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How SIC Analysis Builds Sales

Every business to business marketer should use SIC penetration analysis but few of them do. This is the story of one company that made a dramatic increase in sales from using 8 digit SIC analysis.

Outwater plastics in Wood Ridge, NJ sells 130 styles of formed millwork to builders, remodelers and architects. Founded in 1971, it has 22 inside sales people and 130,000 active customers. It sells by catalogs, trade shows, referrals, trade publication advertising and retail showrooms. Before using the SIC analysis, Outwater rented lists from trade publications and mailed out one million catalogs per year. They got a 1.25% response (sales) rate, gaining 50 new customers every business day. Two years ago Rich Fallon, their database marketing manager, decided to experiment with the 8 digit SIC code software and data from iMarket in Waltham, MA. His goal was to increase response rates and to reduce costs by mailing less.

For his tests, Rich tested three lists:

  • A complied list of builders, remodelers and architects
  • Magazine subscribers in these industries
  • D&B MarketPlace lists targeted by SIC code

The MarketPlace list blew the others away with response rates double the other lists. Besides the increased response rates, the MarketPlace lists had far fewer undeliverable mail returns.

Rich’s next step was to decide which 8 digit SICs were right for Outwater. He profiled his 130,000 customer base using MarketPlace software to determine which SICs were actually ordering from the catalogs. The result was amazing. Whereas the company had always targeted exclusively woodworking, cabinetry and builders, the analysis showed hundreds of other profitable 8 digit SICs.

After appending SIC codes to the customer base, Rich checked which products were purchased by each SIC group. He used this to redo the composition of the specialty catalogs. He was also able to determine, from scanning their database over the past three years, which of their customer SIC industries were growing and which were declining. This helped in product design and budgeting.

After making these changes, Outwater could boast a major improvement in their customer acquisition program:


  • Before they mailed 1 million catalogs per year, gaining 50 new customers per day for an overall response rate of 1.25%
  • Now they are mailing 1.5 million catalogs per year, gaining on average 80 new customers per day for an overall response rate of 2.74%
  • Sales are up 60% due to the new system
  • Profits are way up.

Rich Fallon has also used iMarket SIC coding for trade show targeting. He rents pre-show lists and profiles these by SIC, targeting only those companies which match their existing profitable customers. After the show he sends catalogs to companies who match the profitable profile, but did not stop at the booth.

Cross selling has also benefited from the SIC analysis. Outwater has 32,000 SKUs. With this many, they are constantly adding new products, and changing older ones. Profiling customers by SIC and product purchased has permitted Outwater to develop special small catalogs based on known SKU interest. These mini catalogs have yielded high results because they are targeted for niche markets.

This year, Rich tried something very revolutionary for Outwater. After subtracting all the builders, cabinet makers and woodworkers from their customer base, he discovered that there was a major new industry among their remaining customer base which they had never specifically targeted. IMarket staff informed him that there were 400,000 firms in this industry in the US. He rented 50,000 of the names, developing a special catalog for this new industry. Amazing: he got a 14% response rate from an entirely new market! As a result, he has rented and mailed the remaining 350,000 companies with two mailings in 1998. He is hoping to continue his phenomenal response results.

Not everyone is as resourceful and successful as Rich Fallon, of course. As a result of his success, last August 3, Outwater was awarded a Bull’s-Eye award by an independent panel of industry experts chosen by iMarket. Two Outwater employees had their expenses paid by iMarket for a trip to the Business to Business Database Marketing Conference in Orlando in September.

SIC code analysis has been greatly simplified by the software available from iMarket, which provides D&B company data for small and mid sized businesses. It is a technique that is gradually catching on.


Arthur Middleton Hughes, vice president of The Database Marketing Institute, has presented 28 seminars on database and email marketing.  Arthur has also authored several books includingStrategic Database Marketing 4th Edition (McGraw-Hill 2012). He and Andrew Kordek, chief strategist and co-founder of Trendline Interactive, are hosting a two-day Email Strategy Study Group in Fort Lauderdale  March 26-27, 2013, featuring group competition for email marketers responsible for subscriber acquisition, lifetime value, ratings and reviews, boosting their email budget, and doubling their ROI.  To learn how to attend the Study Group, click here

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Arthur Middleton Hughes has published over 200 articles on Database and E-mail Marketing. Click Here to read them.

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