If data is the engine that drives the digital experience, it’s in desperate need of a tune-up. In the past year, we’ve witnessed a wholesale reevaluation of how we interact with brands online; and at the same time, brands have been forced to reevaluate how they interact with their customers.
Google’s announced phase out of the use of third-party cookies in Chrome browsers by 2022 brought into focus the insufficiencies of the personal data brands use to target customers, and the e-commerce revolution brought on by the effects of a global pandemic meant greater emphasis needed to be placed on digital strategies. During this ongoing overhaul of customer data initiatives, one broad trend emerged: brands need to get to know their customers better and, given an increased emphasis on privacy, customers need to be a part of that conversation.
The result of this recalibration of customer data is that brands need to cut the cord on their reliance on third-party data broadly, and replace it with more intelligent, relevant insights. For some brands, first-party data may play an expanded role in their strategies, though even first-party data has its own privacy issues (more on that later). Innovative brands, however, are looking for ways to leverage zero-party data (ZPD) as a means to better understand their consumers in a way that best serves marketing and sales initiatives, all the while bolstering brand-building efforts.
What Is Zero-Party Data and Why Is It So Important?
If third-party data is the data collected unwittingly from consumers on the open internet, first-party data is data that brands collect—for the most part also unwittingly—from consumers by tracking their activity on the brand’s own website, zero-party data is data directly offered from consumers to the brand.
Third-party data is by and large the most unreliable, and as a result of its general inefficacy, doesn’t represent a long-term strategy from brands looking to understand their customers better. Further, as privacy concerns continue to be raised about the collection of third-party data, brands looking to get ahead of regulators are already divesting from its use.
First-party data narrows the focus of third-party data, because it enables brands to track customers on the channels they own and tailor individual personalization efforts based on that activity. Unfortunately, first-party data is gathered by quietly tracking consumer activity—with consent buried in the fine print, and the data opaque to the consumer.
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Much of the meaning from first-party data usually requires guesswork and inference to make sense of because it’s historical, behavioral data. The activity a consumer demonstrates—take visiting a product page, for example—may be out of date and irrelevant almost immediately; in that example a customer may have bought the product elsewhere, so retargeting advertising efforts around that first-party data would be ineffective. Also because this data is collected in the background, when it expresses itself in marketing efforts it can come across as unexpected at best, and creepy at worst.
In contrast, ZPD requires a direct buy-in from a customer who offers their information freely as a way to optimize their experience with a brand. This knowledge sharing is intentional and transparent: the brand gets to use the data, and the customer gets a better experience across omnichannel interactions with that brand. Because this data is willingly offered, there is no risk of a brand being seen as harvesting data unexpectedly, so there is generally a more positive relationship with the resulting marketing efforts.
How ZPD Can Be Crucial for Marketing and Sales Teams
The best way to understand the benefits of ZPD is by looking at how it can be utilized. A good baseline example is a service like Yelp. As a consumer, if you set preferences in Yelp that say you’re a vegetarian, Yelp will know not to recommend a local steakhouse. This is ZPD in action: the consumer willingly offers a preference, and as a result gets more focused, relevant results.
When applied to e-commerce and omnichannel marketing, the same principles apply, just in a more actionable context. A customer may visit a skincare website looking for products to treat a specific skin condition. The brand can present the customer with a microexperience like a survey or quiz that asks a few simple questions: what type of skin the customer has (dry, oily, etc.) or what type of soap they typically use. From that brief, willing exchange, the brand now has a much deeper, richer view of their customer.
From this data set, the brand can optimize their website experience to favor the types of products that would best serve that customer’s preferences. This data can also be used to offer more relevant advertisements across multiple channels; these ads will be relevant, and won’t appear invasive because the customer has opted into the engagement. This transparency also helps build brand loyalty because the data exchange is viewed as an intentional sharing of insights rather than typical data gathering that occurs without customer knowledge (or even consent).
Building a ZPD Future
As data gathering initiatives ramp up across countless industries, it’s never been more imperative to center the customer in the conversation. ZPD gives brands the insights they need to be more effective in their personalization, marketing and sales efforts, without sacrificing the privacy preferences of their customers.
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And, while there are countless, creative ways to gather ZPD from quizzes and surveys to simple questionnaires, many brands already have existing stores of ZPD, typically fragmented across CRM, loyalty, email and other marketing systems. Getting started on a path towards a ZPD future is closer than brands think; it’s a matter of identifying and filling gaps in customer data, and putting it to use in a way that benefits both the brand and the customer.
Or, to put it another way: if you could ask your customer one question, what would it be? And how much more successful would your marketing and sales efforts be with that information.
