DemandBase Creeps Up the Value Chain

I had a nice little chat with DemandBase two weeks ago. I’d been aware of them since they were founded in 2006 but in their original incarnation as a data provider. That is, they take business data from sources including Hoovers, D&B, LexisNexis, AccuData, BusinessWatch Network, Jigsaw) and merge it into one big contact list that people can use for outbound promotions or to enhance their own files. It’s a perfectly reasonable business, but not one I find especially exciting.

But it turns out that DemandBase has been inching its way up the value chain. Some time ago they released a free widget, DemandBase Stream, that shows the companies visiting your Web site in a news ticker on your computer desktop. That’s somewhat entertaining and can be useful to salespeople who might notice and reach out to current clients or prospects. But the technology is nothing special: a page tag sends the visitor’s IP address to DemandBase, which looks up its owner in standard Internet registries. In any case, being free, it's really just a promotion for DemandBase.

Their new product, DemandBase Professional, is another matter. It also captures the visitor stream to a company Web site and uses the IP address to identify the company. But now it matches that company against the main DemandBase database to actually apply details such as location, company size, industry, and further finds contact names that marketing or salespeople can reach out to. That’s not much more entertaining, but a lot more salable.

DemandBase Professional actually goes further than simply looking up the information, by letting clients specify the industries, company sizes, geographic regions, search terms and number of page views they care about, and only returning information on visitors who fit those parameters. It can also import a client’s list of target accounts from Salesforce.com and issuing alerts when those companies visit. The good news is that clients only pay for alerts that meet their specified parameters, keeping both the cost and volume within reason. The company only charges for incremental prospect names, so you pay don't again if someone visits your Web site twice.

I was impressed by the sheer cleverness of all this, precisely because the underlying technology (page tags, IP owner lookup, name matching, simple filtering) is so straightforward. There’s no identification of actual visitors and no cookies.

Ok, some of the underlying database preparation and matching is actually pretty demanding. In fact, DemandBase told me that they can use only about 20% of the data they get from their partners because quality problems with the rest. But Rodney Dangerfield on a bad day got more respect than data hygiene experts.

One obvious question is how many useful new names can DemandBase actually provide. According to the company, it typically finds that 50-60% of the Web site visitors come through a generic Internet Service Provider connection and thus can’t be traced to a particular company. Of the remainder, 10-20% fall within the target company sizes, industries or regions. Thus, DemandBase might send information on 5-10% of total visitors.

This is still twice the 2-4% of visitors who DemandBase says typically identify themselves directly. DemandBase said they hadn’t made a formal study of the quality of those leads, but felt confident they were more than worth the cost.

DemandBase plans to continue adding value, possibly by pushing automated messages to selected visitors. But they don’t intend to become a lead management system. We discussed social media briefly; they aren’t using social data (e.g. blog, Facebook, Twitter posts) but are considering trying to find degrees of separation in social networks like Linked In. They didn’t mention it, but I could also see them providing input to Web site personalization systems, so the site itself would tailor its content to what DemandBase infers about the visitor.

The company said that about one thousand companies have set up its free widget and a couple hundred are testing DemandBase Professional. Pricing for Professional depends on volume and starts around $200-$300 per month.

I suppose I could just say this is a useful-sounding product and let it go at that. But if you’re looking for Some Larger Significance: it’s also an example of how the traditional distinction between sales and marketing is dissolving. DemandBase is mostly a salesperson’s tool, but it is identifying names much earlier than sales typically gets involved. Even more to the point, a particular name might go to either sales or marketing depending on the situation. This means that sales and marketing have to agree on rules for who does what—requiring considerably more cooperation than just throwing a lead over the wall once it's deemed “qualified”. I'd say that's significant.