Zero-party data: Why it must be part of any effective customer data strategy
Businesses need to use customer data both legally and effectively to succeed in the world of 2024. Understanding the different types of data, how each is collected, and how they can be used is crucial. While it has been talked about for ages, from the 4th of January 2024 Google moved to the next stage in phasing out third-party cookies. Time is running out for businesses to get their data strategies finalized to stay compliant and reduce dependency on data that will no longer be available when the third-party cookie is finally confined to history.
So where does zero party data fit into the story?
What is zero party data?
Zero-party data refers to the private information that a person intentionally shares with a business to get actual or intangible benefits. This includes information that cannot be (legally) obtained from any other source and includes personal details like email and home address, product preferences, communication channel preferences, and contextual information that would help a brand understand the customer better and provide the type of personalization that customers actually want.
Zero party data is explicitly provided by the customer and doesn’t have to be compiled or inferred by analyzing behavioral or transactional data. It is therefore considered the most reliable and unambiguous information that a company can hold about its customers and prospects.
It also removes the ‘marketing creepiness factor’ because people have openly told a brand their preferences rather than algorithms silently working them out.
Zero-party data is important because it provides a competitive advantage. You know something about your customer that your competitors don’t. For example, a person may have multiple email accounts and a mobile phone but may only use WhatsApp for communication. By opting in to receiving WhatsApp messages from you and telling you that it is their preferred channel, you can stop wasting time and money sending them emails and text messages that they will never engage with.
The unique benefits of zero party data
Zero-party data is highly accurate as it has been obtained directly from the customer.
Zero-party data automatically includes consent, so privacy compliance is simple.
Zero-party data can be used to drive a level of personalization and engagement that is not possible with any other type of data.
Zero-party vs first party data
The term zero party data was first used by Forrester Research as recently as 2018 when it became clear that the definition of first party data was too broad and included information that was collected in different ways. By recognizing the distinct properties of zero party data in their data strategies, businesses can treat it differently when it comes to obtaining consent, processing, and using the information.
Examples of first party data include:
- Website browsing behavior gathered by first-party cookies
- Mobile app usage
- Purchase and transaction history
- Information gathered during conversations with salespeople and helpdesk staff
- Social media conversations
What is second party data?
Second party data is information about individuals that is shared between organizations. These could be because they are sister companies under the same parent, or because they have a strategic partnership arrangement. First party and zero party data that is gathered by one company becomes second party data once it is shared with another. It is usually of high quality and easy to verify as it is only one step away from its source.
Second party data is an important element of an effective overall data strategy in 2024, however, it is vital that customer privacy and consent legislation is followed.
What is third party data?
Third party data is data that is either purchased or obtained from freely available sources where the organization collecting the information has no direct relationship with the one using it. For example, data aggregators may compile information from multiple sources and then sell it on.
The issue with third party data is being able to verify its authenticity and that it has been obtained lawfully and with the data subject’s consent. Third party data is also obtained using cookies, the packets of code that are placed in people’s browsers that tracks their activity and then shares it with a wider network. With an increasing awareness of privacy, it is these cookies that Google and Apple have started to phase out.
Examples of zero party data
Exact classification of different data points is impossible and unnecessary as it depends on the context in which the information was obtained. For example, when it comes to an email address this could be viewed as first party data when buying an airline ticket online as the address would be required in order to receive the e-ticket.
However, when making a purchase in store the customer may be asked to voluntarily provide an email address for sending the receipt or warranty information to. In this context the email address would be viewed as zero party data.
Some common zero party data examples include:
|Contact details – email address and phone number
Dependent details including age and gender
Hobbies and interests
Physical attributes – hair color, skin tone, right or left-handed
|Retail and travel
|Device and product ownership
Preferred brands of consumer goods (and reasons)
Preferred mode of travel
Business or holiday travel
Reviews and photos
|Personal stats like weight, BMI, heart rate, blood pressure
Smoking or non-smoking
Physical and mental handicaps
Level of physical activity
|Political party membership
Opinions and views on topical subjects
In many cases zero party data is not fixed or permanent, but that doesn’t mean that it isn’t incredibly valuable and sought after. While attributes like our hair color or whether a person is right or left-handed won’t change overnight, we are a bit more fickle when it comes to our opinions and preferences.
For example, in the final days before an election, political parties are very interested to know the voting intention of people in swing states so that they know where to spend their campaign budget for maximum impact.
