Data enrichment is a hot topic right now. So you may wonder how it applies to your specific business? In this article, we will break down the topic into what is it, when might you want to use it, and when you might not.
As businesses become more digital (this is where the buzzy ‘digital transformation’ phrase comes from) it will undoubtedly pull you toward learning more about your audience and customers. Some of this information is fairly easy to collect yourself - such as which of your current customers visit your website (tools like HubSpot and Salesforce have this functionality out of the box). Other information, such as socio-demographics or details, such as the age of the house they live in, may be harder to come by.
According to Science Direct, “Data enrichment refers to appending or otherwise enhancing collected data with relevant context got from additional sources.” Simplified further, the goal of data enrichment is to fill in missing pieces of information. We can also use this process to verify information that is important to your business, such as ‘is this person still married?’
In today’s world, you can find almost any data point you need or want from a 3rd party data provider. This makes it easy to fill in the blanks, scale quicker, and better serve your customers. It is not without cost though - both financial and from the potential for inaccuracies.
When to Enrich
Knowing when to enrich your data is simple: what would the cost to your business be to gather this information yourself? If it works out to be cheaper to purchase it, then it's a fairly simple decision. There are also instances where data serves a basic business function, and without it, you will grind to a halt or face substantial risks. An example of this is insurance underwriting, where one poorly placed policy can bankrupt all but the largest insurance carriers. In this high-stakes situation, enriching becomes a business need rather than a want.
It's important to focus the enrichment
Ultimately, enriching data provides a myriad of benefits. It's important to focus the enrichment in areas that will show ROI for the rest of the business. It is also important to see if there are easy opportunities that you can collect it, rather than paying for it. This will defray what may be a significantly higher bill, as data providers are not cheap.
When Not to Enrich
When you view data enrichment through a strategic lens, such as your organization’s KPIs or goals, data enrichment may seem like the silver bullet to your problems. It does not always work out like that, though. As a short-term solution it may be fine, but being reliant on it for perpetuity, rather than building out your own data collection system, is ill-advised.
The data you have on hand is valuable
Often, business problems do not require more data - especially if you are already struggling to consume the data you have today. Just adding to the data pool will lead to more paralysis and inefficiency. The data you have on hand is valuable, like the customer details in your CRM. Companies are using CRM information to sell more efficiently, much like the way Amazon or Netflix targets the next thing to buy or watch for you. It is always advisable to look internally and see if what you think you are missing is actually in a different system, or with slight modification, can tell you what you need to know.
All This Talk About Data
Data can be wonderful - it tells you what you need to know and provides a competitive advantage. But enriching data is pointless if you do not trust it. Most executives believe that only 80% of their data is trustworthy. So when it comes to enriching or not, the better question may be: what is it you are trying to uncover that you have no way of knowing right now? The answer to that question may surprise you.