Think Small

Compiling data on small businesses can be tricky and time consuming. But with SMEs making up 99.9 per cent of all UK business, it’s information that is essential to marketers.

The world’s verifiably oldest man was Shigechiyo Izumi of Japan, who lived for 120 years and 237 days before he died in 1986. In the US, a woman went into a coma in 1947 at the age of six and remained unconscious until she died, 37 years later.

There are certain facts in life that always take some believing and this is true in business too. How many people realise that small and medium-sized enterprises (SMEs) account for 99.9 per cent of all businesses in the UK, for example?

The Department of Trade and Industry (DTI) attributes the huge growth in SMEs – defined as those companies employing fewer than 250 people – to a shift from manufacturing to service industries since the Eighties and structural changes within many businesses, including downsizing and outsourcing.

This trend has not gone unnoticed by the directory companies that are investing large sums in maintaining and building their SME databases and selling the information in traditional book form or, increasingly, on CD-Rom and online.

Figures from the DTI reveal that of the 3.7 million enterprises trading in 1999 (in 1980 it was 2.4 million), only 7,000 were rated as large and, in fact, just 24,000 were regarded as medium-sized, which means the rest were employing fewer than 50 people – and a staggering 2.3 million did not have any additional staff. This emphasises how much of a headache collecting database information on small companies can be for the directory industry.

Thomson Directories has a database of more than 2 million companies and the Thomson Local generates more than 15 million referrals every week. Business information manager Laurence O’Toole says most of the company’s activity is providing SMEs with details of other SMEs, and its call centres make about 2 million calls a year to check data because a significant 40 per cent of the information it holds will change annually.

E-mail hunters

“The database is core to all our products and services sold for direct mail purposes. About 40 staff maintain the lists. Their biggest task at the moment is trying to obtain e-mail and website addresses for SMEs,” he says.

O’Toole is well aware of the cost of contacting so many SMEs to check the information held is accurate. So the company operates a call allowance system whereby no call should take more than 90 seconds.

Thomson’s 500-strong directory field sales force also takes part in ‘noffing’ – finding new businesses that are ‘not on file’.

Most SMEs rely on accurate directory databases for their own direct mail. Yellow Pages has been supplying direct marketers with data on SMEs through its business database since 1986, using information from its 77-directory volumes. More than 80 in-house telemarketing operators speak to about 4,000 SME representatives every day.

The company’s online service,, has introduced a scheme designed to strengthen its link with SMEs. Business start-ups are placed on its search database, which currently holds more than 1.7 million classified listings, and has further enhanced its SME service by linking with e-procurement firm GroupTrade to offer small businesses up to 25 per cent off purchases ranging from computers to car hire.

On the map

Yellow Pages also obtains SME information from national mapping agency Ordnance Survey (OS), using an OS product called Address-Point. From next autumn, OS’s clients will be able to take advantage of a new digital information base called the Digital National Framework. Companies will be able to share information on an individual address taken from an OS map using a 16-digit topographic identifier, which is a unique numerical code recognised by a computer.

“A business, whatever its size, could map all relevant customer data to a single point of reference, which would help with direct mail and processing orders,” says a spokesman for OS.

Companies compiling lists for business-to-business customers must have an efficient and cost-effective database system to ensure information on SMEs is reliable, because any product will soon lose credibility if the information being sold is inaccurate.

EMAP produces a number of directories, including the media book BRAD, which has about 13,000 entries. At the end of November EMAP launched a new Web venture,, which allows clients to access information from all its directories.

Three-quarters of Reed Business Information’s directory products are now marketing or targeting SMEs, and managing director John Minch says that although 50 per cent of its business is now through electronic media, compared with just ten per cent five years ago, revenue streams are buoyant because many customers continue to buy the traditional printed versions as well.