The one about the supermarket that knew a teenager was pregnant before her family did.
If you work in marketing, you will have undoubtably heard the story about the teenager who was sent coupons for baby products before she had told her family that she was pregnant. Apparently, her father stormed into the store in question and demanded to know why they were sending offers for diapers and baby food to his teenage daughter. When she finally fessed up, he sheepishly apologized to the store manager.
While this story is unverified and some have questioned whether it actually happened, it shows the (potential) power of first party data in action. By analyzing the girl’s transaction history, preferences and demographic data, the algorithms (allegedly) established that there was a high likelihood that she was pregnant, and she was added to some ‘expectant mother’ customer journey.
Another option – maybe she voluntarily told someone who worked at the store?
What are the best ways of collecting zero party data
Getting zero party data is not about bribing or tricking people into providing information that they don’t really want to share. It is about having a strategy in place that enables you to offer real benefits and be able to present those benefits in a compelling way.
Offering fake or over-hyped benefits is pointless as it will cancel out the trust that you are looking to build up. Also, short term benefits should be avoided in favor of longer-term benefits that give both the business and customer time to build up a relationship.
For example, if you were looking to build up your contact list, you might be tempted to run a prize-draw competition which people could enter by providing you with their email address and opting-in to be contacted. However, once the winner is announced and you send your first email campaign, most of the sign ups may choose to unsubscribe as the benefit was only short-term. Unless you were able to show the long-term benefits of remaining on the mailing list.
With this in mind, here are some ideas for collecting zero party data in a sincere and transparent way that doesn’t make customers feel exploited.
- Dynamic sign-up forms: Sign-up forms that ask for too much information up front or include options that are irrelevant to the individual are tedious and lead to high drop-off rates. By using web forms that adapt based on information the person has already provided, the process is streamlined, and people are more likely to provide zero-party data as they can see the benefits in action.
- Customer feedback mechanisms: Bake review requests into your business processes so that you can find out how satisfied customers are and any thoughts or ideas that they may have about improving your products and services. Better still, establish a formal research panel and offer benefits to customers that contribute. Infobip uses this approach as an important way of learning about our customers.
- Self-assessments and quizzes: Help customers to understand their own requirements better by designing surveys that expose insights that they may not have realized. This tactic can be applied effectively across industries as diverse as real-estate, vehicle leasing, and domestic appliances. Some brands successfully incorporate elements of game mechanics into these types of tools to stimulate the competitive streak in people and extend the reach of their campaigns through social sharing.
- Loyalty programs with real benefits: Establish the actual value of long-term customer loyalty to your business and offer benefits and rewards that match this value. Airline frequent flyer programs are an excellent example of loyalty programs that offer rewards that travelers really want to earn.
- Useful interactive tools: Where possible, provide calculators, configuration tools and use virtual reality to enable customers to gain a better understanding of your products and services, become invested in the process, and provide more zero-party data. See the example below of how Nivea built a chatbot that was a key tool in collecting zero party data from their target audience.
Zero party data collection examples
Here are some examples of brands in different markets that have used creative tactics to engage with customers and win more zero-party data.
Case study: Nivea
Read how Nivea launched a highly creative and successful campaign that used a WhatsApp chatbot to connect with new consumers in their target market and collect key zero-party data. The campaign was so successful that it achieved 207% of its reach target and is being used as a global case study for the brand.
Case study: Megi Health Platform
Megi Health Platform
Read how the Megi Health Platform incorporated a chatbot to supplement the work of health professionals by helping to gather key zero-party health data and significantly improve the efficiency of the diagnosis process.
Case study: Petpetgo
Read how Petpetgo, a disruptive eCommerce brand in the pet product market, capitalized on the zero-party data that they gathered about pet owners and their beloved animals to double the purchase frequency of products by providing information about pet nutrition and health in the form of online guides, videos, and tutorials.
How to create a zero-party data strategy
If you have read this far you will have realized that this question is not valid. We shouldn’t be talking about a zero-party data strategy as if it was a separate thing. Instead, we should be concentrating on formulating an overall data strategy that recognizes the distinctness and value of zero party data and makes maximum advantage of its unique properties.
Furthermore, a future-proof data strategy should concentrate on extending the amount of zero party data that is gathered, reduce reliance on third party data, and work towards obtaining higher quality second party data through strategic alliances.
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