Sample Report

Sample Customer Datamining / "MarketLeader" Package Report:

This sample report is based off an actual report developed by the B2B Marketing Guide. All names and some specific data has been changed for confidentiality reasons, but the report is an accurate representation of what you can expect to receive with the "MarketLeader" package. The following report is typical, but each company has it's own unique situation that would affect the final format of this document and the areas/issues addressed.

This report is also a perfect example of the problems facing small industrial manufacturers, and how marketing intelligence can be gathered and used to guide a successful sales effort.

Important exhibits for this sample report
can be seen by clicking here .

The Company and the Situation

Hytek Drives is a 36 year old, privately held firm that designs and manufacturers a full line of speed controls for all types of industrial motors. Hytek sells through distributors and direct sales representatives throughout the United States, as well as Canada and Mexico. The United States is Hytek’s primary focus, accounting for approximately 95% of all sales, and equaling approximately $7,000,000 annually. An example of a typical Hytek customer might be an O.E.M. (original equipment manufacturer) that needs a control unit to control the speed of the conveyor, a pump, or other device. This might be a custom, one-time application that requires a single control unit or it might be a production line that will require several thousand control units over the course of a year.

The range of applications for Hytek’s line of control units is very broad, ranging from submersible pumps to pizza ovens. Profit margins and contribution margins are similar for all of their products and in all the industries they serve, so the company’s general philosophy on sales is to sell any product they have to whoever wants it. This “shotgun” sales approach has resulted in sales to more than 750 O.E.M.’s in the past 18 months, with about 10% of these customers providing 90% of the total sales.

The company’s sales effort is typical of most small industrial manufacturers, and consists of a small team of direct sales reps calling on distributors and past customers. A few cold calls are also made to try to locate new business, and trade shows and a small advertising budget also bring in some new leads that need to be followed up on. Sales had been rather flat until the last couple years when they started to increase slightly.

The company has been undergoing a change in leadership over the past few years, with the original owners retiring to a seat on the board instead of active management. The new management is not content with the small sales gains being achieved and is looking for a way to boost sales significantly. They know they make a very high quality, competitive product and they have an excellent reputation in the industry. The new V.P. of Sales and Marketing believes that the company is not reaching the right audience, but he is having a difficult time trying to identify what the right audience is, as well as how to reach them if he knew.

Identifying the Target Market / Customer Profiling

Hytek’s marketing database was in better shape than many small industrial companies, since they had recently made a focused effort to get it cleaned up. Since the company only wants to sell to OEMs, all non-OEM customers were filtered out of the database that was sent to the B2B Marketing Guide (Hytek also sells individual units for replacement and inventory stocking to end users). This database of OEM customers included accounting information (sales) for the total dollar amount of purchases for each OEM for the past 18 months. 755 OEM records were supplied.

529 records were matched by the B2B Marketing Guide's software (a respectable 70.1% match), providing a good statistical sample of Hytek’s past OEM customers. Hytek’s records were appended to add critical information about these companies, including their annual sales, number of employees, SIC codes, corporate structure, age, location, etc.

Analyzing this data revealed the following:
(see the Exhibits for an example of the analysis output)

a) The shotgun sales approach is creating a lack of dominance in any SIC code categories or in any specific locations (evaluating by either states or metropolitan areas). However, some SIC codes are high enough to be considered promising, including some industries (like printing trades machinery) that was not mentioned on the pre-analysis questionnaire as an area of focus.

b) The size of Hytek’s customers, based on annual sales and number of employees, is much smaller than the company anticipated. This indicates that Hytek is either not attracting or not aggressively pursuing the larger companies where volumes and overall sales could be higher.

c) Over 80% of the companies analyzed are privately held firms.

d) The biggest surprise is in the area of company age. The majority of Hytek’s customers are companies older than 11 years and a very high percentage are actually over 21 years old. This suggests that Hytek is either not attracting or not aggressively pursuing younger companies that are looking for long-term suppliers to fuel their rapid growth curves.

The above information leads to a good profile of Hytek’s overall / average OEM customer, and this profile was then compared to the “Best OEM Customer” profile. "Best customers" were determined simply on a dollar amount of sales basis. Every customer that had purchased more than $10,000 worth of Hytek’s products in the past 18 months was filtered out of the general population list, and a separate analysis was performed on them.

This best customer list consists of only 68 companies and represents only 9% of the entire OEM customer list. The analysis on this list revealed the following:

a) The SIC codes and geographic locations are still quite scattered, but there are many similarities to the overall customer list. A few new / different SIC codes appear in this analysis that look very promising, including several codes that have more than 3 companies each. The following is a brief summary of some of these codes, with a comparison of how the same code ranked in the general analysis.

