The Formula for Truly Useful Data
We’ve worked with a lot of different companies through the years, many of whom want to be in the data business. I cannot tell you how many times I’ve heard the phrase, “Our data is so valuable.” Let’s just say it’s too many.
Every business today collects data that is relevant for its primary business, be it a SaaS software platform or media company or even an e-commerce business. The interesting observation is that nearly each one of the businesses believes that they can generate new revenues through selling their data. As you can imagine, in most cases, the data has little to no value to anyone outside the company.
I want to encourage businesses to continue collecting first-party data to improve the experience and usefulness of their core offering. With that said, if you want to be in the data business as well, you really need to plan for it up-front. We like to work with businesses as they are on their path to growth to layer in a data collection strategy. This will need to include the proper rights and disclosures about the data being collected and how it will be used both internally and in re-selling the data. Note that most consumers are ok with you selling their data—they just want to know exactly what you are collecting, what is being sold, to whom, and for what purpose. As long as you are not doing something truly nefarious, you will be ok.
Assuming that you can collect data from consumers with the necessary rights to sell it, the real key is answering the question of “are you collecting data that others will value”?
And how do you best determine value? Maybe I like to keep things simple, but I would say, just ask some potential customers what they would find useful, and even show them samples of what the data might look like.
The key here is to bake data collection into your business as early as you can, so that you’re able to scale a data business along with your core business. Learn what data buyers will want and how they will want it up front and apply that knowledge to your data collection practices. In the end, you will, in fact, have truly valuable data.