There are many third-party data providers to choose from, and companies use third-party data providers because they believe that the data they already have in-house is not sufficient to produce accurate results in their analysis.
A prime example is a healthcare system in Europe that wants to identify trends in certain types of cancer; however, the organization does not have broad enough demographics in its own data to perform required analysis.
The company contracts with a large healthcare data aggregator, which anonymizes its data so individual patient records cannot be viewed, but a large number of different European populations can be viewed the trend of. Anonymization is necessary due to healthcare privacy requirements and is an upfront requirement provided by data buyers to aggregators before agreeing to purchase data.
Many companies like this choose third-party data aggregators to augment the data they have in-house because there are commercial vendors ready to provide turnkey data.
But how do you know you’ve chosen the best data partner? Here are five things to watch out for in third-party data providers:
1. Data value
A small company marketing manager community The credit union shared this story with me:
Her marketers wanted more comprehensive demographic data about the individuals living in their community. They contract with a marketing demographics provider in the financial sector who provides them with a wealth of financial data about individuals who bank and do business in their community.
“It’s great data,” she said, “but unfortunately, it’s not what we wanted. What we wanted to know at the time was how many people in our community were underserved services and the unbanked? These are the people we want to connect with – not those who already have a bank… We learned a valuable lesson. We need to better define clearly what we did in our first meeting I think when we discuss our data needs with data providers, we are not specific enough.”
This is an important point.
While most companies may be interested in market share, market promotions and product analysis, what they offer customers, and how they compare to competitors, not every company wants this .
You will only receive value for the data you purchase if the acquired data enables you to achieve your business goals.
2. Data Source
A reputable data aggregator will tell you where it collects data from, and the size of its data samples.
It is important to understand this.
For example, if your company sells heavy duty home insulation in cold, snowy winter areas, you probably don’t care what consumers want in Florida.
In other cases, you may not match your data provider. For example, the data sources the aggregator pulls from, or even the way the aggregator obtains data, may not meet your own internal data privacy or governance standards.
A first step for companies that potential data aggregators and sellers should take is to ask them for a list of data sources so that companies can determine whether the data they are considering purchasing is appropriate for their own business needs, as well as their data privacy and governance requirements.
3. Liability Protection/Auditing
How often do data providers conduct third-party audits of their data and their operations? Would the data provider be willing to share the results of their latest audit with you?
In addition, what assurances does the provider provide to ensure that the data it aggregates has been lawfully aggregated and that all data has been appropriately anonymized for potential violation of individual privacy? Are data providers willing to take responsibility for issues related to their data?
4. Data Quality/Currency
How well is the data prepared by the 3rd party provider? Are there missing pieces of data? Is there data duplication or incorrect data? What about data currency? How often does the provider refresh all data, and is this enough to meet your own data currency standards?
Does the provider provide enough unique data to make your data investment worthwhile, or is there significant overlap between the data the provider provides to you and the data you already have in-house has a difference?
These issues should be considered in the decision-making process of data providers.
5. Advice from customers of other vendors
Before choosing a third-party data provider, it is best to request a reference list and/or call others in the industry People who already use this provider as a data provider.
What are the business results? What are the advantages of data in analytics? Is the data fresh and of good quality? Is the supplier easy to work with? Did it keep its promise? How is vendor support? Does the supplier provide assistance when needed, and are issues resolved quickly?
These questions cannot be answered in conference room presentations, e-books, or even small pilot projects or “try and buy.” ‘
The only way you can be reasonably sure how the supplier might work is with you with other people who are involved and know the supplier verify.
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