With new privacy regulations and a greater public awareness of online privacy rights, we marketers have had a fire lit under us. We must be more careful and thoughtful than ever when deciding how to access and utilize customer data. This environment, coupled with the desire for more targeted information to help maximize marketing dollars, is leading businesses to focus less on the amount, and more on the quality of data used to reach customers.
How can you make sure the data you use is of the highest quality and accuracy and will give you the biggest bang for your marketing buck? Are you worried that your present marketing techniques aren’t quite cutting it? I will walk through the varying levels of consumer data that can be collected and look at the benefits and limitations of third-, second-, and first-party data. This will help you understand how you can move from where you are currently in your marketing data gathering strategy toward the ultimate goal of zero-party data, the information customers willingly share with you.
Also known as declared data and consent data, these levels of customer interaction are the holy grail for marketers. They generate the most meaningful insights that can be utilized to best personalize products and services and create exceptional customer experiences. A win-win for both your business and consumers alike.
Third-party data is bought from outside entities that did not originally own or gather the data themselves. It is collected by aggregators who pay a variety of sources such as websites or other platforms for their first-party data. That data is then compiled into one big data set, organized into categories, and sold to marketers.
The business benefits of third-party data are that it is easily bought, available in large amounts, and readily accessible. But I won’t beat around the bush. Third-party data is not great for consumer privacy and has a lack of trust associated with it. Other major limitations are that buyers are far removed from the original source of the data, it’s available to anyone so your competitors can use the same data, profiles may not be up-to-date, and the data can be segmented in a way that doesn’t quite match your strategic needs. In short, you can’t ensure its quality, accuracy, or precision. Many companies are biting the bullet and moving away from third-party data because of privacy and quality concerns and the desire to have greater transparency in the data they employ.
Second-party data brings you one step closer to customers. It’s data bought directly from another company that owns it. In other words, someone else’s first-party data. Second-party data is usually higher quality, and buyers know where it’s coming from. Marketers can find companies that have data they want and reach out to them. If you’ve been relying heavily on third-party data up until now and want to make a shift, better late than never. Many companies are moving toward more second-party data as a result of data privacy regulations that limit access to third-party data.
The benefits of second-party data are that it is more transparent, gives you more peace of mind in a privacy-sensitive environment since you know the origin, and provides greater confidence in the accuracy and reliability of the information. The limitations of second-party data are that you are still removed from customers and can’t easily interact to follow up and gather more details on customer opinions, beliefs, and desires.
First-party data is information you obtain directly from customers. It can include age, location, purchase history, items a customer looks at on your website, and the kind of device they’re using. First-party data is becoming more and more valuable as new privacy laws implement rules against placing cookies and as companies such as Apple and Google add privacy features like Intelligent Tracking Prevention (ITP) to their Safari and Chrome browsers.
The benefits of first-party data are that it is free, you own it, it’s accurate and tailored to your marketing needs since you choose what you collect, it’s easier to collect appropriate consent, and you can use it to concentrate on increasing business from your existing customers versus constantly having to solicit new customers. The limitation of first-party data is that most often it’s behavioral, not declared or consent data. Behavioral data gives a picture of a customer’s actions or specific behavior at a moment in time, but doesn’t explain the “why” behind a customer’s behavior and has the potential for misinterpretation.
As I mentioned earlier, zero-party data is what marketers should strive to collect. It’s the type of consumer data that is most accurate, high quality, and valuable to companies seeking to truly understand and respond to their customers. Declared data and consent data are gathered directly from consumers, with their permission. It is personal information obtained directly from a customer where both parties are fully aware of the use and benefits of that data. Thus, organizations who use it have the highest levels of privacy and transparency and build greater trust with customers.
With declared data, you can ask a customer a follow-up question about their action to help answer the “why” behind the “what” of the customer’s action. Consent data goes a step further and is part of an ongoing, iterative conversation that tells the continuing story of a customer’s beliefs, opinions, motivations, and desires. Many companies do this by setting up insight communities that allow customers to opt in to give their feedback to the companies they patronize. Gathering consent data demonstrates your customer-centric focus and that your organization truly wants to know what it can do to best serve its valued consumers.
As you recognize the importance of collecting and utilizing data that demonstrates transparency, respect for customer’s privacy rights, and a true desire to hear a customer’s voice, the shift to zero-party data will become a natural progression in your marketing strategy evolution. You can advocate for zero-party data as the best way to spend marketing budgets. No longer is quantity the goal, but the quality, accuracy, and precision that only zero-party data can provide. And declared data is even better when it’s consent data.
What Do You Think?
What types of data are your company currently gathering and using to understand and reach your customers? How are you building trust? Click the social icons to share this post and your thoughts on how you’re working toward utilizing declared and consent data in your organization’s marketing efforts.