Consumer Insights Data

Alternative Data Category Description

Customer insights is a type of alternative data that is a collection of consumer behavior trends, statistics, and feedback that assist organizations in fully comprehending consumers and the choices they make while making purchases. To generate definitive consumer insights, gathering quantitative and qualitative data from alternative data sources such as website metrics, social media mentions, market research, and customer analytics is critical. Customer analytics gives you measurable information on what a consumer does online, whereas market research gives you a broad picture of consumer behavior and market trends. The solutions enable companies to make informed decisions on optimal product features, pricing models, and distribution channels to maximize revenues and market share. There are three primary sources of consumer insights data, Consumer Credit data (loan/ mortgages), reviews and ratings, and survey data.

Subcategory - Consumer Credit

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.

Subcategory - Reviews & ratings Data

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.

Subcategory - Survey Data

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).

Data Structure

  • Most vendors offer the data mapped to a ticker or company. Vendors that use or productize, a derived or separate dataset typically will map the data to ticker.
  • History can vary. Typically, at least five years of history but it can be much longer. Bespoke survey data tend to be current with no history.
  • Delivery frequency can be daily/weekly going up to monthly depending on the underlying data source. Survey vendors that offer historical data around certain topics, themes, brands, or companies are usually monthly or quarterly.
  • The data is typically delivered via platforms or by API, FTP, AWS S3

Compliance Considerations

Consumer insights by their very nature are heavily reliant on consumers' personal information. As such Personally Identifiable Information (PII) considerations are top of mind in this category of alternative data. Alternative data providers need to make sure to anonymize the data and perform some level of aggregation to obfuscate the data and the individuals behind the data. If an alternative data provider obtains data from a third party, the alternative data provider needs to ensure there is no PII leakage and that the data is cleaned. Online social media content has extensive PII and some data anonymization needs to be undertaken. MNPI should not be of concern in this alternative data category as the data is not taken from a company or have the risk of insider attributes.

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