If acquiring external data is on your to-do list, don’t make these common, yet costly, mistakes. Instead, use BlastPoint’s tips on how to prepare for making a wise data purchase that won’t break the bank or cause your staff headaches.
Buying third party, or external, data and integrating it with the data you already have is a great way to paint a vivid, complete picture of who your customers really are, allowing you to increase engagement with them and, ultimately, grow your business.
With enriched, integrated data, you’re better equipped to serve people with the kinds of products and services they want; precisely when they want them; using the kinds of messaging that will resonate most, through channels that are most likely to yield high engagement.
Choosing the right third party data, however, is complicated. Non-data experts aren’t always prepared to wade through the ocean of data that’s available for purchase in order to find which information will be cost-effective, useful and relevant to their goals.
And, too often, a company’s internal data isn’t ready for a third-party data makeover. BlastPoint VP of Product Steve Estes explains:
“Sometimes data purchases don’t end up returning positive ROI, because either the internal data you need isn’t as available or good enough; the modeling approach you’ll take with it can’t deliver juicy-enough results; or the team that would make use of the fruits of your analysis would have to spend a ton of time and effort to change their systems and processes, and that’s just not going to happen overnight. So there’s a careful balance when it comes to choosing external data.”
For an overview and definitions of the various types of data, including first-, second- and third-party, read this piece from Lotame.
Unfortunately, it’s easy to become overwhelmed and make costly mistakes in the third party data selection process, which is why we’ve put together this list of 5 pitfalls to avoid when buying external data.
Pitfall #1: Not Having a “Why” When Choosing to Buy
We ask our clients what goal(s) they want to achieve by enriching their existing data—why they feel they need to know more about their customers or territories—before they start choosing what kinds of new data to weave in.
We do this because it’s important to understand what’s missing from internal datasets, as that may be what’s preventing them from attracting new customers or selling more products.
Sometimes, however, they don’t necessarily have a specific “why” in mind with regard to acquiring new data. Rather, they may believe they need more data purely for the sake of having it.
But third-party data can be expensive, the information within it changes over time, so it will need to be refreshed regularly, and it’s not useful to have just any data unless you have a plan for applying it to help you reach specific goals in some way.
Our data gurus suggest asking yourself, ‘What problem is third party data going to solve for you?’
In other words, when you have a “why” nailed down, you’ve narrowed down the solution you’re looking for, which means you’ll be able to determine what kinds of data to purchase. Then you’re ready to begin your search for the right data.
Pitfall #2: Not Having a Plan to Integrate Outside Data into Your Existing Workflows
To get the most out of external data, it’s important to have a system in place for integrating it into the products and workflows you already have. Often that means cleaning and organizing your internal data first, so that it’s not splintered among different departments or stored in non-uniform ways.
For more on this, check out BlastPoint CEO Alison Alvarez’s September 2020 piece in Energy Central, which goes into more depth on crisis-proofing and orchestrating siloed data.
When teams don’t have a data integration system prepared ahead of bringing new data in, they can end up with a disorganized pile of information and a slowdown of work.
A robust IT team can manage putting a data integration process into place at many organizations, but some company IT departments are spread extremely thin, tasked with a lot of other duties that would make it difficult for them to add this to their long list of to-do’s.
We work with IT teams often to make this step simple and seamless; doing our best to plug away silently in the background performing data integration and orchestration while leaving IT’s existing systems and processes fully intact.
For more information on how BlastPoint teams up with IT to score big wins, explore our Working With IT brochure.
If you’re ready to perform data integration in-house, keep two things in mind:
First, consider the ingestion period; how long it will take to make new data mesh, functionally, with your existing system.
Second, consider data validation, the process of ensuring the data you’re purchasing is clean and of high quality so that it enhances your workflows long into the future.
Pitfall #3: Believing More Data is Better
Just because an ocean of data exists doesn’t mean you need to possess all of it. 99 percent of what’s available to know in the world may have no relevance to your business goals, whatsoever.
Unfortunately, we’ve seen some companies acquire large swaths of third-party data, at great cost, which didn’t end up helping them solve their customer engagement or sales problems at all, and which put them right back where they started: overwhelmed and confused. Only they’d spent down their budgets in the process
Identifying what data you want to buy should involve:
- profiling samples of data from different providers to get a good feel for what they’re offering,
- considering how granular you need your new data to be (e.g., will your initiative require individual customer info or household level data?),
- and performing data-quality spot checks to ensure what you’re being given is both accurate and up to date.
Pitfall #4: Spending Too Much Money on Data
There are a lot of decisions to make when contracting with a data provider. Much of it depends on what kind of data you need in order to fulfill the goals you’ve outlined. But, as with everything else, what you can buy more often depends on your budget.
One basic rule of thumb is that the more granular, precise and vetted the data you’re considering, the more expensive it will be. However, based on our experience, we know that third-party data pricing can be negotiable, in some cases.
Depending on which of the vendor’s sales representatives you speak to and when, you may be given different quotes for the exact same lists of data. So it’s important to vet the company by (1) ensuring they meet industry standards of privacy and security, and (2) having numerous conversations with different representatives at the provider you’re considering, as a way to ensure you’re being given the same quote. If you’re not, by all means, haggle for the best price.
Keep in mind it’s important to buy only the data you need that will move you closer to answering “why” you’re looking to buy data in the first place. Resist the temptation to add irrelevant lists that won’t help you reach your goals.
Meanwhile, plenty of data is free and publicly available, so you likely have the capacity to open your computer and download it yourself. Census data is an excellent source of ZIP code level demographics, for example, that any business can tap into and use.
Government data, such as what’s provided through the Department of Energy, is a great source of information for anyone interested in studying alternative fuels or bioenergy technologies. Likewise, the Department of Housing and Urban Development’s data offers a trove of information on housing costs, mortgage loans, tenants and more.
For a comprehensive list of other free data resources, check out Tableau’s list of 7 Public Data Sets You Can Analyze For Free Right Now.
But take free data the way you might enjoy the proverbial free lunch; as in, there is no such thing. The cost becomes evident when you realize someone at your company needs to know what to do with that data in order to make it useful.
So, before you download several gigs worth of data, be sure someone on staff understands how to parse through it and integrate it into your system — and make sure they have the bandwidth to do so.
Pitfall #5: Failing to Plan for Future Scale
Any data reflects one snapshot in time rather than a finite outcome, so it’s important to remember that whatever data you purchase now will need to be updated and scaled over time.
Sometimes, however, we see teams that haven’t made considerations for ensuring their newly purchased data will get refreshed, maintained and updated down the road. What they have to work with later, then, can become stale, out-of-date and no longer relevant to their goals.
That’s why we recommend that, before buying new data, you build a plan for making regular updates and refreshes based on your business’s growth. Remember, with newly purchased data, you’ll be gaining fresh insights and answering questions that help you design better strategies. Those insights, answers and strategies, ideally, are going to drive better-targeted campaigns that bring new customers, more sales and higher revenue.
Understanding this and making a plan to ensure your data stays up to date is just as important as getting the data in the first place.
For more information on how BlastPoint can help your business integrate third party data, reach data maturity and use customer intelligence, explore our Solutions!