Maintaining First-Party Data: How It Goes Wrong for Businesses

CANOGA PARK, Calif., Dec. 13, 2021 /PRNewswire-PRWeb/ -- When it comes to effective tools for B2B marketers, collecting first-party customer data is at the top of the list. But, just as important as collecting this customer information is making sure the information is up-to-date, accurate, and free of redundancies. Additionally, businesses should not hold a large amount of irrelevant data, as it just takes up space and could lead to data privacy issues. But this can be a harrowing task, and not everyone is up to the challenge. Sky Cassidy, CEO of MountainTop Data, says "maintaining first-party data is often a job better left to the experts."

Put simply, first-party data is the information a business collects directly from its audience. First-party data can be broken down into two different types. The first type is explicit first-party data, which, according to technology researcher company Gartner, would be information "actively entered by the user, e.g., gender, phone number, birthday, on brand sites." The second type is implicit first-party data, which is "captured based on session behavior and location by the brand on site." (1)

Cassidy explains that "when we clean somebody's database for them, we're typically cleaning their first-party data," And, he explains, this is almost always a rather grueling and onerous endeavor, albeit a very necessary one. "Having clean first-party data is really important because all your marketing insights come from that, like 'what type of company buys the most from us'? If your first party data is incomplete or "dirty", you may not be aware of it and you end up making business decisions off of inaccurate or incomplete information, and that hurts the business in the long run."

Second-party data, on the other hand, is first-party data from another company. For instance, two businesses may share first-party data if it is mutually beneficial. Cassidy doesn't recommend using customers' information for any other purpose than what they have consented, such as monetizing it and selling it to a second party. He cites companies that change their terms of service without customers knowing it, allowing them to sell customer information. Second-party data is also less effective because it has been "stepped on" and did not come directly from your audience so you don't know what changes the company you're getting it from made.

Third-party data is any information a business collects that has no immediate connection to that business's customers, or to the company providing the third-party data. This often refers to the lists of information purchased for direct sales and marketing campaigns. While this quality third-party information is a staple for direct sales and marketing campaigns it is never as valuable as well maintained first-party data.(2)

But along with all the benefits of first-party data, there are also many landmines, pitfalls, tricksters, and scammers. One example Cassidy gives is the top performing salespeople in many organizations—those who bring in most of the revenue. "For example, in their day-to-day activities, when they enter something in the CRM, they often skip filling in fields that don't directly relate to their sales. This may be tolerated, since they are high-performing salespeople who are mostly focused on making sales, not on monotonous data entry. But the end result is that the accounts that deliver the highest profits for your business are the ones missing the most relevant information and end up being left out of customer profiling. The people analyzing the data to identify the best segments to target may exclude unknowns thinking these would occur at random when things rarely occur at random in first-party data."

Cassidy further explains that this missing information shows that data governance is underrated. But what exactly is data governance? An article from Quantyca defines it as "the process of managing the availability, usability, integrity, and security of the data in enterprise systems, based on internal data standards and policies that also control data usage." Unfortunately, it tends to be the last thing an organization pays attention to, due to the time and resources required to effectively execute data governance.(3)

The problems multiply when entering the realm of second- and third-party data. Cassidy points out a common example of fraudulent data in the current landscape. A company may think it's receiving many newsletters or account signups, but in reality, approximately 50 percent of these signups may be bogus account bots. "Bad actors can buy 10,000 Gmail accounts and then use account creation bots to create profiles, sign up for newsletters, and all kinds of other activities that can cause this information to end up in databases," explains Cassidy. There's a whole market for fake data which is typically then used to create malicious accounts that can end up in third-party data as well as first and second-party data.

Who is creating these bot personas and accounts and why? Cassidy says it can range from competitors to companies collecting information, to companies looking to disseminate information, to hackers. Often, it's difficult to know for sure what comes from a real person and what doesn't.

One thing is clear—with so many landmines, pitfalls, data tricksters and scammers, businesses themselves aren't always the best choice when it comes to data governance and managing first-party customer data. In many cases, they end up wasting a lot of time and money, when it would have been much easier to let an expert handle it, one who can perform the due diligence and recognize the good information from the stuff that just looks good.

"People who try to [manage data governance] by themselves are asking for trouble," Cassidy warns. "It's like going duck hunting and shooting at the wooden decoys on the water. You're not a duck hunter; you thought you'd go out and get your own duck instead of going to the market, but all you got was a bunch of splinters."

About MountainTop Data:
MountainTop Data, headquartered in Los Angeles, CA, has been providing data services for B2B marketing for almost two decades. With an unrelenting commitment to quality, they were the first company to guarantee the accuracy of their licensed data and business emails.  They provide marketing lists, data cleaning, data appending and data maintenance services. Their data services have been used by some of the world's biggest brands across a multitude of various industries from multi-national telecommunication companies to office technology, to PR firms and more. For more information visit: https://www.mountaintopdata.com.

1. Nicastro, Dom. "A Look at Marketing's Biggest Data Challenges of the 2020s, Part 2." CMSWire, December 21, 2020. cmswire.com/digital-marketing/a-look-at-marketings-biggest-data-challenges-of-the-2020s-part-2/
2. Bernazzani, Sophia. "A Basic Definition of First Party, Second Party and Third Party Data." Hubspot, December 16 2019. blog.hubspot.com/service/first-party-data
3. Uboldi, Daniele. "Govern Your Data: It's a Tough Job, But Someone Has to Do It!" Quantyca Data at Core, June 23, 2020.

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SOURCE MountainTop Data