Brought to you by:

Third-Party Data in 2016: The Marketer’s Guide

2

To thrive in a highly competitive, mobile-first, consumer-oriented

world, businesses need to present their products and services directly

at the point of need, customised to an individual’s specific life

circumstances or personal preferences, and to inform and deliver these

offerings via the person’s channel of choice.

This is no mean feat. To meet these challenges, marketers are turning to

the valuable data they hold on their customers to uncover new insights

and drive more appropriate, relevant and personalised communications,

in an effort to find new customers and keep existing customers coming

back for more.

But is first-party data enough to overcome these challenges? Are

insights being missed and new customer acquisition and existing

customer retention opportunities remaining untapped? What’s the real

value of using third-party data and what are the best ways to combine

this with existing customer data?

As we move ahead into 2016 and beyond, data-driven marketers are

turning to third-party data to supplement and enhance their own

customer data in order to drive deeper insights and realise previously

unforeseen sales opportunities.

However, driven by new data protection regulations, the customer

data landscape is becoming more complex. But, without the necessary

proximity, insight, and ability to act upon key changes in consumer

contact data – regulatory or otherwise, organisations are simply

throwing away hundreds of millions of pounds in lost revenue every

FOREWORD

3

year. Bad data issues remain unresolved; customer intimacy continues to

prove elusive; the potential for non-compliance increases and returns on

investment diminish.

This report discusses the role that third-party data has to play in the

new data-driven marketer’s armoury as a means to deliver ‘just-in-

time marketing’ underpinned by ‘just-in-time data’. Its aim is to help

marketers use third-party data to turn consumers into buyers, and

buyers into loyal customers.

Here at Royal Mail, data, and in particular contact and address data, lies

at the core of our business. We hold a trusted reputation amongst both

businesses and consumers who rely on the data we gather and manage to

ensure letters and parcels are delivered to every postal address in the UK

– more than 29 million delivery points every day.

Much of the content for this report has come from years of experience

working with many of the UK’s leading consumer brands across the

finance, banking, retail, media and utilities sectors.

On behalf of Royal Mail Data Services, I hope you find this report

thought-provoking and useful as you travel along the road towards data-

driven marketing.

Jim Conning Managing Director, Royal Mail Data Services

4

1. Introduction

2. The opportunities within

3. Scaling key challenges

4. Staying compliant with the right data provider

5. The road ahead

6. About MyCustomer

7. About Royal Mail Data Services

CONTENTS

5

Such is the importance of third-party data to the modern day marketer’s

arsenal, that its appropriate and advised uses are ushering forward a

whole new era for their profession. No conversation about the ‘single

customer view’ can be deemed complete without a reference to data,

and given the sheer opportunity posed by the banks of highly valuable

information being held by third parties, it’s no wonder that marketers

are looking outside of their organisations for an in-depth view of the

people they’re selling to.

Unlike first-party or second-party information, third-party data is not

your own user data, nor have you received it from direct relationships or

publishers. It is often aggregated from other sites and is available through

some of the many specialist data providers that sell third-party data.

The use of third-party data is high amongst data-savvy marketers as it

can be used to unearth crucial, previously untapped customer insight.

In a research survey of senior data, marketing and analytics

practitioners conducted by Royal Mail Data Services in conjunction with

DataIQ published in February 2016, almost half (49.6%) use data

provided by third parties. Nevertheless, the current landscape is midway

through embracing a high degree of change.

Perhaps the most notable amendment concerns what third-party data

is used for - its status shifting from a solid method of identifying new

customers towards customer retention and specifically the conversion of

one-off buyers to loyal, repeat purchasers.

INTRODUCTION

6

Third-party data has embraced this role at the same time as maintaining

those same benefits in unearthing fresh prospects. Yet, with the same

report from Royal Mail Data Services and DataIQ highlighting that

companies lose an average of 20.7% of their customers each year, there

is certainly a need for third-party data to play a critical role in helping to

educate businesses about who their customers really are, what they really

want, and why they really want it.

As the new era of data-driven marketing gathers momentum, there

is speculation around what new EU data protection laws will mean for

companies and data providers that fail to play by the rules when it comes

to gaining an individual’s permission to use their personal information.

Making sense of this can prove challenging. Increasingly, organisations

are turning to specialist, trusted third-

party data providers to not only deliver

the additional insight and intelligence

needed to realise the single customer

view, but also to navigate the nuances of

the new data regulations.

