What is firmographic data? (With importance and examples)
By Indeed Editorial Team
Published 25 April 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
For companies to develop effective sales and marketing strategies, it's vital that they understand their clients and the whole market they're targeting. For B2B organisations, firmographics are a valuable way to find out information about clients and categorise potential leads, which can support the development of campaigns and strategies. If a career in marketing interests you, then you could benefit from learning more about this type of data. In this article, we discuss what this type of data is, how it differs from demographics, its importance for businesses and the different ways of using and collecting this data.
What is firmographic data?
Firmographics, or firm demographics, are a type of data that organisations use to divide their target market into segments and to gain insights into the nature of the market. Specifically, B2B organisations use this type of data. A firm demographic is a descriptive characteristic that helps companies to segment the market in a meaningful way and direct their sales and marketing resources appropriately.
Businesses can use this information to develop more effective and highly targeted advertising and marketing campaigns. They can also adapt their sales strategies to meet the requirements of clients and therefore increase the likelihood of successfully closing a sale. Some examples of firm demographics that businesses frequently use are:
type of ownership
What is the difference between firm demographics and demographics?
Firm demographics and demographics are similar types of data and organisations might use them in similar ways. But, there are some notable differences between the two. Demographics are the human equivalent of firm demographics. They relate to descriptive characteristics of people while firm demographics relate to organisations. Businesses that sell directly to the customer usually use demographics in a similar way to how B2B organisations use firm demographics. If a business has both B2B and B2C operations they might use both types of data. Some types of demographic data that businesses often use include:
Why are firm demographics important for businesses?
Firm demographics are important for businesses for several reasons. Sales and marketing departments can use this information to develop their campaigns and target groups of customers in a specific and personalised way. But, it's important to note that the way a business uses this information and the benefits they get from it can depend on what their organisational goals are and what they're using the data for. Below are some of the main reasons why firm demographics are important for businesses:
Gain business insights
This data can give companies valuable insights into their target market. It helps organisations to better understand the sections of their target market and their behaviour. This allows companies to develop effective strategies for targeting the various market segments.
Understand market trends
Finding out more about the market and categorising it helps organisations to understand market trends. This allows companies to adapt their campaigns so that they're more effective. Adapting their campaigns can increase their chances of the business's success, regardless of trends in the market, because they're able to adapt effectively to changing client requirements.
Focus on quality leads
Using firm demographics can help organisations to focus on quality sales leads. Understanding firm demographics allows companies to identify which leads are most valuable and focus on pursuing them while limiting the time they spend on less valuable prospects. Focusing on quality leads helps sales teams to work more efficiently and use their time effectively. It can also increase the number of successful sales and the organisation's overall revenues.
Improve client engagement
Understanding firm demographics can improve client engagement because it makes it possible to develop a more personalised approach to client relationships. This comes from understanding clients and sales prospects in detail, which can make the company more appealing to clients and increase the chances of closing a sale. Additionally, it can improve client loyalty and retention. Understanding and being able to predict client behaviour can also help the organisation to adapt to their demands.
Limit lost opportunities
Firm demographics can help to limit how many opportunities the business loses. This is because analysing the data can help businesses to identify more opportunities. Firm demographic data also helps companies to view the market in its entirety. This makes it easier to identify all potential customers.
Improve return on investment
Using firm demographic information can also improve the company's return on investment in sales and marketing. Sales and revenue are likely to increase because the company can refine its sales and marketing strategies. They can also ensure that they align with each other to create a better return on investment.
Examples of how businesses use firm demographics
Once an organisation gathers firm demographic data it can use it in a range of different ways. Below are four examples of how businesses often use this data:
Location data helps with localisation, which means adapting content and marketing to suit a more localised area. This might mean using local references or languages or respecting local cultural norms. It also helps companies to identify new potential clients or leads in a particular region or to identify new regions to enter. In addition to gathering geographical locations, companies might also collect other location-related data, such as the type of premises, the number of locations and company facilities. This can ensure that the sales and marketing approaches are highly targeted.
Industry data shows companies which areas of business their target market operates in and what services they provide to their own customers. This information is valuable if the company wants to target a specific industry or sector. Gathering industry data can also help businesses to adapt their marketing and sales campaigns to meet the requirements of a specific industry. Targeting potential clients by industry can also be a cost-effective way of reaching a larger share of the market. If the company targets more than one industry they might develop different strategies to suit each one.
Financial performance data can help businesses to develop targeted campaigns that they can aim at different financial circumstances. It can also help businesses to identify potential clients who might benefit from their services and be more receptive to sales and marketing materials. For example, if the company offers a service to help businesses boost revenues, they can target clients with declining revenues and omit those with growing revenues.
Information about a business's organisational structure helps the company to understand its hierarchy. This can indicate who to approach with sales or marketing campaigns. Understanding the company's decision-making process is also useful and can help to develop effective relationships with the client. Knowing who has the authority to make decisions means the company can nurture these relationships and communicate with them more efficiently.
3 approaches that businesses use to collect firm demographic data
Companies can collect firm demographic data in a range of different ways. It's important to note that different approaches can help with gathering different types of information. There are some questions that are worth considering when collecting this type of data, which include:
When was the company founded?
How many employees does it have?
What's the company's annual revenue?
What's the company's current share of its target market?
What's the organisational structure of the business?
Is the company currently growing, declining or stable?
Below, you can find three approaches that businesses use to collect firm demographic data:
Some companies buy firm demographic data from market intelligence databases. This can be a useful resource because it provides relevant and up-to-date information. Buying data can often be a useful strategy and is a less time-consuming method of obtaining firm demographic data.
Research and analyse data
Researching the market and potential clients is a useful way of gathering firm demographic information. Much of this type of data is publicly accessible, so independent research can be a cost-effective method for gathering this information. This type of research can be a time-consuming process and, in some cases, it might be necessary to hire a data analyst to complete this type of work to ensure that the data is accurate.
Another way to get firm demographic information is to survey potential clients directly. For this approach, there's a risk that they might prefer not to share this information, especially if the business is cold calling them. But, if companies are willing to share this information, then this can be an effective way of obtaining accurate and current data.
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