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 4^th 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?

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 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.  

While first party data is also collected directly from customers, this is often done without the person knowing. How often do we blindly agree to a website’s cookie policy without reading the small print or understanding the implications?

Examples of first party data include:

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:

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.  

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.

Here are some examples of brands in different markets that have used creative tactics to engage with customers and win more zero-party data.

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.