Learn how zero-party data differs from other types of data, plus tips for collecting and using it to improve customer engagement and long-term loyalty.
- Consumers are becoming increasingly aware of — and less comfortable with — having their personal data collected and used by businesses
- Zero-party data is a type of data that’s provided willingly and intentionally by a customer
- It’s more accurate than other types of data, allowing brands to create more relevant, personalized messaging
- It can be collected on any channel or platform that involves a customer interaction
Consumers are becoming more aware of online tracking and more annoyed by the barrage of irrelevant ads cluttering their digital devices. They’re growing less comfortable with having their personal data collected and with how that data is being used. But with competition for consumer wallet share at an all-time high, how can marketers obtain customer data to create more effective marketing campaigns — without alienating the very consumers they want to attract? Welcome to zero-party data.
What is zero-party data?
Zero-party data, a term coined by Forrester Research, represents data that a consumer shares intentionally and willingly with a brand. To better understand what zero-party data means, it’s important to understand how it differs from first-party data, second-party data and third-party data. Here’s a brief explanation:
What is zero-party data? This is information that’s provided willingly by a customer, often with the expectation that they’ll get something of value in return. For example, zero-party data may include preference center choices, purchase intentions, personal information or how a customer wants to be recognized by a brand. Zero-party data is considered a subset of first-party data.
What is first-party data? This is information that brands collect directly from customers, but the customer may not be aware that the data is being gathered. First-party data could include purchase history, browsing behavior collected from a website or location details gathered from a mobile app.
What is second-party data? This refers to first-party data collected or owned by someone else. For example, when you purchase data from another organization or share data through a partnership, the information is considered to be second-party data.
What is third-party data? This refers to information that’s collected and sold by multiple sources, usually with no relationship to the consumer. This can include third-party cookies that track a person’s browsing activity, click trails and even credit scores. Since third-party data doesn’t come from the customer, it’s considered to be poorer quality and less effective than zero-party data and first-party data.
Most brands use all four types of data when creating customer segments and marketing campaigns.
The Benefits of Collecting and Using Zero-Party Data
Despite becoming more protective about how their personal information is used, many customers still want — and often expect — to receive relevant, personalized messaging from brands. According to a report from Accenture, 83% of consumers said they were willing to share their data in exchange for a more personalized experience, if businesses are transparent about how they’re going to use that information.1
Unlike other forms of customer data, zero-party data takes the guesswork out of identifying your customers’ interests and preferences. Here are some other reasons to focus on collecting and leveraging zero-party data as part of your customer experience strategy:
- Zero-party data is more accurate, more compliant and better quality since it comes directly from the customer
- It’s more cost-effective, reducing the need to purchase data lists from outside sources
- It lets you create more relevant and more effective marketing campaigns
- It helps create a more accurate picture of your customer, allowing you to create more personalized campaigns across all stages of the customer journey
- It helps build trust through transparency when you: ask your customers directly for information, let them know why you’re asking and explain how you’ll use the data to enhance their customer experience with your brand
How do you collect zero-party data?
There are multiple ways your organization can collect zero-party data. Any channel or platform that involves a customer interaction represents an opportunity to ask for information. These ideas and suggestions can help you get started.
- Online, when a customer creates an account on your website, fills out a registration form, signs up to receive your newsletter, joins your email list or has an interaction with customer service.
- In-store, such as easily accessible tablets or a kiosk where shoppers can browse inventory, register for an account or log in to their account.
- Your loyalty program, by requesting a customer’s loyalty program information at check-out, or encouraging a customer to enroll in your loyalty program and to use that card (or account #) when they make a purchase.
- Social media, through a quick poll, survey or a fun quiz. This type of interaction encourages customers to share their intentions, preferences and styles. Giveaways and contests are another way to collect information. For instance, one entry in exchange for answering a few questions.
- Email, by asking for customer feedback, incorporating an interactive poll or including a preference center link.
Here are two more simple yet extremely effective ways to collect zero-party data:
- Create a customer preference center that makes it easy and convenient for customers to update their preferences. Preferences can include personal information, what types of content they want to receive from you, how often they want to hear from you and on what channels. Include a link to your preference center on a customer’s account page when they log in to their account, on your website and in emails. Periodically reach out to customers and encourage them to update their preferences in exchange for a more robust customer experience.
- Leverage your customer loyalty program by encouraging a customer to join or an existing member to log in to check their status, complete their profile or redeem a reward. Make this messaging easy to access and available on all of your channels. Consider asking loyalty program members for a few pieces of additional information in exchange for loyalty points, a reward or more personalized offers.
Factors to Consider When Collecting Zero-Party Data
Collecting zero-party data to learn more about your customers can be a powerful retail marketing strategy. But the last thing you want to do is turn off customers by appearing too intrusive.
Keep these factors in mind so your plan doesn’t backfire.
- Keep your requests for information brief
- Make it easy for customers to respond and share the information you’re requesting
- Avoid asking customers for too much information at one time
- Only ask for data that you’ll use to improve their customer experience
- Be clear about how you’re going to use their data — for example, letting a customer know that in exchange for providing their birthdate, you’ll send them a special birthday offer
How to Use Zero-Party Data to Improve Customer Loyalty
Once you’ve collected zero-party data, remember that your customers shared this information with you willingly because they expect something of value in return. While the possibilities are endless, here are three ways (with examples) to use zero-party data to create more engaging customer loyalty campaigns and better customer experiences
1. Ask for specific information (like a favorite shirt style, their child’s age or their pet’s breed) that will help you personalize offers, make more relevant recommendations and offer more personalized choices. Deliver content, ongoing communication and special offers based on these customer preferences.
Example: Enfagrow. When new moms sign up for the brand’s mailing list, they’re asked for a few pieces of information, including their baby’s age. The company uses that information to send them relevant content.
2. Leverage your loyalty program with a personalized offer based on zero-party data like a birthday.
3. Combine zero-party data with first-party data (such as SMS interactions, email click-thrus or web browsing behavior) to create one-on-one experiences.
Track your loyalty program’s performance year over year and after major program revisions.
Can you quantify the impact of your loyalty program? Do you know how your program performance compares to other retailers? CCG’s Loyalty Program Effectiveness Appraisal is an objective report measuring customer engagement and loyalty for your brand, including insights on key metrics.
Collecting Zero-Party Data to Improve Customer Loyalty
Collecting and using zero-party data can be an effective way to strengthen your customer relationships and build long-term loyalty. With better quality data and more personalized campaigns, you’ll gain your customers’ trust and stand out from the competition.
Digging into the data and creating strategies to grow and maintain customer loyalty is what we’ve been doing at CCG for decades. Learn more about the retail marketing solutions we offer and how our retail marketing consultants can help you reach your goals. Schedule a free consultation or call us at 303.986.3000.