If a US public company, look at its 10-K (annual report). Firms generally discuss their competitors. You can locate the 10-K on a company’s investor site, through sales intelligence vendors, or free Edgar sites.
If a private company, look at Owler, a free site (See below). This is crowdsourced so may include firms that aren’t true competitors.
Look at sales intelligence services such as D&B Hoovers or InsideView. Hoover’s competitors are editorially generated and include top three flags (see below)
Within IT, look at Forrester Wave reports. Another option is technology category searches in PE/VC databases such as DataFox, Crunchbase, Pitchbook, or CB Insights. Keep in mind that companies within the same segment may not be competitors, but partners, customers, etc.
Many industries have industry specific market research that includes competitors. A few general market research firms also provide competitors (e.g. MarketLine, Euromonitor, Global Data, and Freedonia). Top Competitors are also available in IBISWorld, Vertical IQ, and First Research.
Zoominfo and a few other vendors identify similar companies based upon proximity in articles. This finds competitors, but also customers and partners so should be carefully reviewed.
For new technologies or industries, D&B Hoovers offers Conceptual Search which identify companies associated with key phrases (e.g. Marcellus Shale, Obamacare). This is more of an associated companies list and will identify firms in a topical ecosystem. For example, “Harry Potter” identifies studios, publishers, toy makers, theme parks, and thematic tours. (See example below of conceptual search on Marcellus Shale). Conceptual Search lists may be refined by standard prospecting filters such as industry, geography, and size.
If none of these work, use peer list searches (industry code lists) or keyword searches in sales intelligence vendors.
I was going to be writing about yesterday’s #FlipMyFunnel conference keynote given by Terminus CEO Sangram Vajre this morning, but I woke up to news that Dun & Bradstreet is being taken private. So, I’ll recap Vajre’s discussion of humanizing B2B and the need for authenticity in a later post.
Dun & Bradstreet announced that it will be taken private by CC Capital, Cannae Holdings, and funds affiliated with Thomas H. Lee Partners LP, for $5.38 billion in cash. Shareholders will receive $145 per share, an 18% premium over its Wednesday close. The acquisition includes $1.5 billion in assumed debt.
The deal is subject to shareholder approval and is expected to close within six months.
Dun & Bradstreet has a venerable history going back 177 years. Employees include several future nineteenth century Presidents. The firm, however, has struggled in recent years to grow revenues, particularly in its Risk Management Solutions group. Sales & Marketing Solutions, which makes up a bit over 40% of the company, has posted slow but steady growth.
Dun & Bradstreet has some market leading assets:
The D-U-N-S number is the de facto global numbering system for companies. It is often required for loans and is necessary for bidding on US government contracts.
The WorldBase company file contains global linkages, Tradestyles, and credit scores for 300 million active, dormant, and defunct companies making it valuable for credit risk, supplier risk, master data management, research, client onboarding, marketing, and sales.
The Global Company Authority (FKA NetProspex) provides global directors, executives, and mid-level managers.
D&B Hoovers (FKA Avention) continues to improve with the addition of the WorldBase file, First Research industry overviews, and Global Company Authority file to the Sales Acceleration platform.
Digital delivery solutions include the D&B Direct API, connectors for CRM and Marketing Automation platforms, B2B programmatic marketing, and visitor ID (the mapping of anonymous website visitors to their firm).
The company has a strong data foundation and has been shifting delivery of its product line to the cloud, but its sales and marketing products have not had significant growth. Instead, Dun & Bradstreet has seen companies such as DiscoverOrg, LinkedIn (Sales Navigator), TechTarget, and Zoominfo enjoy most of the growth in the Sales and Marketing Intelligence space.
Funding will be a combination of debt and equity. The deal includes a 45-day “go-shop” period during which alternative offers will be welcome.
Thomas J. Manning will continue as the CEO through the closing of the transaction while James N. Fernandez, a director of the Company since 2004 and Lead Director since February 2018, will continue as the Chairman.
“Today’s announcement is the culmination of a thoughtful and comprehensive review of the value creation opportunities available to the Company as part of a full portfolio and business assessment and exploration of strategic alternatives with multiple financial sponsors. As a result of this process, the Dun & Bradstreet Board of Directors unanimously determined that this all-cash transaction with the Investor Group is in the best interest of our shareholders and our Company,” said Manning.
