In practical data mining it is a common experience that there is much more room to enhance forecast by introducing new aspects, than reshaping the type of the model used. Sometimes it is simplified by saying: “more data, better forecasts”. More data here should not mean more gigabytes, but new approaches, which ensure that we can describe clients’ behavior in-depth. For example, if we want to predict the expected purchases, we may include data of the customer service system, not just build upon past purchases.
This is data enrichment. A quite onerous work.
On the one hand, you have to forget the rule which says: “data scientists’ work is to make the best forecast out of the given data”. Instead, you have to think about new data options which help you to get new aspects.
On the other hand, significant resources should be invested in data preparation. Because, if we had valuable data that is easy to get; probably we would already have it. Therefore, we must be careful with the data sources we intend to use. It could easily take tremendous time to acquire a data source, merge it with our present data, and finally adapt it for analysis.
Regarding data enrichment, it may seem to be an obvious solution to get data from the internet – at first sight. Why does this solution get preferred? Surprisingly, many times inner company data are much more difficult to access (need to be requested from other units, writing order documents, gather legal department acceptances, etc.) Purchasing data is often not possible from professional data services because of the price, the difficulty of the procurement process – or simply because of the lack of appropriate data.
Public data, which can be obtained easily, is – on the contrary – the Wild West itself. A separate post is needed to discuss the challenges if we choose this solution.
Personally, I would prefer the middle ground. I think that the best form of data enrichment would be if different companies shared their data with each other. It is not impossible, also legally, complying data protection legislation. Personal data protection can be complied if the shared data is never client-level but refers to micro segments. Micro segments are formed by categories like geo-demographic factors (age, gender, education, etc.), income, social status, etc.
For example, a utility can share the average invoice value, a telecommunication company the mobile data usage or a bank the card transactions. For giving this data, they could ask for money from their partners. I have already encountered such agreements on the market, but only on a pilot basis.
What kind of data would you share gladly? What kind of data would you pay for in return, which could make your work more effective?
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