Unlocking Deeper Insights: Leveraging Alternative Data for Commercial Due Diligence

Traditional commercial due diligence mainly relies on desk research and customer insights gathered through web and phone surveys. In some cases, timely access to internal data enables a deeper look into company performance, moving beyond surface-level summaries. 

The rise of alternative data sources has unlocked new possibilities, offering insights that complement traditional research findings and allow a fresh perspective on the target asset, often revealing aspects that traditional methods may overlook. 

In this article we explore how different types of alternative data can enhance the value of commercial due diligence (CDD). 

Social Media Data

Social media data includes customer reviews from platforms such as Google, Yelp, Glassdoor, Twitter, and product reviews from e-commerce websites including Amazon. This data provides a pulse on consumer sentiment and employee satisfaction. Customer reviews highlight satisfaction levels, while employee reviews shed light on workplace culture and stability. Potential use cases: 

• Competitive Benchmarking: How do the company's ratings compare to competitors, and are low ratings affecting its market position? 
  
• Review Themes: What are the dominant positive and negative themes in customer and employee reviews? 
• Location-Based Trends: Do customer sentiment trends align with performance differences across various locations? 

Mobile Foot Traffic Data

Mobile foot traffic data offers valuable insights by analyzing anonymized movement patterns collected from smartphones. There are multiple potential use cases: 

• Customer Behavior: Understand visitation patterns, length of stay, and frequently traveled routes. 
• Visitor Demographics: Gain insights into the general characteristics of people visiting specific locations. 
• Marketing Effectiveness: Measure the impact of marketing campaigns by tracking changes in foot traffic. 
• Market Trends: Explore current and historical trends in market share to identify growth opportunities. 
• Competitive Analysis: Benchmark foot traffic performance against competitors to assess strengths and weaknesses. 
  

Credit Card Transaction Data

Credit card transactional data, typically collected at the merchant level, offers valuable customer insights into purchase behaviors, preferences, and spending patterns. Potential use cases:



• Customer Spending Habits: How spending differs by category, frequency of purchases, and average spend 
• Competitor Insights: Understand the share of wallet and its trends over time 
• Market Trends: Category-level trends over time and how they differ by geography 

Web Traffic Data

Web traffic data offers a comprehensive view of a company’s digital presence, providing insights into customer engagement, marketing effectiveness, and market reach. By analyzing metrics such as bounce rate, page visits, and conversion rates, businesses can evaluate their brand's visibility, measure online influence, and optimize strategies to improve digital performance and competitive positioning. Some potential use cases include: 

• Competitor Benchmarking: How does the company’s online footprint compare to competitors? How do key engagement metrics, such as bounce rate and time on site, stack up against competitors? 
  
• Referral Source Analysis: Which referral sources drive the most traffic, and how effectively do they convert into sales or inquiries? Is there a heavy reliance on paid traffic, or does organic traffic play a significant role?

POI Data (Points of Interest)

POI data provides valuable insights into physical locations, enabling businesses to make informed decisions. By leveraging advanced data sources such as Google Places, Foursquare, and other vendor platforms, companies can pinpoint high-potential regions for expansion and accurately assess market penetration: 

• Competitor Landscape: Analyze the presence and coverage of top regional and national competitors. 
• Market Share Analysis: Identify areas where the target company holds a strong market share based on location data. 
• Performance Benchmarking: Leverage POI data to calculate competitor-related metrics for predictive modeling, helping to understand how competition impacts business performance. 

Workforce Data

Workforce data provides detailed insights into a company’s employees, including information about job roles and geographic distribution. In a CDD setting, this data is commonly analyzed to understand the following: 

• Market Dynamics: How quickly is the market growing in terms of headcount? 
• Competitive Strength: How does the target company’s workforce experience compare to industry peers? 
• Operational Efficiency: Are there departments where the target company appears overstaffed compared to competitors? 
• Go-to-Market Capability: What is the typical ratio of "hunters" (sales acquisition roles) to "farmers" (account management roles) in this industry? 
• Talent Attraction and Retention: How does the attrition rate compare to competitors? 

Alternative data sources are essential for thorough customer due diligence, providing deeper insights beyond traditional metrics. Data types like social sentiment, foot traffic, and workforce composition offer unique views into a business's operations, market standing, and customer relationships.

At Stax, we have refined our approach to integrate alternative data seamlessly into our due diligence process, enhancing our ability to accurately assess risks and opportunities. Our Data & Analytics team has worked across countless engagements in our 30+ years as a firm to provide our clients with data-driven insights that they can act on. To learn more about Stax and our Data & Analytics offering, visit www.stax.com or click here to contact us directly.