More astute organisations are going

a step further by looking at new,

faster, self-service tools for capturing,

validating and managing customer data

on an ongoing basis.

“THERE IS CERTAINLY A NEED FOR THIRD-PARTY DATA TO PLAY A CRITICAL

ROLE IN HELPING TO EDUCATE BUSINESSES

ABOUT WHO THEIR CUSTOMERS REALLY ARE.”

7

While its uses are in abundance, a good place to start is by thinking of third-

party data as a way of enabling a much bigger picture of the customer to unfold.

First-party data acts as a handy introduction to the type of people that might

be interested in buying a product, acquiring a service or attaining a piece of

information. However, combining this with data from a third party adds a vital

layer of context and gives rise to customer intelligence that would otherwise

have gone untapped.

A marketer can, for instance, identify customer wants and needs based upon

browsing behaviour on other sites.

Generally, when marketers refer to third-party data, they are looking to it as

a way of tailoring their communications and promotions, or finding the most

relevant people to talk to at a specific point in time. Here is an example of

third-party data being used to retarget a customer via direct marketing - be

that email or mail:

• Step one: The data is acquired and the user profile enriched. New

information comes to light.

• Step two: The marketer uses the new information to target the customer

with more targeted and relevant communications or promotions.

• Step three: Through an interaction, the customer receives a

message relevant to their specific situation and, given their current

circumstances and awareness of a certain supplier, is more likely to

THE OPPORTUNITIES WITHIN

8

purchase or indeed unlikely to switch supplier.

At face value, high-quality data from a trusted third party can allow a

business to optimise their acquisition or retention campaigns for greater

relevancy, which can breed a better all-round performance. There is

of course so much more to be discussed in this area, as Jim Conning,

Managing Director of Royal Mail Data Services, attests:

“Marketers previously saw data as a way of improving new customer

acquisition. We’re now focused on using it to distribute content and

communications that are relevant to customers, whether they’re new,

existing or lapsed.

“People are receptive to communication when

it is relevant and timely. For instance, people

aren’t likely to be annoyed if they’re booking a

flight and someone emails them about hotels,

or if they’re moving house and a DIY chain

offered them 10% off their next order. Gaining

information from a third party results in better

performance and less wastage for a campaign.

“What’s more, you can inform someone that

they bought from you six months ago and you

were wondering why they hadn’t been back, which is good market

research and a way of re-engaging with a lapsed customer, where they

have given their permission.”

The retention piece is especially important when considering the

synergetic effect provided by first and third-party data working hand-

in-hand. A company may know certain details about a consumer, but

learning of something new about them through a third-party data

provider could bolster the relationship, allowing them to offer a new

product or service for a new circumstance.

High-quality, up-to-date, synergetic data can be used to inform

marketing strategies, brand image and company policy, giving the

business a chance to shape their offering around the most important

party: the customer.

“GAINING INFORMATION FROM A THIRD

PARTY RESULTS IN BETTER

PERFORMANCE FOR A CAMPAIGN.”

9

Third-party data, like every marketing investment, does pose the usual

challenges; one of these being found in the volume alone.

In 2014, a survey from dnx and Circle Research showed that 82% of

UK marketers were using big data or planned on doing so within the

next three years, but a third (33%) claimed to be overwhelmed by the

information at their disposal.

The obvious way around this particular issue is to collect information

for a specific reason, or to place effort on aligning something that has

been collected with a campaign goal. There is also something to be said

about data defaulting its way into the remit of Chief Marketing Officers;

professionals who may have years of general marketing experience under

their belt, but no extensive knowledge of getting the most out of data.

Recent surveys show that recruiting specialists is one way to alleviate

this issue. In 2014, a Gartner survey found the number of large

organisations with Chief Data Officers to have doubled inside 12 months,

estimating that a total of 17% had them in-house.

A separate and equally solvable conundrum lies in keeping third-party

data clean and current. Research from Royal Mail Data Services shows

that 63% of businesses lay claim to having old and inaccurate marketing

data on file - hinting that firms may be forgetting the adage of customer

acquisition costing five to eight times more than customer retention.

SCALING KEY CHALLENGES

10

This can come as a result of resources being stretched too far for

appropriate database management, the data being formatted incorrectly

to fit a file, the service of a bad data provider or the company simply

ignoring a mass clean-up, much to their disadvantage.

