Wiser Data Augmentation
Benefits
It is well known that one way to make better predictions about how your customers, distributors and suppliers will behave, is to augment your own data with that of third parties. The benefits are obvious:
Customer behavior is predicated on key variables.
During the recession people had to make a choice between which bills to pay first, which to pay later, and in some cases, which to pay at all. Depending on whether your company is in the first, second, or third category, the same customer will look quite different. Understanding these details on a granular level can help you unlock greater value
Data allows for a broader reach.
In M&A, the combining firms get access to each other’s customer base and obtain a broader view of the market. Take for example the airline industry merger between United and Continental, or a “bancassurance” deal between a bank and an insurance company – in both cases the merging firms have access to a broader pool of actionable customers
Access to specialized data.
Certain data providers have niche or specialized data (e.g. credit bureaus) which can offer a completely different perspective on how customers behave. With credit bureaus, even without acquiring someone as a customer, you get a view of how good their credit behavior has been and can understand whether they are worth targeting
Challenges
While these benefits are tangible, in our experience, the promises of data augmentation are not often fulfilled due to a number of stumbling blocks.
1
Determining which data is useful is not trivial, and what has worked for others may not work for you
2
There is large variation in Price to Value, as certain highly priced data can have a low fill rate and generate only modest incremental revenue
3
The time taken to integrate and fully use a partner’s data can be months, and is often close to a year
To navigate these challenges, we’ve developed a proprietary toolkit. Our approach to help you work with a data partner begins with developing a shortlist of very specific data elements which would be relevant for your firm, bringing added firepower. Next, we utilize a strategic sourcing approach to ensure that you are only paying for data which is valuable to you. Finally, we ensure data integration and rapid testing that allows clients to realize added value within a matter of weeks.
