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A D&B spin-off aims to move beyond credit reports and help small businesses track their reputations online
The Dun & Bradstreet brand has been synonymous with credit reports for most of its 159-year history. To business owners like Marilyn Landis, though, the name also means hard-sell pitches for information few businesses need. Her Pittsburgh financial consulting firm, Basic Business Concepts, got a call from D&B in December with a warning that another business had requested the company's credit file. The caller suggested that Landis' business might look risky to vendors if she didn't pay to update her credit report with revised financial data. "What it's doing is scaring small businesses," says Landis, the former chair of the National Small Business Assn.
Jeff Stibel hopes to change all that by remaking Dun & Bradstreet (DNB) for the Internet Age. He became chief executive officer of the division of D&B that sells credit reports to the smallest businesses when the parent company sold the unit to a private equity group in August. Stibel wants Dun & Bradstreet Credibility Corp., as the new venture is called, to move beyond credit ratings and start helping businesses manage their reputations online. "What we're trying to do now is show a holistic picture" of what makes a business appear trustworthy, he says. "Credit is just one component.... D&B's largest competitors these days are Google, Facebook, and Twitter."
D&B compiles credit files on private companies from public records, payment information supplied by vendors, and self-reported data such as financial performance. The company sells that data to corporations that use it for marketing and to evaluate credit risk. Revenue at the small business division, which charges companies to rate their creditworthiness, was declining by double digits under D&B's ownership. Stibel acknowledges he has to approach customers in a new way. "There was a fair amount of fear-based selling, and that's something that we are trying to dramatically change," says Stibel, a 37-year-old entrepreneur who most recently ran a website-services company called Web.com.
Credibility Corp.'s first new offering will collect comments and reviews from sites such as Twitter, the Better Business Bureau, Yelp, and Citysearch. Stibel says he hopes to launch it in the first half of 2011 and eventually wants to have such profiles for each of the more than 20 million companies in D&B's U.S. database. Stibel thinks mom-and-pop businesses that don't have the time or resources to track how they're perceived online will pay Credibility Corp. $300 to $900 a year to manage those profiles. The new business is growing by double digits and is on pace to reach sales of $100 million in its first year, Stibel says.
The spun-off company, with more than 400 employees, raised some $200 million from Boston private equity group Great Hill Partners. Credibility Corp. will pay D&B undisclosed licensing fees for using the company's brand and database. Stibel says the business suffered from neglect under D&B, since it made up less than 6 percent of D&B's 2009 sales of $1.7 billion. D&B declined to comment, but on an earnings call in July, D&B CEO Sara Mathew called the division a "critical drag" on her core operation of selling credit data to larger corporations. "They were not going to invest in that business," says Shlomo Rosenbaum, an analyst at brokerage Stifel Nicolaus.
Because many small business transactions aren't reported to D&B, a company's file may make it look riskier than its complete payment history would, says Doug Palmer, a Bethesda (Md.) accountant. Few businesses or lenders consider D&B records essential for credit decisions, Palmer says. Like Landis, he advises clients not to pay for D&B products unless a specific creditor requires it. "Vendors and suppliers ... would much rather see financial statements and [check] trade references" than buy D&B reports, he says.
That's why Stibel is exploring ways to help companies manage their reputations beyond credit. "Businesses are confused and paralyzed," he says, "because they don't know where to start" managing how they are perceived online.
The bottom line A spin-off of D&B aims to move beyond just credit reports and help small businesses track their reputations online.