Regardless of how it happens, there is advice for companies that have fallen

behind in their data cleansing and overall data quality management.

“There are two things: you have to fix the data you have and you have to

have a process by which you maintain the accuracy and relevance of the

information,” Jim Conning states.

“When you’re inputting new customer details, you need to make sure

it’s accurate by looking into things like address validation. There are a

number of organisations who use old, non-cloud based systems which

have them manually updating each entry. What they should be thinking

about is how they can add to the database automatically and how they

can maintain that on an ongoing, continuous basis.”

11

Adding to the points about challenges in using third-party data are

the measures companies must take to ensure they are compliant with

guidelines for opt-ins and appropriate usage.

Of course, UK companies should only be working with trusted providers

who will ensure they stay onside of guidelines published by the ICO

(Information Commissioner’s Office) and set out by the Data Protection

Act 1998. For marketers, the points about direct marketing through calls,

SMS, email, fax and post are particularly relevant given the amount of

spend for these channels.

With electronic messaging, for example, the ICO offers an online

checklist which orders companies to obtain approval from the customer

they’re contacting and to provide contact details with every message,

among other pointers.

It is, however, also worth noting a ‘soft opt-in’ which means a company

can reach out to someone if their details come from a sale or negotiation,

the message is marketing a similar product to one they’ve bought or

if the person has been provided with the means to opt-out from the

beginning. The last point means that a marketer can use a customer’s

data where a consumer has chosen to untick a checkbox after making a

purchase or otherwise.

For data providers and their clients, the ICO’s message is simple: you

must acquire permission to bank a person’s data, provide information

about what it will be used for and an easy way for them to opt-out.

STAYING COMPLIANT WITH THE RIGHT DATA PROVIDER

12

The average penalty issued to companies between

September - November 2015 which had their cases

published by the ICO - a group sponsored by the

Ministry of Defence - was £78,564, with culprits

ranging from private companies to councils, right

the way across to NHS trusts. As of April 2010,

serious breaches of the Data Protection act can

carry fines of up to £500,000.

These warnings make it all the more crucial that companies acquire

third-party data from a proven, trusted supplier, where permission to

use, share and contact has been sought and granted. Interestingly, the

challenge to remain compliant is creating new opportunities, subject to

changes for the Data Protection Act as a result of a new EU General Data

Protection Regulation.

Agreed at the tail end of 2015 with a view to being passed within the next

two years, amongst other changes, these dictate that consumers have

the ‘right to be forgotten’ by companies if their circumstances change

(they move house or otherwise), they must be informed of how long their

data is being stored, and they cannot give consent by ‘silence, pre-ticked

boxes or inactivity.’

Much like display advertising is having to reinvent itself as a result of

ad blockers and ‘banner blindness’, the promise of new rules for third-

party data usage is injecting quality into the space.

Speaking of the two-year grace period for businesses to become fully

compliant, Jim Conning urges marketers to consider how they use their

data and the people they gain it from.

“Yes, things might be changing, but any new legislation presents an

opportunity,” he states.

“They do need to be appropriate and relevant in what they do if they

want to deliver a great customer experience. They must place themselves

into the minds of their customers and ask themselves: ‘Would I want

to receive that message myself, and do I think it’s appropriate and

relevant?’”

The frenzy generated around some of the biggest changes to EU data

legislation in two decades has made companies consider many things

£78,564THE AVERAGE PENALTY ISSUED TO COMPANIES BETWEEN SEPTEMBER -

NOVEMBER 2015.

13

around their data; not least from whom they gain it. As a result of the

EU’s new data protection regime, any party that processes data will

be held accountable for a data breach, where information is leaked.

Furthermore, experts are tipping a clampdown on companies that engage

in unscrupulous behaviour, by mis-selling data for example.

“Right now it would seem like the ICO is going after the people who

market, but they have the capability to go after the data providers as

well,” Jim Conning states.

Still, there are a series of basic questions which

should be asked of any third-party data provider.

These include where their information comes

from, how recently it was collected and the

behaviour that led to a customer being intent on

doing something - such is the price tag attached

to motivated purchasers.

From a compliance and quality perspective,

Jim Conning has the inside scoop about the

measures that a provider should have in-house.

“To safeguard our clients, we have a data protection and compliance

director who sits in our legal team. He makes sure Royal Mail as a whole

stays onside with the latest movements in legislation.

