Companies are still struggling to improve the reach and reliability of personalized data about prospects and customers.
Part of the problem is supply – larger amounts of data provide better insight into B2B and B2C buying preferences immediately and over time.
But variety also plays a role. While information about people in a company (demographics) and the technology they use (technography) can help improve marketing and sales results, there is also a place for firmographies. These are records that organizations can use to effectively divide businesses into meaningful categories.
The challenge? While this is a great high-level definition, it doesn't go into much detail or actionable strategies.
In this complete guide to firmography, we'll define firmography data in terms of key shapes and functions, examine how it is used for segmentation, and examine the types of questions that can help your business locate and use firmography data.
What are firmographic data?
Demographics focus on information that is tied to individuals. Data such as customer contact names and purchasing preferences are examples of demographic assets that can be used to run targeted marketing campaigns.
Firmographic data shifts the focus to organizations – or firms – in order to collect and analyze important information about the operation of companies themselves. Common examples of firmographic data include:
- Industry Type – From manufacturing or logistics companies to finance, professional, or legal services companies, Industry Type is a key vector for segmentation. Worthless? Many companies occupy more than one industry and can also occupy several firmographic segments.
- Organization size – How big is the organization, both in terms of physical location and employee size?
- Total Revenue and Revenue – Both quarterly and annual information are relevant here. While annual sales and revenue data can drive long-term sales strategies, quarterly results can help identify more immediate needs.
- Current location – where is the company headquarters? How many satellite offices do they have and where?
- Ownership Framework – Is the Company a Public Organization? A private company? An NGO, charity, or non-profit organization? Each one has its own market approach.
- Growth trends – is the company growing, shrinking or maintaining its current market position? All three motion metrics offer opportunities but need to be approached in different ways.
There is also a crossover segment of firmographic and demographic data related to specific job roles, titles, departments, and potential purchasing power.
By better understanding those responsible for decision-making within a company and the operational framework that surrounds them, companies can better target their marketing efforts to a receptive audience that has the opportunity to take immediate action.
Advantages of firmographic segmentation
The main goal of firmographic data is to help companies break down potential B2B customers into meaningful segments, which in turn can reduce the gap between observation and action.
When marketers, sales teams, and C-suites have access to segmented information that classifies prospects by size, location, revenue, or current growth path, they don't have to spend the time and effort separating that data before making decisions. Instead, potential purchasing partners are pre-sorted into relevant categories.
Segmentation has specific advantages for organizations such as:
1. Improved market orientation.
Understanding the physical and market size of potential B2B buyers can greatly improve the sales target. Here's the reason: Smaller "mom and pop companies" don't have the same needs as larger companies – while both are potentially valuable customers, their paths from first contact to sales changeover differ significantly. For example, while many SMBs want a one-size-fits-all solution to reduce overall complexity, many companies are looking for tailor-made tools and technologies to solve specific problems.
2. Improved customer service.
By using important firmographical data on where companies are located and how their employees are geographically distributed, the customer service offering can be improved. Imagine a manufacturing company that is entirely in a single state. They may prioritize partners who can provide local services. Multinational companies often prefer distributed digital on-demand services.
3. Long-term purchase potential.
Companies moving up in the market offer B2B companies the potential to break into the ground floor and get higher conversion volume over time. Companies currently downsizing also have revenue potential but require a different approach with services that are both cost effective in the short term and can be scaled over time as revenue targets evolve.
Important firmographic questions
How do you collect firmography data that is relevant to your brand and can contribute to the success of your company? It all starts with asking the right questions. Commonly used queries include:
- When was the company founded?
- How many employees does the company have in total?
- How many employees in each office or satellite location?
- What is the company's annual turnover?
- What percentage of your target market share does the company currently have?
- Are they currently in a growth phase, are they shrinking, or are they staying relatively constant?
- What is your organizational structure (flat leadership, standard hierarchy, etc.)
When it comes to capturing firmographic data, you have three options: interviewing companies directly, conducting online education, or purchasing firmographic data from a data clearing house or similar service.
All three have potential advantages and disadvantages. For example, while surveys provide the most accurate firmographic information, many companies prefer not to disclose this information – especially if you are taking a "cold call" approach.
While searches online can reveal a variety of useful firmographic information, there is no guarantee of its accuracy or relevance. The usable value of the data collected in this way depends heavily on the source and the date the information was obtained.
Buying data from a reputable seller offers the most accurate and up-to-date option. Prices vary significantly, however, and it pays to compare this information with publicly available sources to ensure that the sellers are always accurate.
Search for a solid (graphic) basis
Timely, accurate, and actionable "graphical" data – demographic, technographic, and firmographic – can help B2B organizations develop bespoke sales and marketing strategies and improve overall conversion rates.
In order to ensure that firmographic frameworks deliver the intended results, it is important for companies to focus on both segmentation forms and decision-making functions.
By asking the right questions, segmenting prospects accurately, and using this data to inform about sales and marketing efforts, companies can reduce the time between information and action while increasing sales.