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First, second and third-party data: definitions, sources and types
This article will look at what first, second and third-party data actually is, who collects it, what types there are, and what the advantages and disadvantages are.
Second-party data
First-party data is the data you generate directly from interacting with your existing and potential customers in your own channels. It comes from your website, app, social media channels or marketing campaigns. Interaction includes visiting specific pages of the website, downloading content, purchasing a product or service, complaints, support requests, registering for newsletters, sign-ups, participation in events, quote requests, etc.
First Party Data: Are generated by customers and prospects in the various touchpoints.
Sources
- Website
- Own social media channels
- App
- Customer service
- Events, trade fairs
- Webinars
- Many more
Types
- Purchasing a product or service
- Complaints
- Support requests
- Visiting specific pages of the website
- Sign-ups
- Registering for newsletters
- Participation in competitions
- Newsletter registration
- Participation in an event or webinar
- Downloading content on the website
- Quote requests
- It also includes information and data that is generated offline (e.g. a form completed at a trade fair)
The advantages
- Highly relevant, as the data is generated directly from existing and potential customers.
- Data protection guidelines are always adhered to.
The challenges
- When a user enters data manually, the quality of this data is often poor and there may be mistakes or gaps.
- Users only provides the details they want to, so you don’t get the full picture.
- Data that comes from different touch points is often available in different systems, so information is not exchanged or consolidated.
Second Party Data
Second-party data is data that you don’t collect yourself, but that a partner company collects and shares with you. It is basically first-party data that you haven’t collected yourself, but that someone else has collected and made available for you to use.
There is usually a business relationship between the data collector and the user, such as between a shoe manufacturer and an online shop. In this example, the shop gives the first-party data it generates to the manufacturer on a partner basis. The shoe company gets a much better picture of the market and its target customers and is able to specifically direct its campaigns in a certain direction or to promote product development based on sound data.
Second-party data: Basically, first party data that a partner collects and gives to you to use.
Sources
- Partner companies and business partners (suppliers, resellers, etc.)
Types
- Basically the same information as provided in first-party data
Advantages
- Highly relevant, as the data is generated directly from existing or potential customers.
Risks
- The data might not necessarily be relevant, useful or specific. This is why it is important to obtain the right data and not to acquire a big pool of unspecified information that may cause more work than it offers benefits.
- Data protection regulations must be complied with and identified in any case.
Third-party data
Third-party data is data that specialised companies collect, aggregate, analyse and sell to other companies. It is the data you obtain from Dun & Bradstreet or other providers.
Even though many claim that first-party data and second-party data is more important because it is what you collect yourself, third-party data is still enormously important. This is because existing and potential customers only disclose information about themselves sparingly, and if they do, it is often incorrect or incomplete. Third-party data not only fills in the gaps, but also provides a wealth of information required to build and expand business relationships and that makes it possible to accelerate and automate business processes.
If you want to gain information about non-customers, this can only be done with third-party data. This information then forms the basis for actions like conducting market analyses or recording sales potential in a standardised way.
There is some information that an existing or potential customer will never provide voluntarily, and that includes data concerning their financial strength or compliance with regulations. Onboarding new business partners is not possible without it.
Third Party Data: Are collected, aggregated, analyzed and sold to customers by specialized companies.
Sources
- Credit agencies
Types
- Demographics
- Firmographics
- Hierarchies, linkages, corporate structures
- Financial risk scores and indicators, financial figures
- Compliance information to adhere to regulations
Advantages
- Third-party data provides all the information that an existing customer, potential customer or business partner doesn’t disclose about themselves, such as financial or compliance risk indicators.
Risks
- The quality and depth of the data can vary depending on the provider.
Best practice: a combination of first-party and third-party data
In view of the digital transformation and the need to make decisions based on data, a combination of first-party and third-party data is the best method these days. It is the foundation for all business processes such as acquiring new customers, existing customer management and much more.
A solid basis consisting of first-party and third-party data is also the foundation for digitalising and automating critical business processes. Ultimately, this is the only way to increase efficiency and turnover. Or, as Michael C. Reiserer, Managing Director of EASY SOFTWARE, put it: “Those that are efficient and achieve the best results with the least effort ultimately come out on top. This is particularly true of small and mid-sized enterprises like EASY.”
Read Customer Story from EASY SOFTWARE
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