The Benefits of Data Enrichment
Data enrichment is one of the processes that improve and supplement raw data. These processes combine 1st party data with other information from internal and external sources.
How does data enrichment work?
The process of data enrichment begins with the collection of various data from several sources. Recall that typical data sources are divided into three types:
1st party data
The information about customers that the company collects directly from them is 1st party data. Often the source is the user behavior of your website and application or information from the customer relationship management (CRM) platform. 1st party data can also come from subscription lists, social media analytics, and customer surveys.
2nd party data
The 2nd party data is the 1st party data received from someone else. This information can usually be combined with your 1st party data to increase its scale and more accurately target customers similar to your current audience. 1st party data is especially useful if you are targeting a new demographic group that represents a significant portion of the original company's customer base.
3rd party data
3rd party data is aggregated 1st party data collected and compiled from many sources. Instead of buying 2nd party data directly from the source, a company can instead purchase certain 3rd party data sets from aggregators to scale up its 1st party data. 3rd party data is most often used to enrich data in order to increase 1st party data.
All three types of data can be effective for better understanding and targeting your ideal audience. 1st party data is usually the most valuable, as it is information received directly from your customers, but it does not always provide sufficient scale. Enriching this data with 2nd party and 3rd party data helps to provide a more complete view of your consumer at scale. To enrich the data even more, you can use analytics to determine patterns and form new parameters of the target audience.
By combining data using data enrichment techniques, brands can gain a deeper understanding of their customers' preferences and behaviors. By leveraging data enrichment, brands can use their knowledge to make informed decisions, expand their customer base, and personalize messages to achieve greater success. This is why an increasing number of companies are using data enrichment as a source to achieve their long-term marketing goals.
What types of data enrichment are there?
Data enrichment improves data through various means. There are as many types of data enrichment as there are data sources, but companies often use several common types. These include:
Enrichment Demographic data enrichment expands customer data sets by applying demographic information such as marital status, family size, income level, credit rating, and more. This type of information provides greater personalization of your targeting criteria, messages and creatives.
Enrichment Geographic data enrichment includes adding information such as zip codes, cartographic addresses, coordinates, and more to customer profiles. This type of data is especially useful for mobile advertising and for determining the location of new stores. It can also be used to determine local prices.
Enriching behavioral data
Behavioral Data Enrichment applies customer behavior patterns to their profiles, including their past purchases and browsing behavior. This is often associated with tracking the user's buying path in order to identify the key areas of interest of each buyer. Behavioral data is necessary for companies to determine which advertising campaigns work best and what the return on investment (ROI) of each campaign will be.
Each type of data enrichment helps the company achieve different business goals. Before choosing the right data enrichment method for your business, determine exactly what information you need.
Why do I need to use data enrichment?
The main advantage provided by data enrichment is the increased value and accuracy of understanding the company's customers. Companies need high-quality data to make important business decisions and draw valuable conclusions. However, when discussing data enrichment, a general question arises – why not just use 1st party data?
1st party data, as reported above, is collected from customers directly through CRM platforms, websites, surveys and subscription lists. While this data is valuable because it comes directly from your existing customer base, it can also be limited. 1st party data tells companies about the behavior of their visitors on their websites or in applications, but does not tell them anything about the lives of consumers outside their sphere of activity, for example, about purchasing decisions and activity on the site.
Even if your company collects demographic and geographic information, your observation of each client is limited to how they behave when interacting directly with your company. This shows only a small part of who they are, but does not give a more detailed understanding. Your business may not get all the information you need for accurate and effective marketing.
By supplementing information about your company with 2nd party and 3rd party data, you can get a more complete picture of who your client is so that you can more accurately understand him and set up targeting. It also gives you more information to which you can apply analytics to get increasingly meaningful insights.
For all this, you will need a platform for data management and enrichment – dmp data enrichment. It will give you the opportunity to collect all the information in one place and prepare it accordingly for analysis, as well as transmit and use it in advertising platforms.
Results from using data enrichment
In addition to eliminating the limitations for the 1st batch of data, the use of data enrichment can provide significant benefits in various business-critical areas. Just a few of these benefits are described in detail below:
Improving customer relations & increasing brand loyalty
The client should feel that your company understands his needs. This increases the likelihood that he will make a purchase and continue to work with your business in the future. Data enrichment can facilitate this deeper understanding of customers by providing more information to enable personalized customer interactions.
The enriched data allows you to adapt your business to the needs of a wide range of people, up to individual customers. And all of this is based on the detailed information in your dataset. You can adjust the prices and advertising campaigns of your business so that they match the target audience. You can also create more personalized communications based on individual customer data.
Such a personalized experience is very valuable for consumers. It promotes the establishment of meaningful, long-term relationships with customers that lead to business success. In one Forbes survey, 40% of business executives reported that customer personalization has a direct positive impact on their sales.
The more data you have, the more accurately you will be able to segment your audience. Segmentation based on large and small factors helps to classify people and see what your customers have in common. This knowledge allows your company to develop more effective targeted campaigns. With more data, you can identify new patterns and marketing or product opportunities that might previously have been invisible.
A “spray-and-pray” approach to marketing can help overall brand awareness, but its effectiveness on customer conversion is less obvious. Instead, most companies focus their efforts on targeted marketing. However, in order to target personalized advertising to people, companies need to have a complete picture of their audience.
1st party data can only show the behavior of consumers in direct interaction with the company. But the addition of this data to the 2nd party and 3rd party data allows organizations to get a more detailed idea of each consumer and his digital life. This helps companies identify and focus their efforts on the individuals who are most likely to turn into customers.
Reliable assessment of potential customers
Lead evaluation and analysis helps sales departments prioritize their efforts. Only this is almost impossible to do when you have incomplete customer profiles. Data enrichment can improve their profiles with quality data, providing a reliable and meaningful assessment. The quality and depth of the data can also allow you to automate lead evaluation, eliminate assumptions, and allow your sales team to focus on their goals.
Ensuring data compliance
Data enrichment processes ensure that your company complies with regulatory requirements regarding data privacy. Many countries at the legislative level impose restrictions on the type of client data that you can store and on the time of their savings. There is also a need to regularly maintain "do-not-call lists", lists of people who have unsubscribed or banned the use of data about them. If your company does not have a mechanism to ensure compliance with regulatory requirements, you may face costly penalties.
On the other hand, you can configure data enrichment processes for regular streaming database cleanup. At the same time, it is possible to preserve the value of the data and compliance with the reference requirements.
Improving data quality
Inaccurate data can lead to the loss of advertising budgets, customer dissatisfaction and incorrect analytics, which costs companies dearly. Many people work with redundant data because they either do not know about their existence, or do not know which data should be deleted.
Data enrichment tools can eliminate redundant and inaccurate data. This is done by automatically analyzing information, combining redundancy and correcting errors when saving updated profiles. This method improves the quality of the company's data, so they can be sure that the task is being performed to work with the most accurate and up-to-date information.
Increased cost savings and sales
Data enrichment reduces costs and optimizes sales. Data enrichment processes save companies money by managing existing information. This ensures that you don't waste database storage on data that is useless for your business. This process also reduces costs by minimizing penalties due to data inconsistencies. At the same time, data enrichment ensures maximum profit by increasing sales. This is due to more effective marketing and customer management. Data enrichment can identify opportunities for cross-selling and additional sales, while promoting constructive relationships with customers.