In today’s digital marketplace, businesses are working to find ways to leverage third-party data, which is information collected about companies and individuals from another source. Paired with the customer information businesses collect themselves, third-party data can be valuable for everything from learning important details about a target audience to refining products and services—if it’s managed and used wisely and well.
Achieving maximum ROI from third-party data involves not only knowing both its potential and possible limitations but also how best to apply it. Below, 20 members of the Forbes Technology Council share their tips to help businesses verify, prep, and leverage third-party data to see real, effective results.
1. Prepare Your Environment
The benefits of leveraging third-party data are massive, but the barrier to entry is high. People tend to think that “available” equals “accessible,” but the reality is that your company probably already struggles to use the data you own—successfully managing data you don’t brings a new set of challenges. Before you consider what new data you want to use, prepare your environment properly to manage external data. – Lewis Wynne-Jones, ThinkData Works
2. Conduct A Thorough Quality Check
Furthermore, ensure you are verifying the value, accuracy, and recentness of the third-party data. The worst thing you could do is pay for poor-quality data that’s years old and undoes all the hard work you may have done in cleaning up your internal data. Once you’ve established the quality of the data, you can then more effectively decide whether and how to proceed with leveraging it. – Gladwin Mendez, Simplyai
3. Be Sure You’re Asking The Right Question
Big data, and the value we get from it, is not about volume; it’s about variety. The question is, “What can I learn from what is happening outside my organization—things that may be impacting the inside of my organization?” Third-party data can provide the missing link. Too often, we are trying to answer the ultimate question; but to get a usable answer (like “42”), you need the right question. – Howard Holton, GigaOm
4. Pinpoint The Data You Truly Need
Most importantly, choose only the data you need to run your business well. Understand what each leader and team needs to run their portion of the business, and then determine your data needs from that. Many businesses are grabbing all the data they can get, which makes for a lot of junk for the analyst team to go through when trying to provide the metrics that are vital to understanding the reality of the business. – Laureen Knudsen, Broadcom
5. Ensure You Understand The Context
On the other hand, make sure you understand the third-party data’s context. You want to be able to enrich “apples with apples” and not make any wrong assumptions because you don’t understand the exact meaning or context of the data. Nothing exists in and of itself, and with data being central to business leadership, its context is key. – Agur Jõgi, Pipedrive
6. Build Better Customer Profiles
One practical, impactful way to leverage third-party data is to build more accurate and comprehensive customer profiles. This can help companies improve their marketing campaigns, product offerings, and bottom line—but remember, it’s important to use third-party data responsibly and with the customer’s consent. – Satish Shetty, Codeproof Technologies Inc
7. Reduce The Customer Journey
Companies can leverage third-party data to reduce the journey of customers accessing their products or services. Rather than having customers fill out long forms for Know Your Customer and other reasons, integrating third-party data via an API will give any company an edge over its competitors. Strategic decisions and innovation will be faster when companies leverage third-party data. – Nihinlola Adeyemi, ErrandPay Limited
Read more about Errandpay Limited here.
8. Add A ‘Data Enrichment Protocol’ To Your CRM Or ERP
A pragmatic approach is integrating a “data enrichment protocol” into existing customer relationship management or enterprise resource planning systems. This augmentation of customer data with external insights allows you to fine-tune your marketing strategies and customer experiences on the fly. It’s like adding a special seasoning to an already exquisite dish, elevating it to a new level. Hence, this enriches the customer journey and optimizes operational efficiency. – Daniel Strauss, Team Internet Group PLC
9. ‘Predict More And Better’
“Predict more and better” is the mantra in this global era, alongside “personalization” for customers. Third-party data can be used wisely (and securely) to help your customers pinpoint options that are in line with their likings and preferences. Simple predictions based on simple data points—such as where a customer lives, their demographic constituency, their family stats, and so on—can help companies increase their sales. – Arvind Kandula, DevCare Solutions
10. Create Information-Rich Datasets
Third-party and alternative data allows companies to enrich their existing resources, creating more expansive and information-rich datasets. With this information, companies can seek to develop more robust machine learning models, create more feature-rich data products, and harness data to foster stronger customer relationships. – Adam Lieberman, Finastra
11. Build Ideal Customer Profiles
Use third-party data to help build profiles of your ideal customers and/or clients. Starting with whatever first-party data you have and filling in the blanks with third-party data can help you build lookalike audiences and guide your marketing strategies to target specific users. Meanwhile, programmatic advertising will be highly impacted by third-party data. – Jordan Yallen, MetaTope
12. Enhance Customer Segmentation
One practical, impactful way companies can leverage third-party data alongside their own is by improving customer segmentation. Therefore, enhanced customer segmentation allows for more targeted marketing and personalized experiences. – Johan Nilsson, Convolo
13. Minimize Data Collection And Governance Risk
A core consideration for companies using third-party data is that it may simplify their data collection needs and reduce data collection and governance risks. The key phrase is “may simplify,” as an organization may need to change an existing tendency to hoard data. Legally obtaining and leveraging approved, tailored third-party data allows companies to minimize their data footprints and, therefore, risk. – Mark Brown, British Standards Institution (BSI)
14. Get A Broader View Of The Current Market
Third-party data can be a great way to identify industry trends, user requests, and even market gaps. While using your own data, you get a precise view of your audience’s or company’s doings. Getting your hands on a wider dataset can help you gain a broader view of the current market state and address it in your product. – Yuriy Berdnikov, Perpetio
15. Validate Findings And Insights
Think of third-party data as getting a second opinion in the medical world. By utilizing third-party data, we not only validate our own findings but also cross-reference and enrich our insights. This combined intelligence ensures that our strategies are not just data-driven, but are also well-rounded and thoroughly vetted, optimizing results for our clients and stakeholders. – Sandro Shubladze, Datamam
16. Enrich ML Training Models
The availability of third-party data enables companies to greatly enrich their datasets for training machine learning models. This not only boosts model accuracy but also ensures a more fair and impartial representation of data and allows you to fill in data gaps. With access to precise and actionable ML output, organizations can make data-driven decisions that fuel their business growth. – Alexei Dulub, PixelPlex
17. Fine-Tune Demand Forecasting
However, retailers can use third-party sales data within their industry for more effective demand forecasting. Businesses in a high-growth phase or those significantly affected by historical anomalies such as the COVID-19 pandemic may be working with distorted data. Including industrywide data in a demand forecast incorporates macroeconomic trends that aren’t easily identifiable in first-party data. – Steve Denton, Ware2Go
18. Build Competitive Intelligence
Competitive intelligence is the most valuable benefit of leveraging third-party data to understand market dynamics and competitive landscape shifts. Ethical competitive intelligence, powered by artificial intelligence and machine learning models using external data, can help companies make data-driven decisions and develop strategies to sustain and grow their core competencies. – Raj Polanki, Wacker Chemical Corporation
19. Monitor The Cyberthreat Landscape
The threat landscape will continue to grow at an exponential rate, making collaboration and cooperation increasingly important. Incorporating threat intelligence data from third-party sources can enhance cybersecurity measures and help you proactively identify security threats. Moreover, by sharing threat information, we can work together to improve our collective defense against cyber threats. – Neil Lampton, TIAG
20. Forecast Customer Behavior
Similarly, incorporate third-party data into your predictive analytics models to forecast customer behaviors, such as purchasing patterns, churn risk, or lifetime value. This allows you to allocate resources more efficiently and make data-driven decisions. Leverage it to gain insights into your competitors’ customers and market positioning and identify gaps or opportunities in the market. – Meiran Galis, Scytale