“Directories are often used as quick reference tools and not everyone in a small company will have a computer on their desk,” says Minch. He adds that Reed needs “an army of in-house people” to gather and check information because SMEs tend to be under-staffed and will often postpone replying to a directory proof if they do not regard it as a priority.

By the end of January, Reed expects to have launched its first electronic-only directory product, Source Net, which will provide online access to catalogue information from a large number of businesses.

Never-ending task

Artism is another company that offers an online business-to-business directory service. It has 40 staff operating a 25,000-strong personnel database for the creative industries, such as advertising and the music business.

“An online list is never complete because it is always being updated,” says co-founder Lucy Hungerford. “Around 60 per cent of the entries we have are sole traders or SMEs. Gathering information on this sector can be time consuming because it mainly comprises personal details, which means we must not breach the strict Data Protection regulations.”

The data protection regulations can be a minefield for the directory industry. A spokesman for the Office of the Data Protection Registrar says companies compiling directories relating to SMEs, particularly where sole traders or partnerships are involved, have to be careful if the personal data being collated will identify an individual. Directory representatives must always explain how the information will be used.

The spokesman also warns that where personal names and addresses relating to SMEs are being gathered alongside information on larger companies, the scripts being used by callers should be consistent. When dealing with a limited company’s data, the main obligation is to demonstrate that the information will be used fairly.

In addition, under the Telecommunications (Data Protection and Privacy – Direct Marketing) Regulations 1998, it is unlawful for someone in business to contact any consumer, sole trader or partnership that has registered with the telephone or fax preference services (TPS/FPS) operated by the Direct Marketing Association and regulated by the Data Protection Registrar.

Anyone making direct marketing calls to individuals must first clear their lists with the TPS and FPS registers or face possible fines.

The Directory & Database Publishers’ Association has received a number of complaints about companies flouting these rules and it is investigating reports of bogus directories being compiled, particularly online and often by companies based overseas and out of reach of UK regulations. One scam being looked into involves unsolicited faxes being sent to SMEs asking staff to check the company’s details, which it says are being included free on an online directory. Firms are asked to fax the form back: the cost of doing so is usually in tiny print but can be as much as &£31.50 a minute and may take more than three minutes.

“This is not illegal but the whole area has generated many complaints,” says DDPA secretary Rosemary Pettit. “These directories are harming the reputation of our members and the association, which has spent 30 years successfully promoting bona fide directory companies.”

List rental

Ensuring that any data collection process does not flout data protection or TPS/FPS rules adds to a directory company’s expenses when targeting SMEs. One company that offers publishers a way to recoup some of these maintenance costs is online list rental manager, which will administer a list rental service on behalf of directory companies that do not have an in-house department. It has its own software engineers, list managers and help desk, and even offers a daily online data cleaning service against the TPS and FPS registers.

Despite the time and money being invested to create accurate databases on the UK’s SMEs, there is concern that the information being provided is not sufficiently in-depth, especially some of the data being sold for business-to-business direct marketing purposes.

Neal Rimay-Muranyi, director of independent database marketing company The Database Group, says the SME segments of directory databases are useful only to volume marketers where a product has a universal appeal – such as stationery or mobile phones – and where basic information, such as the number of employees at a business or its Standard Industry Classification code, is enough for accurate targeting.

“We have clients in the telecommunications and car industries that are demanding more in-depth information,” he says. “Companies such as EMAP, United Business Media and Reed are using their trade press contacts to list different decision-makers within specific SME companies, which is useful – especially if these companies are not covered by Companies House data.

“But what is really needed is a type of electoral role for business similar to the census carried out for people. As the directory companies already hold the basic data, perhaps they are best placed to approach the Government about such an idea,” says Rimay-Muranyi.

The growth in SMEs is being fuelled by changing working patterns and new technology which allows more people to work from a home-based office. Demand for better information on these new companies will continue to grow, so directory companies must keep looking for new ways to make their data collection procedures more reliable while remaining cost-effective.


    Leave a comment