William P. Foley II, Chairman of Cannae Holdings, said, “In an increasingly data-driven world, Dun & Bradstreet’s insight-driven business model and interconnectivity across industries has positioned the Company for continued success. We are excited to grow the Company, increase operating efficiencies and improve the Dun & Bradstreet customer experience by providing enhanced business solutions.”
It was only a few years ago that Dun & Bradstreet’s WorldBase file reached 200 million records, but this week the file hit 300 million active and inactive company profiles. The dataset is used for sales, marketing, research, master data management, credit risk, and supplier risk products. It is also licensed to many other vendors (the majority of which are not allowed to publish the provenance of their data). While sales reps do not use inactive companies, they are important for risk products, master data management, compliance, and database cleansing.
Two key features of the WorldBase data set are the D-U-N-S Number, their de facto global numbering system, and global linkages which tie together global company family trees.
Dun & Bradstreet continues to invest in their D&B Hoovers platform with a set of content and functionality enhancements. Since the beginning of the year, Dun & Bradstreet expanded its prospecting selects, added deeper technology and company coverage, tightened its Microsoft Dynamics integration, and increased the number of fields available for export to connectors.
Dun & Bradstreet added a series of new display and screening variables including Employees 1-Year Growth, Area Code Exclusions, and Employee Counts at the company or site level. D&B Hoovers now supports over 175 prospecting variables.
Three additional domestic location filters were also added. The Domestic Ultimate D-U-N-S Number identifies the top location within a country, helping with territory expansion and cross-selling. Related variables include Is Domestic Ultimate (Select for the top national offices) and Domestic Ultimate Company (all children of the Domestic Ultimate Company).
The new selects are generally not available in competitor products.
Avention (now D&B Hoovers) platforms have long supported variables for screening by ultimate parent country and ultimate parent. The new Domestic Ultimate D-U-N-S Number selects expand the options for sales and marketing to target accounts at the country level. Thus, if a company is looking to enter a new market, they can evaluate their ABM account presence within that market and focus sales and marketing campaigns around those prospects.
The Technologies premium offering was also enhanced with coverage expanded to 195 countries, 2.7 million companies, and over 20 million tracked technologies. Technologies are screenable at the vendor and product level and viewable as part of the Technologies in Use report. Dun & Bradstreet did not indicate whether they gathered the data or licensed it from a third-party.
Microsoft Dynamics admins can now set D&B Hoovers to automatically use D-U-N-S Numbers populated by the D&B Optimizer for Microsoft enrichment service.
“This feature eliminates the need for the manual match and selection step that is used to populate records in D&B Hoovers. Once D-U-N-S Numbers are attached, the records become automatically eligible for de-duplication when sending to CRM.”
Phil McWade, Dun & Bradstreet Director of Product Management
D&B Hoovers added 15 additional CRM and MAP export fields including D&B Prescreen score, Franchise Status, Import/Export Status, Manufacturing Status, Owns/Rents, 8 Digit SIC and Description, Latitude and Longitude, Tradestyle, and Square Footage. Most of these variables were added to D&B Hoovers over the past year and are also available for display, screening, and download.
In March, D&B Hoovers added over seven million companies including 6.8 million from Brazil, 360,000 from Argentina, 210,000 from India, and 78,000 from Australia. The Russian Federation and Vietnam also added over 50,000 company profiles. D&B Hoovers now covers 21 million active companies in South America and nearly 129 million global entities.
Last week, Dun & Bradstreet CEO Robert Carrigan resigned as CEO, board member, and Chairman. In his absence, Thomas Manning has been appointed Chairman and interim CEO. Manning has been a board member since 2013 and Lead Director since 2016. He previously served as the CEO of Cerberus Asia Operations & Advisory Limited, CEO of Capgemini Asia, and CEO of Ernst & Young Consulting Asia. He was also a senior partner with corporate strategy firm Bain & Company where he led the global IT practice in Silicon Valley and Asia.
No reason was given for Carrigan’s departure beyond that it was a mutual decision.
“Over the last four years we have made progress transforming this company. We’ve improved our data and analytics, developed solutions and capabilities to serve new customer use cases, and modernized our products and platforms. The Board is confident in the strategic direction of the Company, and fully believes that this business can deliver sustainable mid-single digit revenue growth and expanding margins. Our number one priority is accelerating value creation for shareholders.”
