Hmm that’s a good question! Knowing that both of these data sources allow a brand to reach its customers, and that an in-house customer database is likely to be cost-effective, then why even bother thinking about this? As I recently worked on a customer satisfaction research project involving both these data collection methods, I now have the chance to say that there’s more than an element of costs here!

We know that customers register/opt-in with a brand either because they like the brand or are looking for rewards. Either way, these customers tend to be more loyal, with a lower incidence of shopping elsewhere than those contacted via external research panel. Since these more loyal customers are better connected with a brand, they naturally give higher customer satisfaction ratings. After all, loyal customers tend to use the upper ends of a rating scale. Therefore, customers registered with a brand’s in-house customer database are likely to be more satisfied than those identified through an external research panel.

This axiom holds true for brick-and-mortar store shoppers, but not so much for digital shoppers. In fact, there is minimal disparity in digital shopper customer satisfaction from the two data sources. This is related to differences in the shopping behaviour for the two channels. Think about a digital shopping experience. Once you have shopped online with a brand a few times, you tend to stay with that brand for reasons like convenience, ease, and trust.

By contrast, when you shop in-store, you are more inclined to walk in to a nearby competitor store, even just to window shop. Then, who knows? You may like something and exit after swiping a debit or credit card! In addition, online shoppers are automatically registered into a brand’s database.

The point to keep in mind is that both data sources—the in-house customer database and the external research panel—have a similar incidence of loyalty for digital shoppers. However, former is ahead of the race for brick-and-mortar shoppers, which translates into higher satisfaction for these shoppers from an in-house panel.

The next big question follows: Is it right to use one data source over the other? Both methodologies have their own pros and cons, and neither is right or wrong. Choosing one over the other depends on certain factors. What’s the research objective? Does the in-house customer database fully represent the brand’s customers so to provide a full picture? What’s the likelihood of linking survey data with the brand’s financial data for further analytics? And most importantly, what budgets are available? Clearly this is not the end, but rather, the start of another conversation!