Data drives most businesses. But what happens when you lack data to make a critical decision? How do you collect the data, and at what cost?
Before acquiring missing data, define your objective. It could be answering a question, such as, “How do my sales compare to competitors?” Or, “What products should I launch?” Perhaps, “How do I increase sales from existing customers?”
Before acquiring missing data, define your objective.
Once you form the objective, identify the available data to solve it. It could be that data is available from third parties in multiple systems — from transactional data to customer info to behavior data. Or you could have the data available internally. If that data is in fragments, you could potentially solve your objective with trend analysis as opposed to an actual percentage or number.
Regardless, depending on the objective, you likely have multiple data sources. I’ll address the popular sources in this post.
Data Sources
In-house:
- Install on-site software to collect data. Examples include a marketing automation platform or heat-mapping tools, such as Crazy Egg. Heat maps help understand how visitors use your website. Most provide A/B testing capabilities, too, for colors, images, and even products.
- Conduct surveys. While they can be time-consuming to create, surveys from platforms such as SurveyMonkey or Qualtrics can help gain an in-depth understanding of your customers and prospects. Survey a segment of customers for detailed responses that go beyond “yes” or “no.”
- Ask customers or prospects directly. An alternative to a survey is to ask a simple question at a specific point in prospect’s or customer’s journey. For example, after sending the confirmation email, you could ask via email to rate the shipping experience. You could ask customers who have purchased a specific product how likely they are to buy a different one. You could also solicit honest reviews.
- Net promoter score. It is less time consuming for customers to answer one question. The net promoter score ranks the responses to “How likely would you recommend our [company, product, or service] to a friend or colleague?” A responsive of “never” would receive a 0. An “extremely likely” response would be a 10. NPS is a good way to understand overall customer satisfaction.
Secondary:
- Secondary research goes beyond internal data to investigate your industry or your customers. Examples include analyzing prices on competitors’ sites or reviewing the Instagram accounts of customers to understand their demographics and interests. Secondary research typically takes much time. I’ve seen companies spend weeks on secondary research to obtain the objective. However, it’s often worth the effort, as the information is qualitative and thus more useful than surveys or collecting from third parties.
Third-party data:
- Research reports typically provide general data about the trends in an industry, including the size of the market and top players and products. They generally are the cheapest option of third-party providers. However, they are usually generalized and do not address detailed questions.
- Consumer purchase data. Nielson and Kantar are examples of companies that sell consumer purchase data, including behavior, basket analysis, and other purchasing habits. The data can be expensive, but it usually includes details of consumer shopping trends on various levels — from zip code to a single product. Third-party consumer purchase data can also include complementary products, the best in-store location for products, the average price of products, product growth, and market share. Traditionally the data came from physical stores, but providers are starting to collect ecommerce data, too.
- Demographic and psychographic data (values, attitudes, opinions) are helpful when trying to understand your customers. Providers include Experian and Melissa Data. If you know, for example, that most of your customers are males between the ages of 35 and 45 with a college degree, you can tailor your marketing to that segment.
Keep It Simple
Just because data is available does not mean it is useful for your business. Keep your objective in mind prior to purchasing any data or doing extensive research. It is easy to think that more data is better. But typically the best approach is focusing on a single objective. Gather only the data that solves that problem. Keep it simple, in other words.