Dun & Bradstreet Chairman and interim CEO Thomas Manning
However, the company is not growing revenue and profits quickly enough. To address the slow growth, the firm engaged McKinsey & Company two months ago in a strategic and operational review “to help us find ways to speed up the time to realize value,” said Manning. “The first phase of their work validated our strategy and identified barriers to growth and cost opportunities. The next phase of their work will include a full portfolio and business assessment and we are open to considering all options for value creation that may be identified.”
McKinsey validated the basic DaaS strategy around premium company, contact, and risk data. McKinsey’s primary concern was the “breadth of our offerings and distribution channels” which increased the level of operational complexity. The updated strategy will look to “simplify and streamline the business.”
Dun & Bradstreet is also looking to “apply more specialization to our selling activities as we go deeper into the sales and marketing space,” said Manning. “As we expand our sales and marketing value proposition from being primarily a static data supplier to becoming a dynamic player in the digital sales, marketing and advertising space, we are working to make sure that our organization, go-to-market strategy and processes are aligned with that goal.”
The firm hired David Godfrey, who previously ran Global Sales at Gartner, to oversee go-to-market strategy and execution. He will be reporting into Manning.
James Fernandez, new Lead Director of the Board, said, “As Dun & Bradstreet continues its work to drive sustainable growth, the Board believes now is the right time to transition the Company’s leadership. We are pleased to have a leader of Tom’s caliber and experience to step in as interim CEO. The Board will continue to support the Company, and lend our expertise to the organization and Tom during this transition period as we conduct our search for a permanent successor.”
Q4 earnings increased 3%, but only 1% organically, to $527 million. Total revenue hit $1.75 billion in 2017 with 83% in the Americas. The firm maintained expense discipline resulting in a ten-basis point improvement in margins while investing $40 million on initiatives which “transform our technology platforms in order to meet our customers’ modern-day needs,” said CFO Richard Veldran. “Modernizing delivery of our solutions is a critical component of our strategy.”
Data-as-a-service delivery continues to increase. Nearly 30% of Americas revenue came via as-a-service solutions “which makes our data stickier and more useful for our customers and drives higher-value revenue.”
Amongst the 2017 initiatives were upgrades to D&B Credit and new D&B Optimizer solutions for Salesforce and Microsoft.
Deferred revenue was up 3% year over year before M&A activity and currency adjustments. Growth was attributed to D&B Credit, D&B Hoovers Q4, and the D&B Direct API. President and COO Josh Peirez noted that the D&B Credit Suite revenues were no longer declining and that the company is well-positioned in D&B Credit, D&B Hoovers, and D&B Direct.
“We think we’re well-positioned to address the competitive challenges. We’re also pleased that McKinsey has validated that opportunity and that strategy and helping us to make sure that we are packaging and bundling these things properly.”
Dun & Bradstreet President & COO Josh Peirez
Taxes, which were 31.4% in 2017, are expected to drop to the mid-20s due to the US corporate tax reforms. The reforms will also allow the firm to repatriate $265 million to reduce debt levels.
No guidance was provided as the firm is beginning their operational review. Veldran promised more details on the Q1 call.
Dun & Bradstreet raised its quarterly dividend by two cents to $0.5225 per share.
The market reacted very positively to the announcements, driving Dun & Bradstreet’s stock price up nearly 8% after the earnings call.
Sales & Marketing Solutions (S&MS) rose 4% in the Americas to $240.1 million in Q4. Growth was led by Sales Acceleration products which rose 9% to $84.3 million. For the full year, Sales Acceleration grew 10% to $288.4 million in the Americas with the Avention acquisition contributing twelve points of growth. Legacy Hoover’s drove down organic Sales Acceleration revenue with traditional Hoovers revenue declining by mid-single digits.
Revenue for the new D&B Hoovers service (Dun & Bradstreet content delivered through the Avention platform) increased in 2017. However, the decline in revenue from the Data.com partnership will result in a decline in 2018 Sales Acceleration revenue. Data.com generated around $50 million in revenue in 2017 with the firm continuing to sell through August 2017, resulting in a flat year. Veldran projects a $15 million decline in Data.com revenue. Dun & Bradstreet is looking to recapture some of that decline as new D&B Hoovers and D&B Optimizer for Salesforce contracts.
