A complete guide to zero-party data
Over the last few years, the uses and misuses of customer data have been the subject of much discussion among marketers, some of whom have no doubt come close to tearing whatever remains of their hair out.
Regulators have been steadily tightening data protection requirements—most notably, with the introduction of GDPR by the European Union, but also through comparable legislation elsewhere, such as CCPA in the United States.
So, what exactly does all this signify?
It tells us that consumers are seeking reassurance and clarification about what their personal data is being used for. A number of high-profile data breaches led consumers to demand more robust protection, which regulators and legislators have responded to by toughening up data protection regimes around the world.
The pandemic meant that we were probably all spending more time online, as well as making more purchases over the internet. It was an important early test of the new data protection laws.
At the same time, retailers themselves have been forced to change the ways they acquire data, and how they make use of it. This heralds a major change in marketing technology, or MarTech.
This is why businesses must start to make use of zero-party data. This, in a nutshell, is data which consumers intentionally share with businesses. It has many potential uses and it can significantly enhance the customer experience—including through personalised experiences.
Without further a do, let’s look at:
What is zero-party data?
Zero-party data is data which customers actively choose to share with a particular business. They might share this data through registration systems, questionnaires and surveys, feedback forms, social media polls or more.
It’s important to differentiate between this and first-party data. First-party data is derived from web analytics, social, CRM, email marketing information, and more. This means it only gives businesses implied customer preferences (in other words, they have to hypothesise these based on previous interactions) rather than explicit expressions of those preferences.
The term zero-party data was originally coined by market research firm Forrester, which defines that zero-party data is:
“Data that a customer intentionally and proactively shares with a brand, which caninclude preferencecenter data, purchase intentions, personal context, and how theindividual wants the brand to recognize her.”
A zero-party data collection may also include potentially sensitive types of data, such as political opinions and behavioural data.
Consumers today increasingly expect personalised, interactive user experiences, such as product recommendations based on previous purchase history (as pioneered by retailers like Amazon).
Businesses have had to adapt their marketing efforts and messaging accordingly, responding to changing consumer expectations. Customers are getting more demanding, but we wouldn’t have it any other way… er, would we?
We’ll go into more detail about the key benefits of zero-party data later, but it’s worth noting here that it can give businesses a much more finely-detailed picture of their customer base.
This means much greater insight into customer interests, needs, preferences, and intent. It also requires customers to consent to providing it, which is crucial—especially in a day and age when people are wising up to all things data protection and privacy.
Benefits of zero-party data
There are many benefits to zero-party data. For one thing, your business can use this data to provide an experience for the customer that goes above and beyond what your competitors might be offering.
Zero-party data has the potential to provide businesses with a much clearer understanding of what their customers are looking for and what their expectations are. This quality data could give them a competitive advantage. If you aren’t acting on this, there’s a good chance at least some of your rivals already are.
Data quality and accuracy
Zero-party data provides much higher data quality and accuracy. This allows businesses to work on a more concrete understanding of their customers, rather than inferring consumer preferences from previous interactions and purchase history. This also makes it easier for brands to build close, lasting personal relationships with consumers.
Customers increasingly expect personalised experiences. Businesses which provide these experiences—sometimes even in real time—are likely to profit as a result. Those that don’t, on the other hand, are likely to lose out to their more flexible and attentive competitors.
Zero-party data is more directly relevant to customer needs and preferences than first-party data. It gives them the opportunity to tell you more about what they want, which most consumers are only too happy to do (especially if they’re getting a littlebonus in return).
Because first-party data is based on previousinteractions and implied customer preferences, what it can tell us is quite limited. You can hypothesise based on what customers have done in the past, butit’s not easy to accurately project their future decisions on that basis.
By contrast, zero-party data is actively provided by customers. In ourexperience, customers will provide data, regardless of their privacy concerns so long as retailers make it worth their while (by rewarding them with unique discounts and offers, for example). They’ll also want reassurance that the process is a transparent one.
Another important point to bear in mind here is that zero-party data can be much more cost-efficient than other types of data. If you’re watching your business’s pennies, this matters. A lot.
This is, again, in part because of its greater reliability and precision. By giving customers the option to provide information, we can gain a much deeper understanding of their opinions, needs, and preferences, straight from the horse’s mouth.
Businesses can use zero-party data to devise personalised campaigns at each stage of the buyer journey. This can help to boost customer satisfaction and foster lasting consumer loyalty—the cornerstone of success for any business—in a cost-effective manner.
Governments and regulators in various parts of the world have sought to improve consumer privacy by strengthening data protection law. This is partly in response to consumer pressure, and growing awareness of the importance of data security.
As a result, businesses are subject to much more stringent data protection requirements than they were previously. They must ensure that they source data in a way that complies with these new requirements. You’ve got to make sure you play by the rules.
