ladder.”

Abacus consolidates all of the sources into one file, which then identifies decision makers, what they purchase and how often. It provides members with a report on the overall purchasing behaviour of their customers (providing they purchase from another member), covering recency, frequency and monetary spend. It can also identify existing customers with a propensity to respond to specific offers.

Despite some scepticism, Lawrence says co-operative bases are, “something on Information Art's radar”; in fact the concept has been discussed at a recent client forum.

Lawrence comments, “I welcome all developments, it's all building up intelligence and it takes the focus away from lists and labels. Insight-based marketing is where we're heading – building up deeper profiles and adopting affinity based schemes,” he adds. Despite this, he is reluctant to launch a new product until he has a “very clear proposition of benefits” – claiming that if the approach is even slightly equivocal companies will pull out.

Across the pond

Whether this is the first B2B co-operative database in the UK is unclear. Neither McDermott nor Lawrence knew of any other comparable ventures and the Direct Marketing Association could not confirm either.

However, such products have been available in the US for a decade. The Abacus B2B Alliance was established in the US six years ago. It is comprised of 325 B2B DM companies and contains over 1.2 billion transactions from more than 75 million business contacts.

The stationery supplier Staples is a member of the US B2B Alliance. Eileen White, director of consumer acquisition, comments, “The alliance has given Staples access to a new source of responsive data at a time when traditional lists were failing to deliver results.”

 

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