     7.4% = #3589, Service industry machinery (was 2.8%)

     5.9% = #3523, Farm machinery and equipment (was 2.5%)

     5.9% = #3535, Conveyors and conveying equipment (was 2.3%)

     5.9% = #3821, Laboratory apparatus and furniture (was 1.5%)

     4.4% = #5084, Industrial machinery and equipment (was 5.7%)

b) Annual sales and the number of employees highlight the fact that the companies on the best customer list are considerably larger. For instance, the $24.9 to $249.9 million category increases from 6.7% to 19.2% of the list.

c) A similar percentage of companies are privately held, but several of the highest revenue generating companies on the list are public.

d) Again, the big surprise is in the area of company age, but this time the surprise goes the other direction. The number of companies on the best customer list that are 5 years old or less increases from 14.2% to 26.5%. In addition, this analysis shows that the average purchase of companies in the 5 years old or less category is $58,495, compared to only $31,472 for companies older than 5 years. It is very clear that these younger companies have a better chance of producing higher sales volumes.

The Ideal Customer Profile

By comparing the best customer analysis and the general population analysis, and considering the problems and opportunities identified in these analyses, we can develop an accurate “Ideal Customer Profile". Hytek’s ideal target customer looks like the following:

1) 10 years old or less

2) 5 to 499 employees at the individual plant

3) $2.5 to 99.9 million in annual sales

4) Located in the top 13 dominant states (IN, MI, CA, NJ, PA, OH,
NY, KS, IL, FL,TX, MN, and WI)

The object here is to create customer clusters that can be more efficiently serviced by the sales staff. If many customers are located in the same area, then a salesperson can make several visits in a shorter period of time. After these states are sufficiently covered, then the marketing effort can strategically move into other states.

5) SIC codes are based on the top SIC codes identified in the best customer analysis that have at least 2 companies listed for that code.

The strategy here is to focus on proven areas of expertise, before expending resources to learn and develop products for new industries.

6) Private or public companies

Market Potential and Market Penetration

Based on the Ideal Customer Profile developed, the market potential and market penetration can be determined for the entire market as well as some specific, dominant SIC code markets. This report is summarized as follows:

Note: For this analysis, potential is evaluated by the number of potential customers or companies, rather than the sales potential. Sales potential may be a phase two project to add detail to this report. To determine a sales potential, other factors would need to be considered, including the motivating “drivers” for each particular industry, as well as the macroeconomic / competitive situation, etc.

SIC #3589, Service Industry Machinery (8-digit codes):

Potential = 89 Companies

Penetration = 5.62% (= 5 / 89)

SIC #3523, Farm Machinery and Equipment (8-digit codes):

Potential = 17 Companies

Penetration = 23.53% (= 4 / 17)

SIC #3535, Conveyors and Conveying Equipment (8-digit codes):

Potential = 246 Companies

Penetration = 1.63% (= 4 / 246)

SIC #3821, Laboratory Apparatus and Furniture (8-digit codes):

Potential = 64 Companies

Penetration = 6.25% (= 4 / 64)

SIC #5084, Industrial Machinery and Equipment (8-digit codes):

Potential = 348 Companies

Penetration = .86% (= 3 / 348)

Top 5 SIC Codes (above), 3589, 3523, 3535, 3821, 5084
(8-digit codes):

Potential = 764 Companies

Penetration = 2.62% (= 20 / 764)

Recommendations

The information compiled and analyzed for this report allows Hytek to understand exactly what their ideal market is, and where problems exist in their current sales and marketing effort. The work done so far is extremely valuable and has provided Hytek some insight that they have never had before. Now, this information must be used to improve the effectiveness and efficiency of the sales and marketing process.

It is clear from this analysis, that Hytek Controls has barely begun to penetrate the potential markets that exist for its products, so a strategy must be developed to target and attract these new companies. The key to this strategy are very focused mailings and outbound calling campaigns to reach these new potential customers.