When purchasing data from a third party, however, it’s not always easy to ascertain whether that data has been obtained in a GDPR-compliant way. Some third-party data providers are more reputable than others. Complementing first-party data with zero-party data can help businesses avoid some of the pitfalls commonly associated with third-party data.
How to collect zero-party data
Given the tougher data regulations and consumers’ increasing awareness of data protection issues, third-party cookies are more or less a thing of the past.
By the same token, Apple’s IDFA update—which means iOS users must now opt into allow advertisers to track their activity, rather than automatically doing so, as before—caused major controversy, effectively upending a lot of marketers’ old strategies.
All this has had substantial repercussions for online businesses. The main upshot of it is that retailers need to find new ways of collecting data so as to get a better understanding of what their customers are looking for—and indeed have come to expect.
Let’s look at some of the methods you might use to collect zero-party data from your customers. The most important thing to remember here is that honesty and transparency are key. Customers are generally happy to opt in and provide information, as long as your business is up front about how it intends to use that data.
You might not have given much thought to the customer registration process, but it can actually be a good opportunity to gather insights from consumers. For example, you could ask customers questions about why they’ve chosen to register with your business or service, and what they want from it.
This is a good way not only of finding out more about your customers and understanding their expectations, but also of forging personalised bonds with individual consumers. It also shows customers, right off the bat, that their opinions are valued.
You can invite customers to provide zero-party data through your website. For example, always-on features such as email opt-in forms or guided selling product finder quizzes.
You could also try questionnaires, polls, registration forms, and digital campaigns to get customers in the mood to handover that all-important data.
Modern consumers expect to be able to interact with their favourite brands and businesses via social media. They also expect brands to provide them with a steady stream of interesting and engaging content.
Instagram, Facebook, and Twitter polls are particularly popular; for a lot of users, they’re almost like catnip. (Just think of all the time you must have wasted on them at work on Friday afternoons.)
Consider using social media polls to gather zero-party data. You can use them to ask your followers all sorts of relevant questions, providing you with useful information which can then help you enhance their customer experience.
Email marketing remains a mainstay of many businesses’ marketing strategy, and it can also play an important role in your data strategy, too. Don’t be afraid to use it.
For instance, customers like it when retailers offer them something special—such as a discount on their birthday. By asking customers for their date of birth, you can obtain zero-party data and then give them a little something in return.
Avoid bombarding them, though, as that’s something which consumers are known to find infuriating.
Other types of customer data
There are other types of customer data aside from zero-party data, in case you didn’t already know.
These other types of data can be grouped into three general categories: first-party data, second-party data, and third-party data.
First-party data is highly prized by businesses for its quality and accuracy. There are some similarities between first-party data and zero-party data—namely, they’re both derived directly from consumers—though there are also some important differences between them too.
What is it?
As with zero-party data, first-party data is sourced straight from customers. This means that it’s easy to keep track of where the data comes from, which helps to address privacy and data protection requirements. First-party data can be used both to forge deeper connections with and learn from consumers, as well as improving return on investment.
Here’s the key difference between the two: First-party data is drawn primarily from website analytics and user behaviour monitoring, while consumers directly provide zero-party data themselves.
First-party data can be derived from various sources, including your customer relationship management (CRM) software, social media profiles, and website analytics. Zero-party data, on the other hand, is intentionally shared by consumers.
The latter, therefore, helps to actively build trust between your business and its consumers, while the former provides insight into their behaviours. Both are hugely important.
Why it’s important
First-party data is highly prized by businesses because of the insights it can provide into user behaviour, and because it can thereby help firms understand their consumer base that bit better. It’s also valued for its accuracy, as it’s derived directly from consumers.
Pitfalls and issues
Some businesses struggle to make effective use of first-party data because they’re unsure of the privacy concerns relating to it. It’s one thing to put it all down to trial and error, but the errors can be costly.
To make good use of first-party data, businesses must ensure that they collect, clean, store, and deploy it properly, in accordance with the relevant legal requirements. These technical challenges can be quite a burden for some businesses.
Second-party data, as the name implies, is data which is collected by one party and then shared with another. In effect, it’s somebody else’s first-party data. It has a number of uses for businesses and is widely used to help deepen understanding of consumer preferences.
What is it?
Second-party data is obtained directly from the firm that controls and originally gathered it. There are some similarities with first-party data with regard to the types of data and where they’re originally sourced from. Second-party data might also include social media activity, customer surveys, website analytics, and app usage, for example.
Why it’s important
As with first-party data and zero-party data, second-party data can provide retailers and other businesses with a deeper understanding of their customer base. The better you know your customers, the better you can serve them and keep those virtual tills ringing.
Privacy issues are minimal, because the data is purchased straight from the company which originally sourced it, which should—so long as the vendor is reputable, of course—ensure compliance.
Pitfalls and issues
Second-party data must be handled in an appropriate, ethical manner. Those sourcing second-party data must ensure that their partners are above-board and reliable.
