The Ultimate Guide: What is Firmographic Data & How to Use it?
Table of Contents
- The Ultimate Guide to Firmographic Data
- What is firmographic data?
- What are the attributes of firmographic data?
- What are the sources of firmographic data?
- How is firmographic data collected?
- How can I assess the quality of firmographic data?
- How can I use firmographic data?
- What are the challenges with firmographic data?
- How is firmographic data priced?
The Ultimate Guide to Firmographic Data
Do you want to make smarter business decisions by knowing all the key details about the companies you’re looking to engage with?
Well firmographic data has got you covered by providing you with the key characteristics of companies, including their size, revenue, and sales cycle length. With this information, you can approach companies with the confidence that you’ll be speaking in the right terms and have appropriate expectations of how your relationship will proceed.
Read on to find out all you need to know to start benefiting from firmographic data in your business.
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What is firmographic data?
Firmographic data, or firmographics, is information that describes and quantifies the characteristics of firms (i.e. companies). These characteristics can include the company size, industry, legal status, revenue, and sales cycle length.
It can be helpful to compare firmographics to demographics, only instead of focussing on describing and categorizing people, firmographics describes and categorizes companies.
In general, firmographic data is most relevant to B2B companies that interact with other firms. A firm can be any legal entity from a federal organization or a non-profit organization, to a global enterprise or a small highstreet retail shop.
Firmographics can be incredibly useful in helping you to know more about the companies you’re engaging with. This could be both future prospects and even your current customers, and suppliers.
Firmographic data is also often used to enrich other data types, like B2B contacts or technographics. The additional information from firmographics is vital in anticipating the framework for the entire interaction, such as how long the sale might take and the potential budget of the company.
What are the attributes of firmographic data?
Firmographic data consists of all the characteristics that can be used to describe and categorize a business. These can be on a macro scale, like size and industry, or on a micro scale like revenue and sales cycle length.
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Some of the key attributes of firmographic data include:
- The legal status of the company (publicly owned, privately owned, non-profit, NGO, Inc., LLC.)
- The location of the various branches of the company (region, country, state, city, zip code, address)
- The company’s industry (SIC classification codes)
- Company size (including revenue, number of employees, SME)
- Performance (sales cycle length, sales numbers, quarterly and annual profits, credit rating)
- Company structure (headquarters, parent companies, subsidiaries)
As you can see, firmographic data really provides a comprehensive description of every aspect that it might be beneficial to know about a company.
What’s important for you is to identify which attributes will be of most use for you depending on the type of business you’re interacting with. Businesses can each have their own unique style: a Fortune 500 company will not operate in the same way as a small, young start up.
What are the sources of firmographic data?
The majority of firmographic data sources are publicly available, being things like company websites, company registers, tax declarations, and white paper reports. This is because when a company is created, it must often provide the legal body of its country of operation with basic firmographic information like its legal status, address, and annual revenue.
However, some crucial firmographic information, like that which is not required to be shown by law or for companies based in untransparent countries, is much harder to access. Indeed, sourcing even just basic
firmographics yourself can take up a lot of time and resources, and that’s not accounting for these difficult cases.
Because of this, most companies will turn to data providers to collect and present the firmographic data for them. In many cases, even large firmographics firms will use data from smaller companies to bolster their own available information!
How is firmographic data collected?
The methods used to collect firmographic data depend heavily on the source. For some online sources, scraping is a fast, simple and scalable option to acquire the information. In other cases, the only way might be to source the information from another data provider with access to a specific database or to simply just call up the company and ask directly.
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The type of source and the collection method used will affect the type of data that you get. Self reported data is data sourced from documents created by the company for the purpose of sharing firmographic information. Derived data is data extracted from sources not directly intended to provide firmographics but which can still reveal insight or broader context. Verified data is information collected, and thus confirmed, directly from the company of interest.
Here are the sources and collection methods used to gather these data types, as well as their strengths and weaknesses:
As mentioned, self-reported data is data that has been gathered from documents provided by the companies, most often for the purpose of sharing firmographic information.
The sources of self-reported data include:
- Company websites
- Company registers
- Tax declarations
The most common way of collecting self-reported data is by scraping these online sources. Company websites, registers and tax declarations can be great upfront sources of firmographic data, and thanks to scraping this information can be collected on a large scale.
The downside to these sources is that they tend to only contain information that companies are compelled to share by law, meaning that some potentially useful facts might be omitted. Moreover, in countries where it is not a requirement for companies to publicize firmographic data, these sources will likely be inaccurate, outdated, or perhaps even non-existent.
Another downside is that these sources only tend to be updated on a yearly basis (think how often you’re required to do your taxes), so it is possible that some information like company size or scale may be outdated.
For these reasons, deriving data from alternative sources can be useful.
