Why You Need Hierarchies in Master Data Management

Hierarchies are key to understanding business relationships

Hierarchies are all about relationships. Businesses have family trees, just like our personal family trees. A business will have a site entity, like a family unit, which is hierarchically linked, just as we are linked to our grandparents, parents, children, grandchildren, cousins, etc.

In a corporate organizational hierarchy, linkages depict relationships of business locations and reveal how organizations engage within their ‘family’. Hierarchies are key to a successful master data management initiative.

Access to this intelligence can help sales teams plan and execute strategies to engage with target customers and prospects to form desired business relationships.

Organizational Hierarchies

The term ‘organizational hierarchy’ often invokes an image of a chart depicting an organization’s reporting structure in terms of people. Typically, it would have the president/CEO at the top of the chart, with direct reports below, from the VP down to supervisors, etc. It provides a reporting map for people working in an organization and maybe even a chance to peer into the roles they play through their titles and reporting connections.

Dun & Bradstreet describes ‘hierarchy’ as “the organizational structure of a company that delineates the relationships of power, responsibility, and function where the relationship is reflected by legal ownership or operational perspectives.” It is sometimes referred to as the ‘corporate family tree’.

When one business location has financial and/or legal responsibility for another business location, a linkage is created in the Dun & Bradstreet Data Cloud.

The organizational hierarchy plays the role of central nervous system for master data. These hierarchies connect all customer master data. Understanding the organizational hierarchy (or corporate family tree) is one of the core principles of a sound master data strategy.

What are the benefits of this understanding? Reducing duplicate records is just one example. There are a number of ways the same company could appear in your customer master file. Using an organizational hierarchy, you can group them and provide a parent-child relationship for your sales force to leverage as part of their go-to-market (GTM) strategies.

Another example that we’ll describe in more detail below relates to account based intelligence.

Hierarchies – Your Superhero Power!

Here are five ways that using hierarchies will make you a master data superhero at your company.

1) Scope of Business (Who Owns What) – Company connections aren’t always obvious from business names, and researching a company’s website won’t always give you the information you’re seeking.

Let’s say you’re a salesperson working for a large tech SaaS firm and you’re following a lead for Highbridge Capital Management, LLC. You immediately look for the company’s website and discover that the company has two locations: New York and London. Great – they’re both in your territory! To entice Highbridge to do business with your company, you offer it a new customer discount for the first year of a three-year contract. It agrees, and you strike a deal. But wait! A couple of weeks later you receive a call from a sales leader at your company accusing you of interfering with a deal her team has been working on with JPMorgan Chase & Co. You ask, “What has that got to do with me?” As it turns out, a lot.

Highbridge Capital is a wholly owned subsidiary of JPMorgan Chase & Co. If you had access to D&B Hoovers, you could have used its corporate hierarchy functionality to learn that Highbridge Capital is owned by J.P. Morgan Asset Management Inc. and is a subsidiary of JPMorgan Chase & Co.

Figure 1: Corporate hierarchy in action

This is just one of many situations in which company connections aren’t obvious from their business names or internet presence. A corporate hierarchy report reveals these organizational linkages based on various factors, not the least of which is legal ownership. This visibility enables you to approach an organization with actionable intelligence about their organizational structure and provide guidance with GTM and account-based marketing (ABM) strategies. Knowing ownership linkages will also provide insights that can be useful in mitigating compliance and lending risks.

In the above example, the internal sales team could have used the hierarchy asset to provide a more substantial offering for the potential customer. Sales could have avoided internal conflicts within their team and the potential embarrassment of overlapping a deal with different offerings.

2) Account-Based Intelligence (ABI) – The application of account-based intelligence is predicated on the ability to group and aggregate accounts, prospects, customers, etc., into clusters. Interaction data such as services, sales web visits, etc., are applied and combined with these clusters. Organizing and aggregating data in this way enables a data-driven organization to glean actionable insights based on the analysis of customer/prospect information to guide key decisions down to the account level. This is how ABI is created, with a company’s organizational hierarchy as its backbone.

Knowledge of organizational hierarchy furthers account intelligence by identifying how organizations or entities are linked under an account. More precisely, it reveals which accounts are related to or owned and operated by larger accounts. A company’s hierarchy/linkages provide intelligence to help organize, segment, define, and align organizations/entities in relation to individual accounts.