The B2B Marketing Guide proposes a step-by-step approach for Hytek to follow, and these recommendations are listed below:

1) Develop a targeted marketing strategy and process.

a) Determine how many leads can be handled in a given period of time and what the sales goals are for this program / the company. Factors that must be considered include the actual mailing processing, follow-up phone calls, meetings and follow-ups with interested leads, etc. Phone calls need to be done about a week after a mailing, data needs to be entered in the database for each call, many times information will need to be resent, and subsequent mailings (approx. 2) need to be done about every 2 to 3 weeks. If a large amount of leads are desired in a short period of time, then an outbound calling firm should definitely be used, but if a small, steady flow of leads is desired, then it can probably be handled in-house (or with minimal assistance from an outside firm).

b) Determine the strategy for which potential markets should be targeted first and how broad to go with the list. Additional research may need to be conducted to determine which of the dominant industries shows the highest probability of growth or a continued need for Hytek’s products. The "drivers" for these industries need to be considered, as well as how the current economy is affecting those fields, etc.

c) Develop the targeted marketing mailer packages, by gaining a thorough understanding of that market’s needs and drivers. A powerful letter and call script need to be developed, and a business reply card should accompany this letter and sales literature.

2) Verify the marketing message, corporate image, and company capabilities.

It is not enough to simply target the proper ideal customers. If the right message, image and capabilities are not in place, the effort could be a waste of time and money.

a) Evaluate all of the company’s marketing materials, including the website, sales literature, advertising, directory listings, etc. to make sure that the right message is being conveyed to attract larger and younger companies than what Hytek has attracted in the past.

b) Analyze the recent public companies that have purchased Hytek’s products and consider what their special needs or concerns were. Then address these issues in all future marketing materials and make sure the sales staff and distributors are educated on these issues. This could be done by conducting interviews with the sales, production and accounting personnel that interacted with these customers.

c) Conduct additional market research through the use of surveys / questionnaires to some past customers and ideal prospects to determine what their needs and concerns are. Then address these issues in all future marketing materials and make sure the sales staff and distributors are educated on these issues. This would be done best by an outside entity where confidentiality can be promised to those people taking part in the survey if they so choose. More accurate and honest feedback can be gained with this approach.

d) Conduct some competitive market research to determine the strengths and weaknesses of the competitors and their products. Many factors should be judged in this analysis, including price / feature comparisons, service and support, website content and functionality, who shows up on internet searches, financial strength, etc.

3) Evaluate and implement a reinforcing advertising and PR plan.

a) This effort may include:
       - Internet branding
       - Trade publication articles
       - Press releases
       - Newsletters
       - Advertising
       - Etc.

The goal here is to reach the same audience being targeted in the mail and outbound calling campaign, through other sources. This branding effort will reinforce the message that the company is trying to convey.

Additional Services Offered by the
B2B Marketing Guide / MarketWise Solutions

At a minimum, Hytek will probably wish to acquire the actual prospect list for the 744 identified ideal prospect companies (764 - 20) that are existing customers. Hytek can request this list from the B2B Marketing Guide or may use the profile characteristics provided to acquire this list at an alternate source. The B2B Marketing Guide offers these lists at very reasonable rates of $300 PLUS $0.50 per record licensed (so $672 for these 744 records). These records will be provided with all contact and company profile information in an Excel file. Custom lists can also be developed at a rate of $110 per hour PLUS $0.50 per record, and a firm price can be quoted in advance.

The B2B Marketing Guide's parent company, MarketWise Solutions, can also perform many of the other tasks listed in the Recommendations section above. Most of these tasks can be coordinated with your company via email and telephone, but face-to-face meetings can also be conducted in certain situations. Our services include:

       - Marketing materials evaluation
       - Internet exposure evaluation (including Thomas Register)
       - Competitive / market analysis
       - Industry / market surveys (for awareness of your firm,
                 needs, current drivers, etc.)
       - Customer surveys (for satisfaction, needs, etc.)
       - Internal SWOT analysis
       - Develop and implement targeted mailings
       - Conduct outbound qualifier phone calls
       - Develop marketing materials (printed pieces, websites, etc.)
       - Develop and implement comprehensive Internet exposure
                 and Thomas Register plans
       - Write and distribute press releases
       - Write technical articles for trade publications and get published
                 (this is a specialty of MarketWise Solutions)
       - Develop and place advertising
       - and more ...

Call or email us to discuss any additional projects and to get cost estimates. See the Contact Us page.

You may also want to examine the B2B Marketing Guide KIT, which will be available in the second quarter of 2002, and promises to become the Ultimate Guide for Industrial B2B Marketing for small companies.
Click here to learn more about this exciting step-by-step guide.

To learn more about the Customer Database Analysis / "MarketLeader" Process click here.

To learn more about
the Process click here.

Sample Customer Datamining / "MarketLeader" Package Report:

The Ideal Customer Profile

Recommendations

Additional Services Offered by the B2B Marketing Guide / MarketWise Solutions

Additional Services Offered by the
B2B Marketing Guide / MarketWise Solutions