It’s important to know who exactly you’re talking to in business to business marketing and sales interactions. Knowing where a target business falls in a greater corporate structure will give you critical insight into how a specific company is run, and who you need to contact to begin cultivating a mutually beneficial relationship. The product or service you have to offer may also determine where in an organizational hierarchy you need to land, or indicate an opportunity to source better leads.
You need to first understand what corporate hierarchy is and how it influences B2B interactions. Next, you will need to learn more about the hierarchy structures of your potential clients. Where a target business sits within its hierarchy is an important piece of firmographic data to have in your library.
In this post, we’re going to take a closer look at the concept of parent companies: what they are, how they work, and when you need to know about them.
Corporate family trees are made up of parent, ultimate parent, and subsidiary organizations. A parent company is an organization which owns at least 50.1 percent of stock in a subordinate (subsidiary) business.
Subsidiary companies report directly or indirectly to a parent company, which maintains some level of control over the subsidiary’s operations, expenditures, and investments. Different parent companies may choose to exercise this control in different ways and to different extent.
Some parent companies give extensive managerial control to subsidiary leadership, while others run operations almost exclusively through their own boards. In either case the parent company will always maintain some level of control.
Amazon is one convenient example of a parent company. The megacorporation owns such subsidiaries as Zappos.com and Whole Foods, overseeing operations and making expenditure decisions for each.
Parent companies are distinct from holding companies in that they maintain operational control over their subsidiaries. Holding companies own similar stock in their subsidiaries, but keep a more passive ownership. Holding companies do have some control over operations and can make hiring and firing decisions for their subsidiaries however rarely take greater part in the day-to-day. Holding companies are also protected from significant subsidiary losses, while a parent company may be held liable if a subsidiary goes bankrupt.
Medical corporation Johnson & Johnson is one example of a holding company, owning assets in numerous subsidiaries including Neutrogena, LifeScan, and Janssen Pharmaceutica.
When doing your firmographic research, it is important to understand and distinguish who you are actually looking for versus selling to. In other words, you may have a target business in your sights, but is there another entity you will need to appeal to in order to make your sale?
Parent companies may hold a number of different vertical and horizontal subsidiaries which are seemingly unrelated, so which subsidiary belongs to what parent may not be immediately obvious. These situations may require a little extra digging to help you understand the hierarchy. Typically the parentage will be listed somewhere on a business’ website.
More perceptible parent/subsidiary relationships in the digital sphere are identified through a Domain Name Server (DNS) network. Similar to a corporate hierarchical structure, online domain hierarchies include parent domains as well as child domains, often belonging to subsidiaries of a larger corporation.
For example, Adobe.com is a parent organization and parent domain, with subsidiaries described through child domains as business.adobe.com, etc.
In many cases, your business will need to market and generate a sales relationship with the parent company rather than the target subsidiary. You should aim your communication efforts at parental representatives.
Understanding a parent/subsidiary relationship can give you critical data that helps you generate better sales leads as well as targeted marketing materials. It’s also vital to knowing who the main stakeholders and decision makers are, at all stages of your B2B relationship. Here are a few other instances wherein understanding the parent company will make all the difference.
Intricately is a comprehensive data management platform that gives you vital and actionable insights into your sales and market leads. Using Intricately, you will be able to identify organizational hierarchies to your advantage and craft effective sales and marketing strategies for dealing with independent organizations, subsidiaries, parent companies, and ultimate parent companies. Request a demo today to see if Intricately is right for you.
Learn more about other forms of categorical corporate information at our other page: Firmographic data.