Great customer experiences are created when we get to know our customers. We do this by using data. There are many types of audience and customer data. Each has its own benefits and challenges and data help us to guide our strategies. While all customer data can help us create better experiences, not all of them are equal. Let’s take a look at which types of customer data you can use, and how they differ.
Customers’ data can come in many forms and sizes. First-party data is data companies collect directly. Data that companies collect directly comes from their partners or is purchased is called second-party or third-party data. And then there is the new kid on the block: zero-party data.
First-party data refers to data that you directly collect from your customers or audiences through your own channels such as your website, newsletters, phone calls, emails or mobile apps. Data can be gathered from customer sales, customer support, and customer success programs. First-party data includes demographics, purchase history and website activity. First-party data, out of all the data types, is the most valuable. Since you can collect it directly, you know its accuracy, quality, and relevance to your business.
On the on hand it’s considerably easy to gather first-party data. All of our customer-related systems have some customer first-party data. On the other hand, getting a integrated view is difficult because data is collected, stored and manage in different systems. This can lead to inconsistent and inaccurate data. A centralized platform is the best way to ensure consistent customer data across all your systems. It allows you to consolidate, standardize and make it accessible to all systems, regardless of where it was collected.
Data you obtain from a trusted partner is second-party data. Most of the time, you are familiar with the partner. This means that you can assess the data’s quality and accuracy. Because the data comes from a partner you also know that it is relevant.
It is equally important that your partner complies with privacy regulations such as the GDPR or the CCPA. This will ensure you are confident that the data was collected with permission from the consumers.
There are some benefits to using data from second parties. First of all, it allows you to connect with new audiences that match your audience structure. This data can be combined with your first-party data in order to create better predictive models. This is especially important if you don’t have many customers to build predictive models.
Analyzing a larger audience group can help you gain better insights into your audience. Combining first-party and second-party data can help you discover new ways to reach your audience, or reach new audiences.
Data media publishers selling to advertisers is one example of second-party data. A local grocery store might also sell its customer loyalty data on to a credit-card company.
It is quite easy to collect second-party data. You get it from your partner. Once you have it you will need to keep it safe and make it accessible through the same means to your systems. To ensure that your second-party information is accurate and relevant, you should validate it and generally treat it the same wa like your first-party data.
Third-party data can be bought from data marketplaces, including Acxiom and Nielsen, Google, OnAudience, and Google. You can purchase often very large datasets with millions of datapoints. However, this data has a major problem. You don’t know where it came form, so you don’t have any way to verify its accuracy or reliability. It is also impossible to verify that it was collected in compliance with privacy regulations. Before buying this kind of data, you must research the source and method of data collection before you choose a third-party provider.
There are many reasons why you might choose to buy third-party data. It allows you to reach a wide audience with your advertising programs. It can be combined with your first-party information to improve targeting.
There is a new type of data that people are talking about: zero-party data. Zero-party data can be confusing in that it is often confused with first-party information. Forrester Research defines zero-party data as “data that a client intentionally and proactively shares to a brand,” which can include purchase intentions, preference data, and personal context. It can also include how the customer wants the brand to communicate with her.
Zero-party data includes data that a consumer has explicitly provided, such as their communication preferences and the type of information they wish to receive. Another example is the expression of interests. A consumer may tell you explicitly what they are interested in such as crime fiction, products suitable for toddlers or craft beer.
Zero-party data goes beyond first-party data: it gives you a deeper understanding of your client. This is the base for to create relevant and personalized customer experiences.
How privacy is changing the way we collect and use data
As customers are more aware of what data they have, how it is used and their privacy rights, the way we collect and use customer information changes.
Consumers don’t want to be bombarded by irrelevant advertising and content. Many consumers are refusing to give their data to companies as they don’t know how their data is used or if it’s securely and properly managed. Thus, businesses must ensure that they collect customer data in a responsible manner and they must also be transparent about how they will use customer data to enhance customer experiences.
Moving to a Cookieless World
Cookies have been used for years to track and collect consumer data via the internet. However, times are changing. Google may have delayed plans to stop third-party cookies being used in its Chrome browser until 2023. But it will. Apple already offers consumers the option to opt out of third-party tracking and cookies in its browser and apps on iOS devices.
Now businesses need to find a different way to personalize and track experiences. For example, you might consider other approaches, such as asking people for their consent to identify their preferences and interests. Also, you can leverage progressive profiling to gradually grow your customer database.
Building Your Data Strategy
Understanding your customer experience requirements across the organization is the first step. Once you have a clear understanding of your goals, you can determine the data required to create those experiences.
You should also start thinking about alternative ways to access data you might not have soon. It is important to find new ways to obtain first-party (and zero party) data.
But there is no a one-size-fits-all approach. It will never be easy to find new ways to update and collect data. Get in touch with us and learn about novel strategies to collect data from your customers. Follow us on our blog app and stay up to date.