MYSW Part II (e-Prospecting and the marketing data industry)
Customer prospecting is part of the marketing data industry, which is currently dominated by huge, multi-billion dollar companies like Dunn & Bradstreet, Polk, First Data, and Experian. These companies typically have a lock on the rights to a certain type of customer data such as insurance forms, mortgage applications, or some other source of highly personal information which has allowed them to create enormous databases, statistical models, demographic studies and other relevant market data. These databases are typically sold off (in the form of highly-targeted prospective customer lists) in pieces to large Fortune 500 companies that are looking target new customers and expand their revenue base.
Since the data providers are very large, cash rich, and risk averse (stemming from the fact that they have a lock on the industry), they are not too keen on jumping headfirst into the Internet. However, the problem runs deeper than that. Most of these companies still run on old SNA mainframe computers, which require many programmers to run, and sell through commissioned sales forces. In addition, the data is normally sold in large quantities first to a list broker, who then resells it in smaller pieces to big corporate clients.
This distribution is hardly efficient as everyone takes a cut off the margins on the way down. However, the data providers have been reluctant to move to net distribution as they would not only piss-off their entire multi-billion dollar list broker distribution channel, but also alienate most of their current work forces.
Enter MYSW. Gregory and the MYSW team realized the inefficiencies in this model and decided to become the first e-prospecting service, catering to small businesses (of which they already have an extensive client list). The small business market had historically been out of the reach of the large data providers since their inefficient distribution made it unprofitable for anyone to sell customer prospect lists in quantities of less than 20,000 or so. So using this new market opportunity as leverage, they struck deals with both Polk and Experian to license their huge databases and sell prospects in small quantities (as little as 200 names) to small businesses, online and at a very reasonable price. Since this is all found money for the data providers, MYSW was able to negotiate very favorable revenue-sharing agreements with Polk and Experian.
(cont. next post) |
