Businesses have been using data enrichment as a means of further refining their knowledge about their consumers for years. It can be extremely effective at improving data and making it more usable. This type of data collection has become an important part of marketing, profit increases and business expansion. Read ahead for everything you need to know as well as three use cases of data enrichment.
What is Data Enrichment?
Simply put, data enrichment refers to the process used to enhance, refine, or improve raw data. This process could include additional data, or it could be a correction of minor errors in the original data. When businesses are using data enrichment, they will start with an existing database of first party customer data. They will then take third party data from an external authoritative source and merge it together to create a more comprehensive database. Many brands or companies will do this to enhance their existing data and improve their understanding of demographics.
In cases where data enrichment is being used, the company that is performing the enrichment needs to make sure that its customer data is up to date prior to beginning. Aside from being up to date, it also needs to be in the correct form and of the appropriate quality to meet the businesses needs for raw data. Some companies will employ data cleansing services to clean and standardize their data ahead of enrichment.
Data enrichment is important to businesses because it makes their raw data more usable. When they add in the third-party data, it offers brands more insight into the type of customers that they are serving. Then from this point the company can use this more targeted data to personalize marketing messages, develop new products or services and do away with the ones that don’t work. It can strengthen the relationship that companies have with their consumers and further growth and profit within the business.
Types of Data Enrichment
While the types of data enrichment that are out there seem endless, there are two methods that are the most common. One is demographic enrichment, and the other is geographical enrichment. Both are equally important but differ in the type of data they seek out. As the name suggests demographic data enrichment will focus more on things like income levels, marital status, age range and gender. Geographic data enrichment is going to focus on the locations that the customer base resides in. This will include not only ZIP codes but also the boundaries between cities and towns. This type of data can be especially helpful when determining where to place brick and mortar stores.
There are three ways that the new data can be acquired. The first one is called a direct method. This focuses on more personal data. For example, a customer can respond to a survey or provide additional information about themselves in an online profile. Because this data is coming directly from the customer, it is referred to as such.
The next method is the internal method. Your company may have internal databases such as CMS, ERP, digital services, or other production systems. These systems may be holding data that can be applied towards your existing data for further enrichment.
The third way to collect new data is through external methods. Some businesses will choose to purchase data from a third party. It is important to note here that any data acquired from an external source would need to be validated to ensure the information is accurate before it is integrated.
Use Cases of Data Enrichment
- Marketing: As previously mentioned, data enrichment was first embraced as a means for marketing. Companies should always seek to strengthen their understanding of their customer base and its behaviors. It can help target audiences with appropriate placed ad campaigns and help to expand business by bringing in new demographics. Using data enrichment for marketing is something that all businesses should be doing if they are not already.
- Risk Reduction: Data enrichment can also be used to mitigate risk. This is especially true for insurance companies. In the insurance industry, data enrichment provides valuable information about every factor that could cause an issue on an insured property. It allows them to come up with price points that make sense based on the level of risk they would take on.
- Geographical Insight: There are many different industries that benefit from location-based data collection. It can also include demographic information. This can be helpful when choosing locations to expand your business to.
Boost Your Brand with Data Enrichment
Data enrichment is something that all businesses should be doing to help with growth. Consumer data is one of the most valuable pieces of information for an established business, so make sure that the data you do have is working well for your company.