Consumer Insights Data

Consumer credit data can be a type of alternative data used to effectively forecast company KPIs or stock prices. It provides a summary of the credit profiles for consumers at zip code levels and the data is used to identify and target areas where customers share financial behaviors. This type of alternative data usually cover zip+4 level areas which include attributes like credit lending risk scores, the propensity to pay, the propensity to take out a mortgage, purchase trends, payment trends, and the propensity to take out consumer loans. Datasets classified under other categories can also be used to measure consumer credit, e.g. consumer transaction data, email receipts data, mortgage/loans data, and app usage data. Email receipt data is useful for tracking if people are paying bills on time. Lending apps can be used to track the number of daily active users and other metrics like average spending time as proxies to evaluate lending activities.

Product and service reviews posted online on social media platforms and other websites can be harvested and analyzed for ratings, trends, and frequently mentioned topics. Numerous academic studies have shown that consumers place faith in online reviews and that favorable reviews generally lead to increased sales. At the same time, excessive negative reviews and complaints can be a sign of poor management. App reviews can provide insights into consumer satisfaction with app services such as mobile banking. Glassdoor and Indeed can be indicative of corporate quality and future financial performance. Other alternative data providers track brand reputations by incorporating various alternative data sources that gauge consumer and B2B opinions, including surveys.

There can be a discrepancy between what is occurring on social media and what consumers say through direct surveys. Survey data is an alternative data category that is most useful when trying to understand the ‘why’ behind other datasets. Different types of investors may use survey data differently; a private equity firm uses this data to understand consumers in the markets where they operate and get a good sense of the market opportunity awaiting them in a possible acquisition. A Venture Capital firm often uses survey research to validate whether launching into a new category is worth their time and money and confirm that a new product or service will address an actual market need or consumer pain point.

Asset managers and hedge funds can use survey alternative data to do research on public business-to-consumer companies like entertainment, telecom, consumer goods, retail, and food. Asset managers in general use survey data to spot longer-term trends around consumer perceptions of products and services. Additionally, when investors make decisions, they also need to check that social media content correlates with surveys of actual consumers, both sets of information should confirm a trend and cut out the noise that may be on many social media sites.

Data management challenges must be considered when working with survey data, including brands must be mapped to parent companies (consumers follow brands, investors follow stocks); changes in ownership over time interfere with the data (for example, Facebook’s acquisition of WhatsApp); and data aggregation and the frequency of the data (daily, weekly or monthly).