Peirez is quite pleased with the trajectory of the D&B Hoovers business. “We think our products are far better than anything else in market. We continue to see the overwhelming majority of customers that are buying our D&B Hoovers product buying the higher level of the product with the integrations to CRM, so that’s extremely encouraging for us.”
The firm is also moving to migrate its Hoover’s customer base over to D&B Hoovers. In Q4, more than ten percent of the legacy base moved to the new platform as Dun & Bradstreet “started to move very aggressively in getting the customers upgraded,” said Peirez. While the D&B Hoovers Suite grew low-single digits in its first year, Peirez expects growth to accelerate in year two. The company has told users that the legacy platform will be phased out at the end of the year.
Advanced Marketing Solutions grew 2% in Q4 to $155.8 million in the Americas. For the full year, growth was 2% to $383.9 million. While revenue was up mid-single digits in H2, the product line was weighed down by H1 weakness.
Outside the Americas, S&MS grew 17% to $16.9 million in Q4. For the year, S&MS non-Americas revenue rose 18% to $60.4 million. Growth was driven by Sales Acceleration products, including the acquired Avention product line. Sales Acceleration products jumped up 24% to $7.5 million in the quarter and 39% to $27.7 million for the year.
The D&B Hoovers Suite rose 26% to $42.6 million in the Americas in Q4 and 22% to $166.5 million. Outside of the Americas, D&B Hoovers Suite rose from $0.6 million to $5.3 million in Q4 and $3.1 million to $16 million. While the classic Hoover’s product line had little overseas sales, the new D&B Hoovers product line, built on the Avention platform, benefited from a longstanding presence in the UK, Singapore, Australia, and India.
For the past nine months, there has been great ambiguity around the future of Data.com, a pair of AppExchange services which combine the old Jigsaw contact file with Dun & Bradstreet account and industry intelligence. Salesforce has remained mum throughout with Dun & Bradstreet providing details on their earnings calls.
Dun & Bradstreet CEO Bob Carrigan announced that Dun & Bradstreet and Salesforce will be offering a path forward for Data.com clients. In August, Salesforce Data.com stopped offering D&B content for new clients, but legacy clients continued to receive D&B WorldBase, Hoovers, and First Research insights. However, the long-term direction of Data.com remained ambiguous as service revenues declined due to “natural attrition.” Carrigan announced that the two firms have agreed on a transition plan to migrate Data.com customers to D&B Hoovers and the new D&B Optimizer for Salesforce.
D&B Hoovers represents a significant upgrade for Data.com Prospector customers as they will receive deeper global company and contact coverage than before. Users will have access to a deeper set of global contacts, a broader set of screening variables, and company intelligence including financials, filings, SWOTs, news, sales triggers, and alerts.
Optimizer for Salesforce will launch next week at Dreamforce where Dun & Bradstreet will have a larger presence than in previous years. Product specifics were not provided on the call, but some details were posted on the AppExchange Lightning Data site. D&B Optimizer offers a data management dashboard, account record matching using DUNSMatch logic across eighty variables, segmentation analysis (revenue, employees, industry and location), family tree linkage opportunities, duplicate record management, and out of business flagging. Updates are made every fifteen days.
Optimizer for Salesforce is listed at $22 per user per month, $3 less than Data.com Clean. It is currently available in the US and UK.
“For organizations to grow, they need actionable and complete data across the entire business to ensure that timely and informed decisions are being made. D&B Optimizer for Salesforce provides Salesforce customers the ability to get the data they want, when and where they need it, directly within their Salesforce instance. This leads to increased productivity and, ultimately, growth for their businesses.”
Derek Slayton, General Manager of Sales and Marketing LOB, Dun & Bradstreet
Not only will Salesforce assist with transitioning clients, but they will also be referring prospects to Dun & Bradstreet. Dun & Bradstreet will recognize the full revenue from these products and own the customer relationships going forward, providing them with greater control over the product, increased revenue, and an end to their disintermediated status on the AppExchange.
