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

Many businesses try to manage their own first-party data, and since they aren’t doing it correctly, they end up harming their business over time. Sky Cassidy, CEO of Mountaintop Data, explains the pitfalls and landmines involved with “dirty” data, and why it is often a job for the experts.

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.”

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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.”

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