In the data-driven world, the more information you have, the better decisions you can make to drive business growth.
Besides relying on internal data, it’s worth considering getting data outside of the company, also known as external data.
Utilizing this data offers a lot more advantages, such as understanding your competitors, improving your products or services, enhancing talent sourcing strategies, building data-driven products, and more.
What is external data?
External data is information derived from public external sources, such as social media platforms, online communities, government websites, job boards, and more.
This type of data can range from financial to HR to weather data. It has a huge scope and you need to decide which works for you.
Data generated from these sources can be used for a wide range of purposes that may benefit businesses in different industries. Customer demographics, trends, and search queries may also serve as data that can help companies grow.
This type of data is usually collected from outside of the organization and is available to the public. External data, also known as third-party or public web data, serves as a powerful tool for companies that want to optimize their operations and make data-driven decisions.
Types of external data
There are four relevant external data types: open data, paid data, shared data, and web data. While all four types have a common feature of stemming from external data sources, they differ in provenance, access, costs, structure, and further dimensions.
- Open data is publicly available and can be used or republished without any permission or copyright restrictions.
- Paid data is acquired from data providers or data marketplaces. It’s commercially available at a certain cost.
- Shared data is a type of data that is shared between various companies within business networks or ecosystems.
- Web data is any kind of unstructured data that is available to the public online. This can be data from social media, websites, blogs, etc.
These types can be also classified as traditional and advanced, based on the ways the data gets collected.
Traditional external
Traditional external data can be provided by third-party governmental or commercial institutions. It comes from statistics departments or commercially acquired private databases.
Traditional external data is frequently used to complement internal sources for a better understanding of the selected market or to monitor macro trends or consumer behavior.
This type of data can be found in government press releases, third-party market research databases, reports from statistics departments, etc.
Advanced external
Advanced external data is generated by tracking customer or competitor activity.
This type of data is usually utilized by companies with specialized teams of data scientists or firms which use Data-as-a-Service (DaaS) providers.
Advanced external data may be applied to a wide variety of business applications.
Examples of this type of data may include brand sentiment on social media, real-time data related to the product (pricing, stock status, etc.) on digital marketplaces or competitor websites, supplier information, etc.
External data sources organizations leverage worldwide
There are many sources of external data that businesses use around the world. The most common sources are:
- Publicly available company data. Those are websites or platforms, where you can find information about companies such as their size, industry, location, and more. This information is available on websites like Glassdoor and others.
- Open data. There are many open datasets available online. Governments around the world publish a lot of public data on their portals and platforms, including economic data, public statistics, reports, and analysis papers.
- Data aggregators. These can be external datasets from companies such as Nielsen or Experian that provide structured marketing and demographic data derived from a huge range of sources.
- Analyst or industry reports. Those serve as valuable assets for many businesses, as they show real-time financial trends, growth patterns, changes in consumer behavior, etc.
- Hyperscalers like Google, Amazon, and Facebook. Companies can gain valuable insights from analyzing data like online search queries related to certain products, Google's basic search, and trends data that includes currently trending keywords and subjects.
- Social media data. Social media networks are the main sources of professional data. You can get the job title, work experience, connections, location, and more data points of your potential customers or candidates. Companies can also analyze the social media presence and engagement of their target audience to improve their marketing efforts.
- Product reviews. Another valuable source of data that provides an important insight into your customers and whether they like the products you sell or services you provide.
- Data brokers. These have emerged carrying specialized datasets, which are already collected and specifically structured in a way to bring the most value to different aspects of a business or the market. You should rely on data companies when you need large amounts of data that would take ages to get yourself.
Key benefits of using external data
Organizations that use external data effectively have more potential to place themselves ahead of their competition when it comes to strategic planning.
Among the benefits of using external data, you can find the following:
Strategic planning support
An effective company strategy must go beyond internal data analysis of the business processes. Organizations must seek out external data that will provide important insights and help them build more accurate predictive models.
Competition comparison
External data helps businesses better understand the market they’re operating in as well as their competition.
Companies can better analyze the competitive landscape and be ahead of most companies in the market.
Implementation of various data strategies within the organization will bring more value as it will provide a bigger picture of the overall performance and opportunities and threats on the market.
Thorough company analysis
Using big data allows business leaders to use time series and historical data to better understand what has been done right and wrong to further make more data-driven decisions.
With the insights from data, organizations will also be able to optimize the performance of different departments and benchmark specific aspects of performance against competitors.
The difference between internal and external data
Internal data is collected by organizations in their operations and transactions. In the table below you can see key aspects that make internal and external data.
The most common use cases of external data by corporate departments
Use cases of external data and their complexity differ between various industries and markets, however, external data can be used for a wide variety of purposes and bring value to almost all important aspects involved in the business.
Investment intelligence
Investors can leverage firmographic data to generate new investment opportunities. It allows for cost-effective and scalable generation of company lists that fit the investor's criteria.
For example, you can group companies by filters such as location, founding date, industry, size, and more to find the best opportunities.
Talent sourcing
Recruiters can use employee data to enhance their talent sourcing strategies. Similarly to how investors discover new companies, recruiters can generate a list of potential candidates that would be the best fit.
They can use filters such as job title, location, experience, and more employment data points to get a list of professionals that could fill an open position.
Building data-driven products
HR tech and sales tech companies can use external data to build their own, unique, data-driven products.
HR tech can ingest large volumes of employee data to their database and power a recruitment platform, whereas sales tech companies can do the same to build a lead generation platform.
Customer insights
With external data, the marketing department can get better insights into the company's customer base.
Here social media data will allow a better analysis of brand perception and awareness, while online search data will show current shopping trends and what interests the target audience the most.
Another important aspect is brand sentiment analysis. Businesses may compile a sizable volume of customer feedback to learn what consumers think of any brand and how particular behaviors might affect perception.
Product development
Companies can use product review data to track the pulse of the market. It's a great source of information if you're looking to build a new product or improve an existing one.
You're getting information directly from the consumers, the end-users that will be using the product or service.
Conclusion
Long-term business decisions will be more effective if organizations fully leverage publicly available external data. To obtain the most valuable insights, businesses should be linking internal data with existing external data.
They also need to develop a solid data strategy to make sure they can assess and manage various sets of data.