Derived data is drawn and deduced from other activities from the company or external parties that are not necessarily directly for the purpose of sharing firmographic information, but do so indirectly.
The sources of derived data include:
- Social media posts
- Job posts
The primary collection method that results in derived data is also scraping. The benefit to using these sources is that the data is often information that companies aren’t intentionally sharing or are compelled by law to reveal.
Something that used to be a major downside to scraping these sources was that the information was often inaccurate or irrelevant, due to the sources being more complex and less directly relevant. However, thanks to Natural Language Processing technology, which allows algorithms to better understand the context and semantics of words, this problem is minimized.
However, the same issue exists with derived data as with self-reported data: what happens if these sources are not available? In this instance, the data providers will need to dig deeper to find the truth.
This is where manual verification comes in.
Verified data tends to be very specific or hard to find, and has thus undergone an extra level of confirmation. Oftentimes this is from manually reaching out to the company or to a data provider with access to a private database.
The sources of verified data include:
- Data providers
- Private databases
- Phone calls
As mentioned, much of this information is gathered manually. The benefit to this is that you can be sure of both the accuracy and recency of the data, given that it has come straight from the company themselves.
Another advantage is that certain data providers can access difficult to reach databases and find information on companies that is otherwise not easily available.
However, the obvious downside is that manually reaching out takes time, effort and is not scalable. For this reason, many larger data providers actually use smaller providers to manually source this data for them.
Overall, you should check that your data provider uses a range of collection methods and sources so that you can be confident in the quality of the data you’re purchasing.
With that in mind, let’s now take a look at what “quality” means for firmographic data.
How can I assess the quality of firmographic data?
To assess the quality of firmographic data, you should take a look at the methods used to collect it. Data that has been scraped may often be accurate but you cannot guarantee the source it was drawn from was up to date. Data that has been verified manually will often be of the highest quality, but this can come at a high price.
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Especially in the case of firmographics, one accurate piece of information is far more beneficial than a lot of inaccurate data. For example, you might have already used technographic data to find a company that would be a good fit for your product, incorporated intent data to confirm their potential interest, and acquired a list of business contacts for that company so you can reach out. Now you can use firmographic data to tell you the potential budget and sales cycle length of the company which can validate your decision to pursue the company and inform you of how the sales process might unfold.
In general, the data quality standards for firmographic data are high compared to other data categories. This is in part due to the lower amount of effort that firmographic data providers have to put in to cleanse and present the data.
However, it goes without saying that you need to get firmographic data that is right for you.
Here’s what you should bare in mind when trying to purchase the highest quality firmographic data for your company:
84% of businesses who want to buy firmographic data agree that accuracy is the most important factor when actually purchasing the data. For firmographics, accuracy can be measured by how the data translates into results in the real world.
Inaccurate firmographic data can lead you to making incorrect decisions, such as approaching a company who cannot afford your products/service or incorrectly predicting a company’s sales cycle length, causing the lead to fizzle out.
Data completeness is always important in making firmographic data useful. This is because it’s important to have a holistic view of the company you’re engaging and because complete firmographic data is better for enriching other data sets.
In order to understand the requirements of the business you’re interested in, be that a small start-up or a global organization, having the complete picture of the business will help you to select the characteristics that are most relevant when engaging with them.
As mentioned earlier, a primary use case for firmographic data is to enrich other data sets you may already have. To facilitate this, the best quality firmographic data sets will come with a match key that can join up linking points of firmographics with points from other data sets.
For example, the match key can allow you to join up company details with a list of contact details from B2B contact data, or company details with intent signals from intent data. This will ease the data enrichment process and help you to get the most value out of your purchased firmographic data.
It’s important that the data provider you choose can offer firmographics data of sufficient scale in the market/industry/country you’re interested in. One way to find this out is to ask how large their list of websites they scrape is.
Be sure to check this so that you acquire data that is actually useful for you.
Even if all of the above factors are confirmed, the actual usability of the data is low if the data is out of data.
There’s little point in knowing how large an organization was two years ago, or what their budget was last sales cycle, as these factors will almost certainly have changed by the time you engage with the organization.
Up-to-date data is especially vital when you’re evaluating your own suppliers, since you need to be assured that they are still performing, and thus still a good choice for your business.
What to ask your data provider:
To help you ensure the quality of any data you’re buying, here are some of the key questions you should ask your firmographic data provider:
- What are the sources of your data?
- How do you collect the data from these sources?
- How often do you update your data?
- Does your data come with a match key, and if so, which one?
- How much data do you have available for (your region/market of interest)?
How can I use firmographic data?
The point of firmographics is to know more about companies. Thus, the main use case for firmographic data is knowing more about the different organizations you’re involved with, from future prospects, to your current customers and suppliers. This can help you to check that your company is only engaging with the right firms and that you engage with these firms properly.
