Consumers have an abundance of choices which makes it harder for your brand to stand out, let alone find the right people who would be interested in your product. To know more about your potential customers, however, you need the right kind of data. Data drives sales and the customer experience, but you need more than your first-party data alone to get the insights you need to find more of your best customers and set yourself apart from the competition. To get the quality information your company needs, you can use data enrichment.
What Is Data Enrichment?
Data enrichment refers to processes that enhance and augment raw data. These processes combine first-party data with other information from internal and external sources. Enrichment tools then apply organization and insights to develop more accurate and detailed data about a company’s customer base. So how does data enrichment work, and how do you enrich customer data?
Data enrichment begins by collecting various data from multiple sources. Typical data sources are divided into three types:
- First-party data: The customer information collected by a company directly from its customers is first-party data. This is often collected from the behaviors of your website and app users or from information in your customer relationship management (CRM) platform. First-party data can also come from subscription lists, social media analytics and customer surveys.
- Second-party data: Second-party data is first-party data from someone else. This information can usually be combined with your first-party data to increase its scale and more accurately target customers similar to your current audience. Second-party data is particularly useful if you are targeting a new demographic that represents a significant portion of the source company’s customer base.
- Third-party data: Third-party data is aggregated first-party data collected and compiled from many sources. Instead of buying second-party data straight from the source, a company can instead purchase specific datasets of third-party data from aggregators to scale up their first-party information. Third-party data is most commonly used for data enrichment purposes to augment first-party information.
All three types of data can be effective for better understanding and targeting your ideal audience. While first-party data is typically the most valuable because it is information directly collected from your customers, it doesn’t always provide enough scale. Enriching that data using second- and third-party data helps provide a more panoramic view of your consumer, at scale. To take enrichment even further, you can apply analytics to uncover patterns and identify valuable insights.
By combining data through data enrichment techniques, brands can gain deeper insights into their customers’ preferences and behaviors. By leveraging data enrichment, brands can use their knowledge to make informed decisions, expand their customer base and personalize their messaging for greater success. This is why an increasing number of companies are using data enrichment to achieve their long-term marketing goals.
The Types of Data Enrichment
Data enrichment enhances data through various means. While there are as many types of data enrichment as there are data sources, companies often utilize a few common kinds. These include:
- Demographic data enrichment: Demographic data enrichment enhances customer datasets by applying demographic information like marital status, family size, income level, credit rating and more. This type of information enables greater personalization for your targeting criteria, messaging and creative.
- Geographic data enrichment: Geographic data enrichment involves adding geographic data to customer profiles, including postal data, mapping insights and more. This type of data is particularly useful for mobile advertising and in determining where to place new store locations. It may also be used to determine localized pricing.
- Behavioral data enrichment: Behavioral data enrichment applies customer behavioral patterns to their profiles, including their past purchases and browsing behaviors. This often involves monitoring a user’s purchasing path to identify key areas of interest for each customer. Behavioral data is essential for companies to identify what advertising campaigns work best and what the return on investment (ROI) of each campaign will be.
Each type of data enrichment helps a company meet different business goals. Before selecting the right data enrichment technique for your business, identify the kind of information you need.
Why Does Data Need to Be “Enriched”?
The primary advantage provided by data enrichment is the improved value and accuracy of a company’s customer understanding or view. Companies need high-quality data to make essential business decisions and draw valuable conclusions. However, a common question arises when discussing data enrichment — why don’t you just use first-party data?
First-party data, as previously discussed, is collected from customers directly via CRM platforms, websites, surveys and subscription lists. While this data is valuable, as it comes directly from your existing customer base, it can also be limited. First-party data tells companies about their visitors’ behaviors within their site(s) or app(s), but it tells them nothing about consumers’ lives outside their company’s scope — like purchasing decisions and website activity.
Even if your company collects demographic and geographic information, your observation of each customer is limited to how they behave when directly interacting with your company. This shows only a sliver of who they are, which yields less detailed insights. Your business might not get all the information it needs for accurate and effective marketing.
By supplementing your company’s information with second- and third-party data, you can gain a fuller picture of who your customer is so you can more accurately understand and target them. This also gives you more information to which you can apply analytics for increasingly meaningful insights.
On top of eliminating the limits of first-party data, using data enrichment can offer significant benefits in various business-critical areas. Just a few of these advantages are detailed below:
1. Improved Consumer Relationships
When a customer feels like your company understands their needs, it makes them more likely to make a purchase and continue working with your business in the future. Data enrichment can facilitate this enhanced understanding of customers, providing more information to enable a more personalized customer experience.