“We’ve met with the ICO to talk through our current practices as well

as some of the things we’re thinking of doing. We then apply any

rules across our data to make sure that our information is correct and

permissioned, and that if a consumer wants to change their permission

status, we can change it immediately.”

With all this in mind, any good third-party data provider must be in a

position to provide their clients with an easy and fast way to automate

the collection and ongoing management of data in order to help them

respond to new business opportunities in an agile manner.

Much like the communications sent to the customer, the data provided

should be appropriate and relevant to the company’s goals for their

campaigns, whilst there is much to be said about the provider being

reputable. In an era of mass change for data legislation, longevity will be

afforded to those providers that intend on being compliant from the off.

“ANY PARTY THAT PROCESSES DATA

WILL BE HELD ACCOUNTABLE

FOR A DATA BREACH.”

14

If there’s anything to be gained from the lists of marketer predictions

laid out at the end of 2015, it’s that customer insight is set to play a huge

role in helping them realise their goals. Gartner’s CMO Spend Survey

tipped the average marketing budget to rise 10% year-on-year in 2016,

charged with the usual demands for new customer acquisition, but also

“expansion of the most valuable customer relationships”. Customer

retention looks set to be a priority for marketers in 2016.

Progress in this area will partly depend on businesses being able to

understand customers and treat them as individuals. A ‘single customer

view’ is the jigsaw that first-party details like email addresses, social

media accounts and purchase histories can help create, but third-party

data can form a much more powerful version of this. If advice from the

experts is anything to go by, in 2016, marketers using third-party data

should be thinking bigger than ever before.

“Marketers previously saw data as a way of improving customer

acquisition,” Jim Conning continues.

“We’re now focused on delivering

marketing that is relevant to customers.

We have to build an intimacy with

customers, because that’s the most

effective, low-cost way of getting

potential customers engaged.”

“CUSTOMER INSIGHT IS SET TO PLAY A HUGE ROLE.”

THE ROAD AHEAD

15

Poor data quality is often cited as an obstacle to obtaining the single

customer view; that’s why it pays to combine first-party data with third-

party data by gaining any information from outside of the organisation

from a trusted provider.

An investment in analytical talent will aid things when the time comes

to examine everything that’s been collected, which in turn helps the

business to understand who their key customers are and what they want.

From here, marketers can begin to base their messaging, creative and

recipient list on a solid foundation of insight.

Third-party data may be coming of age, but in an era of the single

customer view, the connected world, bound by legislation ensuring that

companies play by the rulebook, it’s an enthralling space to observe.

ABOUT MyCustomer.com is Europe’s leading online resource

for customer-focused professionals, with over 100,000

members. Sharing news and advice on fields including

customer service, marketing, sales and CRM, MyCustomer.

com is a vital hub for business leaders looking to enhance

every facet of the customer experience they deliver.

With a network of expert contributors from around the globe

and a focus on strategy, technology and in-depth research,

members of the MyCustomer community are able to tap into

a wealth of knowledge and receive the most comprehensive

view of the trends affecting and influencing the world of

customer management.

Join the community at:

WWW.MYCUSTOMER.COM

ABOUT ROYAL MAIL DATA SERVICES Royal Mail Data Services is the specialist data business

of Royal Mail Group. We’re committed to helping our

customers build data-driven businesses to improve business

performance so we’re constantly developing new contact

and address datasets as well as new ways for businesses

to source, capture and use data. Every day we’re providing

businesses of all sizes with a combination of contact and

address data, data insights and analysis, and data quality

management services.

Our customers work with us for so many different reasons.

To improve the performance of their marketing and

customer communications campaigns. To tap into the sales

and customer retention opportunities presented by using

our unique home and business mover data. To reduce their

costs of using inaccurate or out-of-date address data. To

enhance their customers’ experiences by delivering more

personalised, relevant communications and interactions. To

improve the overall quality of their customer data. And these

are just a few examples.

For details of services and solutions go to:

WWW.ROYALMAIL.COM/CORPORATE/MARKETING/DATA-SERVICES

Royal Mail, the cruciform and all marks indicated with ® are registered trademarks of Royal Mail Group Ltd.

Royal Mail Group Ltd 2014. Registered Office: 100 Victoria Embankment, London EC4Y 0HQ.

© Royal Mail Group Ltd 2014. All rights reserved.