The Taxonomy Theory: The Art Of Classifying Your Accounts
Ask a librarian how they classify books and you better have some free time. Grab a coffee, sit down, the reply will be long. Library classification is a precise, systematic method for coding and organizing library materials so people can find its books quickly and easily.
Successful business-to-business sales and marketing activities also require a methodical classification of accounts and the decision-makers within those accounts. When you group companies according to specific attributes, you can uncover unique ways to identify the particular needs of each group. You’ll serve each group of companies better.
Like books, categorizing thousands of records in your database is not easy. You can organize books by format and size, separating hardcovers and paperbacks. And, you can sort and categorize your accounts according to basic firmographics:
- IT/Internet/Communications, >€5 billion revenue, >6k employees, Stockholm, Sweden
- Software, €70M, 400 employees, Helsinki, Finland
- Software, €1,7 billion revenue, >4k employees, Amsterdam, Netherlands
Such a classification system can only take you so far, though. In this article, we'll go through a categorization scheme, a taxonomy can inform your sales and marketing strategy, and how real-time company information offers endless possibilities to create such a classification scheme.
Taxonomy theory in practice
Using a taxonomy for sales and marketing activities is nothing new. Grouping companies according to their nature of business has been a standard practice for decades. Different organizations have sponsored a wide variety of taxonomies, like the Standard Industrial Classification (SIC) in the US. These official industry codes, however, don’t work well with the rapid-changing nature of business-to-business.
Thanks to the vast amount of company data available today, there are more creative and smarter ways to classify companies. Artificial intelligence and machine learning can analyze hundreds of data points to create classification models based on nearly any set of company characteristics.
At Vainu, we label the companies in our database based on 150 different attributes. A software company is not just a software company. Instead, it can fall into very different groups, such as SaaS, eCommerce platform, Cloud Security.
Grouping and categorizing companies allows us to more effectively segment and target customers based on unique characteristics and uncover those that match our ideal customer profile. Any classification system must be accurate and comprehensive. Otherwise, it’s as ineffective as a library organized by book size.
In CRM platforms and marketing automation tools, accounts can be labeled according to different characteristics and belong to different groups. This is particularly important for marketers. Whereas a salesperson who sells to SaaS companies will be content with enough prospects to reach quota, marketing teams want to reach each and every company in a particular segment (e.g. SaaS companies with revenue over ten million). Marketing is scalable, so it wouldn't be wise to market to as many possible companies.
Grouping and categorizing companies allows us to more effectively segment and target customers based on unique characteristics and uncover those that match our ideal customer profile.
Select your variables
With real-time company information fueling their tech stack and helping categorize their accounts, sales and marketing teams can group using attributes like these:
- Is the company selling to the Nordics, to the Netherlands or the UK?
- Does the company use a CRM? A marketing automation tool?
- Is the company selling to other companies? How significant its B2B revenue is?
- How large is their potential customer base?
- Does the company sell to a specific group of companies?
- Have the decision makers shown interest in our products and services? Do we have a possibility to begin the sales process through a warm introduction?
- Is there a good timeframe for starting the sales process (for example, a company change like the hire of a new executive)?
Sales and Marketing: Different use cases
Both marketers and salespeople can benefit from a robust scheme to categorize accounts. However, their different tactics and goals make the approach to taxonomy different as well.
Marketing departments need to strike a balance between the personalized content they deliver and the benefit such content provides. Personalized content increases conversations, but creating custom-made versions of every piece of content will take too much time for most companies. By grouping companies, marketers can more efficiently personalize content and still reach a large number of companies.
Salespeople, on the contrary, usually work with just one company at the time. They will contact and meet several companies through their working day, but sales activities are always one-to-one. The way salespeople group companies is different.
Ideally, salespeople want to classify and segment companies after closing a deal to find similar companies and continue on a successful path. They will look for similarities based on a particular situation. Are two ten-million euro marketing agencies located in Stockholm similar or not? Are two restaurants, which are looking for similar customers the same if one is in London and the other one in Liverpool? Is every B2C leisure activity company similar? The answer always depends on the context. Most of the time, a salesperson wants to define their own criteria for the similarity, so they can, for example, search in their CRM and find new potential customers.
In contrast to marketing activities, for a salesperson it isn't important to find all the companies in one category—a few good ones will do. Marketers want the opposite because volume is key to their success. If their activities reach hundreds or thousands of companies, segmentation must be done systematically.
Firmographic attributes such as size, location, and industry are a good starting point because each company has its own characteristic. Using these attributes and some filtering marketers are able to send the right messaging to all of the right companies. Data-driven marketers don’t stop there because nowadays there are so many more data points that allow them to create complex classification schemes. Let’s see next how to tap into data.
How Vainu compiles data to categorize companies
Our core business is plugging real-time company information into our customers’ CRM platforms to fuel their sales activities and marketing campaigns. Therefore, it’s easy to justify the significant investments that we’ve made into compiling data to help build different classifications.
First, we compile data from a public source, or we buy it from another data provider. That’s only a fraction of the company information in our database.
Then, we proceed to label and classify each company. We automate this process as much as possible, but occasionally humans need to step in and validate the data. This process not only improves the quality of our taxonomy and datasets, but it also enhances our algorithms for a more accurate classification in the future, for example, looking into a company’s website or press releases.
Such categorization happens in the background. For the end-user, it doesn’t matter. What matters is having access to all the data and attributes right in the system they use to manage their sales activities and marketing campaigns. Typically, those systems are the CRM (Salesforce, Dynamics365, Pipedrive, or SuperOffice) or marketing automation tools like HubSpot, Marketo, Pardot, or Mailchimp.
These sales tools have the possibility of adding categories and values into the account level, and, in many cases, they have advanced workflow capabilities for building different campaigns and automations.
Time to roll up your sleeves
At the end of the day, in B2B sales, you only want to sell and market to those companies that match your ideal customer profile (by the way, here’s a template in case you need to create or refine your ICP). This guarantees to be creative, smart, and relevant in sales, knowing that you’re reaching at the right time and without wasting any resources in the process. Classifying your accounts will help you reach those companies that match your ICP.
Beyond company classification, there are also the people behind the business ID. Data can also help you categorize the different stakeholders. That’s something for another post, though.