3) Reporting and Aggregation – If your sales leader asks you how much business your company did with Walmart, how can you accurately report your results without manually grouping individual accounts that look like they are related in some way to Walmart? Will you know to include companies like Bonobos, New Moosejaw LLC, Jet.com, and Hayneedle – all companies that fall under the Walmart umbrella? You will need a strategically applied account intelligence process that can aggregate this information based on Walmart’s corporate family tree.

Organizational hierarchy is the foundation and parent-subsidiary relationships are the cornerstones of the intelligence needed for reporting and aggregating customer data, whether at the companywide or individual account level. You could use it, for example, to break down Walmart’s total revenue by each of its brands.

4) White Space and Penetration – Hierarchy management is key to maximizing white space and penetration opportunities, which are about attaining a stronger footprint in a target organization/account. The most traditional way to gain penetration is by using internal data pertaining to target accounts and their activities. Although it can be an effective approach for jump-starting sales and marketing activity in a static marketplace, it actually limits growth in the existing dynamic environment. As the saying goes, “You don’t know what you don’t know.” To deal with this, you need to look for an outside-in view of your customer from a third-party perspective, such as Dun & Bradstreet’s hierarchy offerings. Here’s how they can help:

a) Your customer master must have a mechanism to group customers and prospects into organization families (e.g., all JP Morgan entities/subsidiaries would appear under the JP Morgan global HQ). This is how you can identify the total white space for your GTM or ABM strategy. Dun & Bradstreet has solutions that provide these views and groupings through our hierarchy offerings.

b) To manage large company families, your customer master, stewards, and/or analysts must have logical ways to traverse these linkages and identify subsidiaries that your organization is targeting for white space and penetration activities. The Dun & Bradstreet Data Cloud offers the world’s largest set of business decisioning data and analytical insights, covering hundreds of millions of businesses globally. What if the account you wanted to penetrate was sold to another company? This is key information that you would need to know as you craft your strategies.

5) Visual Intelligence for a Company Family – Perhaps one of the most beneficial aspects of a well-managed customer hierarchy is the visual intelligence it provides. At a glance you can see the chain of command within an organization and begin to understand who reports to whom and who are the leaders of various teams, to infer who are the company decision-makers, to identify subject-matter leads, etc.

Hierarchy management’s superpower is that it can enable you to easily identify and understand entity relationships, proximity, categories, etc. We call this Highly Intelligent Entity Relationship Aggregation (HIERA).

Each entity in a corporate family tree can be characterized by company-specific attributes such as industry, entity type, employees at the site and revenue (if available) and by their relationships with other entities. Some entities report to others and some have others report to them. Having access to this type of ‘HIERArchy’ provides a map for how to engage target organizations, whether large or small. For example, you could use information about what entity a company reports to in order to identify the best contacts to approach.

Figure 2: Out-of-the-box HIERArchy data

Figure 2 is an illustration of using out-of-the-box HIERArchy data potentially matched to your internal sales account data. Imagine layering these hierarchies with account intelligence, contacts, install-at, bill-to, ship-to, and end-user master data. What about overlaying HIERArchy with D&B solutions like Decision HQ, ELI and GSEM for your account teams?

The Central Nervous System of Master Data

The five hierarchy uses described above demonstrate how an organizational hierarchy is the central nervous system for all customer master data – connecting site locations, firmographics, contacts, mergers, acquisitions, and divestitures data – and, to some extent, partner, vendor, and product data. The central role of organizational hierarchy in master data management is rooted in providing relationship intelligence to entities, thereby making master data more meaningful and strategic. Pay attention to hierarchy relationships, as they pave the way to successful master data consumption and management.

More Resources

Creating business hierarchies is one of the most rewarding aspects of implementing master data initiatives. Our whitepaper, Why Successful Master Data Implementations Use Hierarchies, gives you the foundation to take it on. It includes Dun & Bradstreet hierarchy options including Extended Linkage Insight and even a section on how to manipulate hierarchies to further operationalize your own definitions. The expert advisors on the Dun & Bradstreet Data Advisory Team can provide further assistance and help guide you through the process.

Read the whitepaper!

Eric Weitz, Data Advisor on the Data Advisory Team, also contributed to this article.

Read the Whitepaper