According to Dun & Bradstreet CFO Richard Veldran, Salesforce revenue is “in the neighborhood of $50 million, because they’re not selling new on their side.” In the short term, that revenue will decline due to “natural attrition.” However, as customers are converted to D&B solutions, the firm will no longer be on a revenue share basis with Salesforce, resulting in in a revenue upswing. It should be noted, though, that subscription revenue is ratable over the term of the contract so there will be a delay in this revenue recognition.
North American Sales Intelligence Market Sizing Model (Excel)
The 2017 Market Size of North American Sales Intelligence Vendors. Includes vendor product features, market share, and notes. GZ Consulting Copyright 2018.
For the past few years, I have been sizing the North American Sales Intelligence Market. This is the largest of the markets as Europe and AsiaPac are more fragmented (the UK is the only other mature market with Bureau van Dijk, Avention UK, Artesian Solutions, and DueDil offering full solutions).
In 2016, I estimated the market at $770 million with LinkedIn Sales Navigator as the top vendor. While new firms continue to enter, the top ten firms (now eight following the 2017 acquisitions of Avention and RainKing) earn seven of every eight dollars in the industry.
I am making my market model available for license (See PayPal button at top) as an Excel spreadsheet. It includes revenue numbers by company along with market share, key features, and notes.
I have also broken out two sub-categories: Predictive Analytics and Tech Sales Intelligence. Predictive Analytics vendors continue to scuffle in the marketplace. Last September, Gartner sized the global market at between $100 and $150 million. I have gone back and forth on whether to include them in the larger sales intelligence space, but several of the sales intelligence vendors have added light predictive tools (e.g. Avention, DiscoverOrg, RainKing) while the predictive analytics companies have moved to add enrichment and provide more insights to sales reps. As such, I see the two product categories moving towards each other so chose to include Lattice Engines, Leadspace, and similar firms.
The Tech Sales Intelligence category (e.g. DiscoverOrg, RainKing, Aberdeen, Corporate360) continues to show strong growth and makes up just over 15% of the market. Both DiscoverOrg and RainKing have posted remarkable growth over the past few years and merged their efforts last month. Post acquisition, they are the number three vendor in the space and may hit $120 million in 2017 revenue. The new powerhouse has 4,000 customers and is looking to expand beyond technology sales to become a general purpose sales intelligence solution.
Acquiring RainKing should move DiscoverOrg well past Data.com (Salesforce) which will likely see declining 2017 revenue. Salesforce has dropped the ball on Data.com. They overpromised and under-delivered for years, relying on their ability to bundle the offering with other SFDC products. As of last month, they are no longer able to deliver Dun & Bradstreet content (D&B WorldBase, Hoovers, and First Research) to new customers (legacy customers retain access). Unless Data.com has a major content partner announcement at Dreamforce, it is likely to see significant revenue declines in 2017 and 2018 as customers switch to D&B Hoovers for Salesforce and other offerings.
Dun & Bradstreet re-established itself as the #2 vendor in the space with the January 2017 acquisition of Avention and the rebranding of Avention OneSource as D&B Hoovers. Both companies have struggled to grow revenue with Avention growing slowly over the past few years and Hoovers declining. However, infusing Avention products with Dun & Bradstreet content both reduces the underlying cost structure of Avention offerings and improves the depth and quality of the content. Furthermore, Dun & Bradstreet has a much larger sales force which previously has lacked a credible global sales intelligence offering. Hoovers classic generated nearly all of its revenue in the United States. Over the next two years, expect to see significant revenue shift from Hoovers Classic to D&B Hoovers.
Finally, LinkedIn Sales Navigator has established itself as the clear number one vendor in market revenue. The product didn’t exist five years ago and its competitors still tend to dismiss this gorilla in their midst. How can they be missing the #1 vendor in the space? Easy — the gorilla is well camouflaged and appears to be more of a three-toed sloth sleeping in the forest canopy. Sales reps all use the freemium version of LinkedIn so give little thought to delve further when they ask “how are you obtaining your account intelligence today?” and the response is LinkedIn. Thus, they enter LinkedIn as the competitor into their CRM, not Sales Navigator. A few months later when they lose the opportunity, the rep then enters “no decision” into the CRM instead of recognizing a competitive loss. I have been warning vendors in the space for years about this phenomenon, but they have failed to understand the threat of a gorilla that looks like a three-toed sloth.
N.B. Three-toed sloths inhabit Central and South America and gorillas Central Africa. This is a metaphor.