25 July, 2020

From Carrier Pigeons to Machine Learning: How to Develop an Informational Edge

Sales Strategy

Alex Barrett

from carrier pigeons to machine learning image

This is the second of four posts looking at how the ‘edges’ that investors develop to trade successfully can be a useful source of inspiration for sales technology that helps enterprise sales teams sell more effectively.

Developing an Informational Edge

Whether it’s carrier pigeons in the 19th century, stock tickers in the 1920s or Bloomberg terminals in the 1980s, banks and financial institutions have always invested heavily in technology that provides accurate information quickly.

As such, the development of financial technology provides a useful source of inspiration for what’s possible in fields such as enterprise sales, where companies may lack the deep pockets of Wall Street banks but are looking to invest in technology that gives their sales teams an edge.

Today, accurate, real-time publicly available company and economic data is table stakes for any bank or investment fund. All financial institutions need the latest company earning reports or central bank forecasts, but this information on its own is unlikely to give an edge that can be successfully traded on.

As a consequence, financial firms are looking for other informational edges, whether through instant access to data or more esoteric sources of information.

Some examples include:

  1. Start-ups are using machine learning to extract company earnings data as soon as it is released, and auto-populate financial models in seconds rather than days.
  2. Investment firms are spending on average $900,000 a year on alternative data, primarily web-scraped data. For instance, scraping consumer electronics websites gave investors early insights into falling demand for GoPro products before the company announced underwhelming results.
  3. Whether it’s drone surveillance of lumberyards or sending scouts to monitor truck roll-outs from factories in China, some hedge funds are willing to go to extreme lengths to acquire information that their competitors don’t have.

Lessons for Sales Technology

Drone surveillance aside, I believe there are some interesting parallels here that inform how sales technology can provide an informational edge to enterprise sellers. Many companies are already looking for insights based on their internal customer data, collected on systems such as CRM, but external data about customers is also vital.

Here are two examples:

  1. Accurate, fast and objective data about company earnings

    This may be table stakes for Wall Street, but we don’t see that the same is true in enterprise sales today. Account executives often rely on news feeds to hear about the latest financial results for their accounts. These feeds offer only patchy coverage based on which companies are deemed ‘newsworthy’ and can reflect the biases of journalists and media organizations.

    At Databook, we’ve therefore invested in building a platform that provides real-time financial data for every public company. We make this data available to all users, to ensure that it is not siloed in an organization’s value-engineering team. And we present the data in context, so that a company’s financial results are shown along with those of their competitors. We aim to provide this data as close to real time as possible. This data provides the foundations for building a strong financial case for change at the customer that aligns with your product.

  2. Alternative data sources such as web scraping

    Investors scrape the web to find insights into a company’s performance before they become publicly available. For sellers, alternative data sources can provide a useful window into a customer’s intent and strategy, and therefore provide an important edge. Forward-thinking sales organizations are already investing in intent data but this often focuses on activity further down the organization (e.g. web searches for a particular technology by an engineering manager) and far removed from executive decision-makers

    Our view is that the most valuable data for enterprise sellers is management intent data, which shows what the C-suite and other decision-makers at your customer are thinking about in terms of corporate strategy. That’s why our focus at Databook has been to build a unique, constantly updating database of management intent for all public companies, which can be used to generate instant insights into strategic priorities and digital transformation investments at a customer.

Your Informational Edge is Just the Beginning

Having an informational edge – i.e. accurate financial data about your customers and leads – is not enough. Without analysis, data is noise. However, an informational edge provides a strong foundation for developing an analytical edge, which can give you unique, actionable insights into your target accounts.

Next time: How to Develop an Analytical Edge