External data

External collation means gathering data from sources outside the business — for example government reports, trade association surveys, newspaper articles, competitors' price lists or published industry research. The business did not collect this data itself, and it can be numbers or opinions.

What external data gives you

Because the data comes from beyond the business's own records, it shows a wider picture of the market. Your own sales only tell you about the customers you already have; external figures can show what people are doing elsewhere, what rivals are charging or how a whole industry is changing. For instance, a small bakery in a seaside town might read a national report showing households are buying fewer loaves but more pastries, and use that to widen its pastry range.

It can also give a more independent view. A trade body or government department is not the business itself, so its findings may be taken more seriously than the business's own claims about itself.

What it costs you

External data may be more expensive and slower to obtain. Some industry reports have to be bought, and finding, reading and sorting through them uses staff time that could be spent serving customers. It can also be less specific: a report covering the whole country may say very little about your street, your prices or your shoppers. Because someone else gathered it for their own purpose, it may also need checking before you rely on it.

Judging a source

Before acting on external data, a business should judge the source against three questions.

A survey of shoppers in a large city may be recent and reliable, but it still tells a business in a small market town very little about its own customers.