Companies today have a one dimensional understanding of their customers. They understand how they directly interact with them, but know little else about their preferences or lifestyle.
How can an e-commerce startup validate whether their customers would be interested in an activewear line before commissioning it? Or if they want access to swimwear all year round?
By connecting with like minded companies, inter-enterprise data collaboration offers a secure and trusted solution to combine the insight from first and second party data sources, and make more informed decisions.
First, second or third party data?
First party data describes the data collected by a company about their customers, whereas second party data is simply another company’s first party data. The combination of the two creates unique insights that help companies to produce more detailed and accurate audience profiles.
Conversely, third party data is widely available to purchase, so competitors are likely using the same external information and are making the same assumptions. As Forrester notes, “using ill-gotten or badly aggregated data can be riskier than sharing data carefully and securely with select trusted business partners”.
By tapping into second party data sources, companies can double the impact of their data by more accurately targeting customers, validating the benefits of a partner relationship or understanding the knowledge of joint users. These partnerships also help to level the playing field, as they enable SMEs to have the same level of customer understanding as the larger and more diversified corporations.
Gaining collaborative business intelligence is the premise behind data cooperatives, where companies pool their data into a centralised location where is can be integrated and analysed together. According to a study by Criteo and Forbes, 60% of brands and retailers are currently participating as a part of a data cooperative and 72% of marketers cite “increased revenue” as a key benefit from the expanded customer understanding.
Retain data ownership
Pooling data to combine the insight is more complex under the GDPR, as if a customer withdraws consent, then it is the responsibility of the company that collected the data to ensure all other parties have also deleted it. Data collaboration platforms can provide the same end result as data cooperatives but without the loss of data ownership and the privacy, security and commercial risks.
By using data collaboration software to securely partner with second party data sources, companies are able to “think big” to further understand their audience and tailor campaigns based on detailed and accurate customer personas. They can learn more about customer demands to answer strategic questions, direct the future of an organisation and drive revenue.