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Firmographic data can be crucial for the personalization of content. It can be used to formulate the following factors, creating advertisements in social media targeting a sector, creating effective blog posts to influence the market, creating newsletters and email campaigns for companies, A/B testing, creation of study materials and tutorials for a specific company.
However, all of this is done within the context of if the company is a potential prospect, a current client, or an existing supplier.
Here is a list of how the use cases of firmographic data fit into your understanding of all the companies you’re involved with:
Understanding Your Current Customers
It goes without saying that it helps to know the companies that are currently purchasing your products/services. While you may already have a pre-established relationship and a decent idea of who and what they are, firmographic data can fill in gaps and help with useful predictions.
For example, you may not know that a current customer company has recently increased its number of employees by a substantial amount. Firmographic data can find this out for you as soon as it is happening and without you even needing to ask. by looking at which departments the company is growing in, you can determine if you’ll need to adjust your categorization of this customer and if perhaps you could upsell them more of your products.
Evaluating Your Existing Suppliers
An often unconsidered benefit to firmographic data is that it can also help you to evaluate the performance, and thereby the value, of your existing suppliers. You can’t even begin to satisfy customers and generate profit if the foundational supply for your company is rotten.
By using firmographics, you can check changes to the size, performance, and revenue of your existing suppliers, letting you know if they’re good to keep or if it’s time to find a new source.
Assessing Future Prospects
The most obvious use case for firmographic data is how it can be used to judge potential companies that you might want to engage with in the future. This could be both new customers and new suppliers.
An example of using firmographics here is to categorize and segment potential prospects by firmographic attributes, e.g. country, industry, and size. You can then further differentiate them by how they behave, as shown by their revenue and sales cycle length.
This information will allow you to only engage with companies in the market you’re interested in (shown by location and industry) and who could afford your product/service (shown by budget, size, revenue). You’ll also gain an idea of how the interaction with the company will go by understanding its size and sales cycle length.
Thus, it’s very clear how acquiring firmographics is a must if you’re looking to create appropriate and reliable future B2B relationships.
Despite having uses of its own (as mentioned above), a use case of firmographics that cannot be overlooked is how valuable it is when enriching other data sets. Indeed, by using firmographics to enrich existing data, you can make its own use cases stronger.
To use these data types in an example, you might have already acquired technographic data and implemented it to find a company that has a technology stack which has a gap that your product can fill. Intent data can then show you when this company is looking to fill the gap, and B2B contact data can ensure you reach the right person within that company. Now you can use firmographic data to learn more about how the company works and how the sales process will unfold, including information like its revenue and sales cycle length.
Now in order to undergo this valuable enrichment process, you the firmographic data must have a match key that can connect it with similar data points in your existing data sets. Make sure there is a match key and that this is suitable for your existing data sets, and you’re good to go.
With an understanding of what good firmographic data is and how you can benefit from using it, let’s quickly cover the challenges you might encounter when purchasing firmographic data and their solutions.
What are the challenges with firmographic data?
Despite its relative simplicity, firmographic data does come with its own set of challenges. These are mainly ensuring accuracy, scale, a usable match key, and the avoidance of any breaks in privacy laws.
Here are a couple of ways in which you can overcome potential challenges:
Understand the operations of the data provider
The operations and collection methods play an important role in the overall data quality offered by the provider. If you can understand the principles and practices behind the provider’s data collection, you can better anticipate the data quality.
Ask for a sample data set
There is no better way to get an idea of the data quality of the provider than by securing a sample data set. Most firmographic data providers will be more than happy to offer you a sample that you can test in order to check that the data will actually help with your intended use case.
A final benefit is that you can also check to see if the match key actually fits with your current data sets, reassuring you that any firmographics you purchase from the vendor will be able to enrich data you already own.
Having looked at how to overcome any challenges that might prevent you from getting quality data, let’s come to the final important factor: pricing.
How is firmographic data priced?
The pricing models for firmographic data largely depend on the vendors and the clients. In general, you can buy firmographic data as a subscription, per company, or in batches, with the price dependent on how much data is being requested.
The pricing can also be influenced by the type of the industry, size of the companies, location clusters and the niches that are being targeted by the client. This is because acquiring data for certain industries or places may be more difficult than in others.
Before you commit to investing on a pricing model, you should ask for a data sample to assess the validity, the quality, and the impact it can have for your intended use case. Most major data providers will be happy to provide a data sample.
As long as the world keeps on running, there will always be new businesses cropping up and more potential clients and suppliers to identify and evaluate. Old and new companies alike will continue to develop, so it is important that you and your company are up to date on the goings on in the corporate world.
Having read this guide, you can now feel empowered to identify where your company can benefit from firmographic data and begin the search to find the right firmographic data provider with the right product for you.