Recognizing the Value in Alternative Data Sources
Business leaders today recognize the value in using “alternative” data sources to drive consumer insights. For those who have long relied on structured and unstructured conversations with their audiences (i.e. surveys, focus groups, etc.) to drive business decisions, new data sources, technology, and identity resolution techniques provide great opportunities to drive better outcomes and reduce the overall cost of business intelligence initiatives. However, most will admit they have a lot to learn when it comes to fully leveraging data and analytics in this new world.
So, what are the two main types of “alternative” sources and how can they be put to use to create value for businesses that have historically relied in primary research techniques?
Probably the most valuable data source to marketers and insights leaders is what is most commonly referred to as first-party data. First-party data refers to any source within an enterprise that provides information on the customer and their behavior. This data can come from sources like the organization’s websites, CRM platforms, or social media platforms. While tremendously valuable in its own right, this data can be even more valuable in generating incremental audience insights, optimizing the customer experience, and further assessing customer needs when properly matched to surveys of these same customers.
At the same time, first-party data can enable firms to scale insights that are gathered from samples of the customer base (i.e. by a survey) that would be useful to have on the entire customer base. In this case, first-party data serves as a crosswalk between the sample of customers and the broader customer base they represent by providing signals among the broader customer base that may predict how a customer who didn’t take the survey might have responded. Brands with mature first-party data strategies use this technique to score their customer base with personas to drive media outreach and customer satisfaction to mitigate attrition and drive cross-selling.
Third-party data is another important source for marketers and insights leaders to have in their arsenal. This class of data is typically collected by publishers, data companies, and other entities that are in the business of helping companies gather data on their customers. Third-party data sources may include logs of website visits, inferences drawn from what consumers are researching or reading online, commentary in social media networks, geo-location information, or attributes gathered from credit reporting or publicly available sources.
Similar to the benefits of first-party data, appending third-party data to traditional surveys can provide important information on an organization’s customers or prospects that would otherwise not have been available, either because customer responses are unreliable or cost prohibitive. Like first-party data, these sources can also provide extremely powerful “crosswalks” to external data systems that enable communications targeting beyond the firm’s “owned” properties, thus helping to improve the precision of paid and earned media outreach.
If your firm recognizes the value in these sources but struggles to harness it properly, it pays to start with answering some basic questions:
- What are your business goals?
- What do you require from data and insights to address these business goals?
- Which 1st and 3rd party sources out there could be leveraged to complement (or replace) what otherwise would have been dedicated to a survey?
As many marketing leaders are discovering, answers to these basic questions can drive the organization to develop more actionable, meaningful, and activatable insights.
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