It’s also important that the firms involved are a good fit with one another and have sufficient goals in common; incompatibility between partners can cause problems further down the line. That sort of aggravation is the last thing you need.
Third-party data is data which is sourced from businesses which have themselves obtained that data from another party.
It’s commonly used to make behavioural, contextual, and demographic targeting more accurate, so that specific segments of a consumer base can be targeted with greater precision and accuracy.
What is it?
There are data aggregators which buy data from the various websites where it was originally generated. This is what’s known as third-party data; it’s collected into large data sets and then sold on to other companies which want to make use of it.
Why it’s important
The key benefit of third-party data is the scale it provides. It allows businesses to delve deep into consumer data, obtaining detailed insights into their behaviours and preferences. It can therefore enable these businesses to reach new markets and demographics, by helping them better understand the consumers they’re attempting to reach.
Pitfalls and issues
Some businesses buy third-party data without having a clear plan for integrating it into existing workflows. This can leave them with a big, confused collection of data which they don’t really know how to use—and slowing productivity.
Piling up data in this way may simply leave you feeling overwhelmed and confused by it.
How can Ve collect and make use of zero-party data for your business?
Now that we’ve got to grips with the concept of zero-party data, it’s important to think about how your business can make the most effective use of it. Fortunately, Ve is on hand to help!
Ve Global’s Digital Assistant technology can help your business sell more products and provide an even better, more attentive level of customer service. It can also help you get the most out of zero-party data.
Unobtrusive onsite technology
With Ve’s simple, unobtrusive onsite Digital Assistant technology, collection of zero-party data is made simple and easy.
The assistant can engage with customers and encourage them to provide information which you can then use to take your business to the next level, through a deeper and clearer understanding of what consumers are looking for.
Ve’s trusty Digital Assistant is proven to deliver results. For example, German non-profit IT firm AfB saw its conversion rate soar by a whopping 88% in just six months.
Custom reactivation campaigns
Cart abandonment is a big problem for retailers. A lot of customers put items in their online shopping cart and then simply leave them there, without completing a transaction.
With Ve, customers who leave a site without completing their purchase have their cart history saved. It can also deliver custom campaigns to encourage reactivation and nudge customers to go through with their purchase.
Digital Assistant and Email Remarketing
Email remarketing campaigns can be highly effective at targeting customers and encouraging them to proceed with a transaction.
Ve’s Digital Assistant can be combined with email remarketing campaigns, enabling your business to increase the lifetime value of its customers through the use of zero-party data.
With Ve, you can report on and evaluate your zero-party data via our platform. This means you make the necessary changes and tweaks to your online ecommerce store, which could give you a crucial competitive advantage over your rivals—helping to deliver sustained revenue growth and boosting your conversion rates.
Frequently Asked Questions (FAQs)
Hopefully, this guide will have already answered many of your most burning questions about zero-party data, but here, we’ll recap and perhaps cover some additional ground.
What is zero-party data?
Zero-party data is data sourced directly from customers. It can be obtained via a number of sources, including polls, surveys and quizzes, social media, consumer feedback forms, and contests.
Businesses can encourage customers to provide this information in a number of ways, such as by offering unique discounts or offers in return for the data.
There are other types of customer data,too, including first-party data, second-party data, and third-party data.
There are some similarities between zero-party and first-party data, in that both come directly from customers. However, first-party data is generally derived from user analytics, whereas zero-party data involves a conscious interaction with the customer
How can you leverage zero-party data?
Businesses use zero-party data to target their customer communications more efficiently. They use it to create messaging which is both more timely and more relevant to the needs and interests of customers.
This is because zero-party data provides direct insights into customer preferences, whereas other types of data may only provide vague inferences.
In particular, zero-party data can be used to tailor communication to the needs of individual consumers, segmenting them into various lists according to their gender, age, and other demographics. It can even be used to send consumers ‘happy birthday’ emails, rewarding themfor their loyalty with discounts and other offers that might be of interest to them.
How can you collect zero-party data?
Zero-party data can be collected in a number of different ways. It can be obtained through social media polls, customer surveys and questionnaires, post-purchase feedback forms, and in-app preference settings. It can also be obtained via online quizzes, which are hugely popular among users.
You can also use what’s known as micro-experiences to entice users. These are brief brand interactions which can take place either in-app or via the web and on mobile. They may consist of short questionnaires, asking consumers about their expectations and preferenceswith regard to a particular product or service.
However, businesses looking to collect zero-party data should be as up front as possible with users about how they intend to use it. Customers are well used to providing personal information, and are generally content with doing so, albeit on the condition that the business seeking their data is honest with them about what it intends to do with that data.
Businesses must therefore be ethical in data collection. They must reassure consumers that the data they’re asking for will be used for legitimate purposes, and that it will be kept securely under lock and key.