With a proliferation of new AI tools coming to market, brands and marketing teams are increasingly questioning which data sources they can trust – especially when it comes to gathering information about their customers. Additionally, we see more and more providers making big claims like having “the most reliable data,” leaving it up to buyers to do their due diligence to vet each product’s data and security practices.
First-party data, which is provided directly from a customer, is typically the most accurate. However, this often isn’t enough information for brands to fully understand their customers or build an effective personalization strategy. To explore a more holistic view of their customers with information like demographics, interests, behavioral traits, and what types of products their customers have purchased in the past, third-party data becomes essential.
So how do you differentiate accurate data from sources that are less legitimate, what is the impact of AI on data integrity, and why do you need customer data in the first place?
Data Validity & Identity-Based Marketing
As brands shift towards identity-based marketing practices, they aim to engage customers based on demographics, interests, habits, and more. This level of personalization builds a deeper connection between the customer and the brand, leading to better loyalty and higher customer lifetime value (LTV). Not only does it allow you to speak directly to the customer with messaging, products, and offers that resonate with them, but it also helps to efficiently target and acquire more customers who are likely to deliver a high LTV.
First-party (1P) data can include information provided by a user during a transaction, email sign-up, or survey. While this information is valuable in order to get in touch with customers, it doesn’t give many clues to who they are outside of the data they’ve provided. This leaves marketers asking “How can I get a more well-rounded understanding of my customers?”
To answer this question, brands often turn to third-party (3P) data attributes. With this, they can append existing customer records with additional attributes sourced from a customer data provider. These attributes are used to identify unique traits within a brand’s customer base and allow marketers to build campaigns for specific customer groups. However, the process of enrichment is only effective if the data is accurate, so sourcing quality data is vital.
Sourcing Quality Data
3P data comes in many forms – some highly accurate, and others not as reliable. With evolving privacy concerns and the rise of AI, it’s more important than ever to inform your strategy with data that’s compliant and accurate, and not simply scraped arbitrarily from online sources.
Third-party data providers have been bubbling up in the market which rely on AI-bots to source their data. These bots scrape the internet for customer data from public-facing sites and are often pulling in inaccurate or outdated information. Aside from the question of data accuracy, AI bots raise many privacy concerns. According to an article from the International Association of Privacy Professionals, a recent class action lawsuit alleges an AI bot tool used “stolen private information, including personally identifiable information, from hundreds of millions of internet users, including children of all ages, without their informed knowledge or consent.” With a growing concern for ethical privacy practices, understanding where your data is sourced from is a must.
Additionally, some customer analytics tools claim to offer data enrichment, but the information being provided is limited to website engagement and conversions. This doesn’t typically have a great impact on personalization strategy and is derived from pixels or cookies. As tech giants like Google have wavered on their cookie policy, brands have recognized that they cannot rely on cookies or pixels as a future-proof strategy. Without a backup plan in place, brands using this as a central part of their marketing efforts will be crippled if cookies are sunset for good. As data regulations evolve, brands must adjust accordingly to solidify their place in the ecommerce ecosystem.
The most effective way to utilize third-party data is to partner with an ethical provider that offers demographic, psychographic, and behavioral attribute enrichment. These providers may source their data from self-reported information, government records, or data that customers have explicitly agreed to allow brands to access. Data should be regularly refreshed to maintain accuracy and to remain current. At Decile, third-party attributes are appended to first-party data and incorporated into the platform to build personas unique to each brand, identify top attributes, compare customer segments, predict future lifetime value, and onboard valuable segments to advertising platforms. Ultimately, marketers need to understand how their top customer personas differ across any dimension, including products purchased, lifecycles, and demographics to name a few.
What to Look for in a Data Partner
There are a few simple things to look for that will help you identify reputable providers.
Transparency
Your data partner should be able to be honest and straightforward about where the data is coming from and offer documentation on their sourcing practices.
Quality
Is the data accurate and reliable? Always ask about hygiene practices, accuracy, and identity resolution.
Security
Data safety and security should always be a priority. Look for a partner who is SOC 2 Type 2 compliant, the highest level of security certification available.
Platforms like Decile keep privacy, security, and compliance top of mind so that marketers can confidently identify traits of top customers, along with their product and channel preferences – for a truly personalized customer journey.