Choosing the Right Third-Party Data Partner for Analytics

There are many third-party data providers to choose from, and companies use third party data providers because they don’t think that the data that they already have internally is enough to produce accurate results in their analytics.

One case in point is a healthcare system in Europe that wanted to determine trends for certain types of cancers; however, the organization didn’t have broad enough demographics represented in its own data to perform the analytics needed.

The company contracted with a large healthcare data aggregator that had anonymized its data so records of individual patients could not be seen but allowed the trends across large swaths of diverse European populations to be seen. The anonymization was necessary because of healthcare privacy requirements and was an upfront requirement that the data purchaser had given to the aggregator before agreeing to buy the data.

Many companies like this choose third-party data aggregators to augment the data that they have in-house because it’s simply too costly and time consuming to build their own in-house diversified data repositories when there are commercial vendors that are prepared to offer turnkey data.

But how do you know that you’re choosing the best data partner? Here are five things to look for in a third-party data provider:

A marketing manager at a small community credit union shared this story with me:

Her marketing staff wanted more comprehensive demographic data on the individuals who lived in their community. They contracted with a marketing demographics provider in the financial space that provided them with a plethora of financial data about individuals who banked and did business in their community.

“This was great data,” she said, “But unfortunately, it wasn’t what we were looking for. What we wanted to know at the time was how many individuals in our community were underserved and unbanked? These were the individuals we wanted to reach out to — not to the ones who already had a bank … We learned a valuable lesson. We needed to do a better job of clearly defining the business problem that we were trying to solve with the vendor at the first meeting. I believe that we weren’t specific enough when we talked to the data provider about our data needs.”

This is an important point.

While a majority of companies might be interested in market share, market promotions and product analyses, how well they are serving their customers and how they compare with their competitors, not every company wants only this.

You will only reap value for the data that you purchase if the data acquired enables you to address your business goals.