When Dipping Into The External Data Well, Bring The Right Bucket

Third-party data is still an important source of information. But choosing the reliable supplier is not easy and having the necessary technical capabilities is becoming paramount.

External, or third-party, data has been a core part of marketing and lead generation campaigns for many companies for many years. However, the issues around it, along with a new and emerging range of alternative options, suggest that now is a good time for senior marketers to rethink its place in their data strategy.

A recent Royal Mail Data Services report indicates that 49.6% of marketing practitioners use external customer data. And for good reason. It provides reach in terms of extending your audience and context on the consumer’s likely behavioural and demographic profile, and reduces the risk of missing vital clues about a customer—weakening your strategic position and leaving your customers open to be courted by competitors.

Household composition, for example, can be a strong indicator of headroom for additional contracts or services for multi-adult households versus single households. Income and affluence is another baseline attribute that is often not derivable using only data from a customer’s interaction with your brand.

External Data Issues

Buyer beware, however, in the U.K. the sheer number of providers and array of offerings available are dazzling; this can lead to challenges selecting the right suppliers and being able to cut through the noise.

A vital part of any comprehensive data strategy is benchmarking and comparison of data sources to establish the most suitable source for any particular campaign. When benchmarking, it’s important to consider three aspects—reach/volume available, commercials, and accuracy/trust.

On this latter point, marketers need to ensure they engage with data suppliers who can prove compliance with the nine principles of the Data Protection Act. Being able to prove permission for use should be the first box to tick.

Similarly, marketers need to validate the data they receive—claimed insurance renewal dates and car ownership, for example, do not always live up to the accuracy claims of their promoters.

Emerging Alternatives

Ever-tighter regulation is encouraging and mandating that data providers change their business model. The days of opaque permission provenance are all but gone. The days of reselling prospect files through a long chain of multiple data providers are numbered.

Thankfully, marketers today have more options to engage directly with consumers rather than just having to rely on data that has been gathered by intermediaries, thanks to consumers embracing technology in their lives and becoming more connected.

Brands should, therefore, be building their investment in alternatives to third-party data by increasing the focus on encouraging prospective consumers to share their data. Key to this is understanding the value exchange and what consumers are prepared to share. Recent research undertaken by Amaze One showed that there are some data types that consumers are happier to provide (for example: name, age), whereas other data types (such as social network logon) are very reluctantly shared.

There will still be a role for external data in the future, but it will be different. Rather than relying wholly on “bulk cold data” for the acquisition of “new-to-book” customers, success will, instead, come from sourcing specific consumer types with specific needs and motivations from more specialist providers.

Technology Challenges

In addition to the business considerations, external data offers challenges from a technical perspective.

How do you accurately match external data to your existing customer/prospect universe? Is an email address enough? Perhaps, but what if that email address is shared by a household and, therefore, is not unique to an individual? Also how do we handle real-world data capture issues, for example is Philip Smith the same as Phil Smith? What about Mr J. Doe and John Doe? Ideally, you want a flexible way to deal with matching that takes into account these nuances so you are confident you are utilising the data correctly.

Managing the constraints associated with the data licencing is also a technical challenge. For example, third-party-provided prospect data that doesn’t convert is important to retain so that you can refine subsequent acquisition of data and avoid purchasing the same non-performing prospect records in the future.

This is where capabilities such as pseudonymisation (where most identifying fields within a data record are replaced by one or more artificial identifiers) allow you to retain the data and the insights you have, without violating the retention terms of the data supplier.

Finally, tracking the performance of external data and being able to attribute conversions to the appropriate supplier require capabilities that will allow you to retain the source of data even when complex events and multiple marketing activities overlap in this way.

To Sum Up

Making external data work for your business requires you to invest in the technical capabilities that are necessary to effectively manage it, to be selective in your choice of providers and clever in how you use it. Perversely, you also need to build alternative approaches to getting the information you need and investing in the strategies to make your owned data more complete—this will mean that should the well of third-party data run dry, you aren’t at risk of going cold turkey.