Enriched data allows you to tailor your business to the needs of general populations all the way down to individual customers, and it’s all based on detailed information in your dataset. You can adjust your business’s pricing and advertising efforts to appeal to a target demographic. You can also create more personalized communications based on an individual customer’s data.
These personalized experiences are highly valuable for consumers, fostering meaningful, long-term customer relationships that translate into business success. In one Forbes survey, 40% of business executives reported that customer personalization had a direct positive impact on their sales.
2. Enhanced Segmentation
The more data you have, the more accurately you can segment your audience. Segmentation based on large- and small-scale determiners helps categorize individuals so you can see what your customers have in common. This knowledge allows your company to develop more effective targeted campaigns. With more data, you can reveal new patterns and marketing or product opportunities that may have been invisible before.
3. Optimized Targeting
The spray-and-pray approach to marketing may help general brand awareness but it’s effectiveness at closing a customer is less clear. Instead, targeted marketing is where most companies are focusing their efforts. However, targeting individuals with personalized advertisements requires businesses to have a complete picture of their audience.
While first-party data can only show how consumers behave when interacting directly with a company, augmenting this data with second- and third-party data allows organizations to get a panoramic view of each consumer and their digital life. Doing this helps businesses identify and focus their efforts on the individuals most likely to convert into customers.
4. Reliable Lead Scoring
Evaluating and scoring leads helps sales teams prioritize their efforts, but it is nearly impossible to do when you have incomplete customer profiles. Data enrichment can enhance customer profiles with quality data, enabling reliable and meaningful scoring. The data’s quality and depth can also enable automated lead scoring, removing the guesswork and allowing your sales team to focus on their goals.
5. Maintained Data Compliance
Data enrichment processes ensure your company’s compliance with regulations related to data privacy. Many laws impose limits on what type of customer data you can store and how long you can keep it, and do-not-call lists also need to be maintained regularly. If your company doesn’t have a mechanism in place to maintain compliance, you could face costly penalties.
On the other hand, you can establish data enrichment processes to scrub databases regularly, which safely stores any valuable data while keeping your database compliant.
6. Enhanced Data Quality
Redundant and inaccurate data can result in wasted advertising dollars, customer dissatisfaction and incorrect analytics, which costs companies significantly. Many businesses operate with redundant data because they are either unaware of its existence or unsure of what data to remove.
Data enrichment tools can eliminate redundant and inaccurate data by automatically analyzing information, combining redundancies and correcting errors while maintaining updated profiles. This method enhances the quality of a company’s data so they can be confident they are working with the most accurate and up-to-date information possible.
7. Improved Cost Savings and Sales
Data enrichment reduces costs and optimizes sales. Data enrichment protocols save companies money by managing existing information, which ensures you’re not wasting database storage on data that isn’t useful to your business. This process also reduces costs by minimizing penalties due to data noncompliance. Simultaneously, data enrichment maximizes profits by boosting sales through more effective marketing and customer management. It can identify cross-selling and upselling opportunities while promoting meaningful customer relationships.
Data Enrichment Solutions for the Future
Data collection is changing and third-party tracking is on track to disappear. Browsers such as Safari, Firefox and Chrome have announced they will begin blocking third-party cookies. Third-party cookies are most often used to collect user data for marketing purposes by tracking activity, and then using this data to deliver targeted ads and content to individuals based on their search history across different domains. Without third-party cookies, companies will have to look to partners with future-proofed data enrichment solutions. While most data enrichment solutions rely on cookie-based data, many options are ready for the new future of digital advertising. One such solution is Lotame Panorama.
Try Lotame’s Panorama Identity Resolution Platform
If you’re looking for a future-proofed data enrichment solution, try Lotame’s Panorama Identity Resolution Platform.
Lotame Panorama is a suite of data enrichment solutions focused on providing quality results for digital advertising. Our platform enriches your first-party data with quality second- and third-party information from over 250 online and offline data sources. Instead of gathering data yourself and using multiple tools for analysis, Lotame provides a platform where you can access everything from a user-friendly system. Our integrated tools for marketers and publishers can enhance your data and turn profiles into living audiences.
Develop rich data about your customers and uncover more opportunities for engagement — no cookies required. Contact us today to learn more about Lotame Panorama and try it for yourself.
How are marketers and publishers adjusting their customer acquisition strategies in light of nonstop industry change? We surveyed over 1,400 decision-makers to better understand identity’s role in their cookieless future, what they’re adding and removing from the next-gen tech stack, and where they plan to invest today and in the future. Get the report here.
