How is zero-party data changing brands’ relationships with consumers?
Blog Post written for HdK Associates, a London-based digital marketing agency specializing in helping organizations in the arts culture and heritage sector.
Zero-party data, a term coined in 2020 by Forrester Research, is defined as “data that a customer intentionally and proactively shares with a brand.” As privacy regulations snub marketer’s main sources of consumer intel left and right, zero-party data is becoming more valuable than ever.
How Zero-Party Data Competes with Third-Party Data
Third-party data is the source of consumer intel marketers are most familiar with. It’s consumer information sold programmatically on a large scale to companies seeking valuable insights into consumer behaviours and needs. The large scope of third-party data has been traditionally valued by marketers, however data regulations including GDPR have been increasingly minimising its influence on the marketing industry. As consumers opt for more privacy online, companies must ask consent to utilise third-party cookies to collect their data. This is making zero-party in high-demand for marketers to be at the forefront of the curve.
While third-party data is openly available, allowing competitors to purchase the same information, zero-party on the other hand, offers exclusive insights into loyal customers. Consumers opt to participate and donate their information to a brand voluntarily which is collected through surveys, chat boxes, subscription and social data, and actions across websites and apps, making it extremely cost-efficient and specific. The use of zero-party data also enables organisations to create more targeted and effective marketing campaigns that resonate with their intended audience. Not to mention, at its core zero-party data values consumer privacy, whereas third-party data collection via cookies is being phased out for its invasive methods of collection, and its inability to relay the same extensive insight into consumer purchasing habits and motives. Brands opting for zero-party data are able to offer consumers personalised experiences while respecting their right to privacy, building trust amongst their consumer base.
Third-party data is certainly not obsolete, but zero-party data is on the rise as a serious and notable competitor. Consumers not only desire personalised experiences, they expect it, and in current globalised marketplaces this allows consumers to feel valued and understood by their favourite brands.
How to collect Zero-Party Data
Collecting zero-party data requires organisations to proactively seek information directly from their customers through various channels. Here are some ways that organisations can collect zero-party data:
Surveys and questionnaires: these surveys can be sent out via email, social media, or on the company’s website. The questions can be designed to gather specific information about customers. For instance, a dance organisation may ask: “what is a limiting factor to your attendance at our shows?” Questions like this can help organisations target audience pain points. Organisations can incentivise audiences to answer questions by offering a piece of media or discounted items like tickets as well.
Social media interactions: by monitoring social media channels and engaging with customers, brands can gather information about their customers’ preferences and interests.
Contests and giveaways: This requires customers to share information to participate, and this can be utilised to promote successful and targeted campaigns. For instance, an organisation might encourage audiences to participate by commenting their favourite show on social media and following their organisation’s account in order to enter to win free tickets or another prize.
Website interactions: analysing customer behaviour on the site, such as pages visited, items added to cart, loyalty programs joined and searches conducted provides valuable consumer insights.
These interactive funnels and many others require no coding, are cost-efficient to brands, and interact with customers in an engaging way to establish strong and trusting relationships with consumers. However, these data collection methods do demand more attention from marketers as consumer expectations are changing.
Brands Utilising Zero-Party Data Successfully
DSW: In 2019 DSW broke into an uncontested market of shoe-shoppers seeking out a personalised shopping experience. DSW began offering its customers an extensive quiz and loyalty program opportunities in order to be offered products relevant to their style choices. Collecting individualised data in this way not only made DSW customers feel valued but also skyrocketed DSW from 26th place on the Retail Personalisation Index in 2018 to third place in 2022.
Thrive Market: Currently ranked first on the Retail Personalisation Index, Thrive Market is a mobile grocery app offering consumers both personalised grocery lists and recommendations. The app also engages first-time site users via visitor quizzes to collect information to cater to their personal dietary needs and product preferences. No two grocery lists are the same — and Thrive Market capitalises on this fact by curating its web experience based on zero-party data to directly acknowledge consumers’ individual needs.
GLOSSYBOX: GLOSSYBOX is a monthly beauty subscription service that provides monthly makeup bags with product samples to its subscribers. The company relies heavily on zero-party data and curates a selection of makeup based on skin type, and beauty routine to provide personalised product recommendations. Monthly quizzes determine these brand preferences and commonly used cosmetics, as well as products consumers wish to try or to not try again. At £14.75 per month, the membership recognises consumers changing desires by allowing them to edit their Beauty Profile at any time. The company is on its way to becoming the number one beauty box in ten countries worldwide.
As the importance of data-driven marketing continues to grow, it is likely that more organisations will begin to use zero-party data to improve their marketing strategies and drive growth. Gaining a stronger understanding of your audience and their wants, struggles, and desires is an important way to provide audiences with the customised experience they prefer and increase retention.
Your Brand Can Use Zero-Party Data
Information collected about a user’s age and location, favourite products, brands, and hobbies, can help organisations to tailor their marketing campaigns to better suit their interests and segment their audiences. This research can also be predictive of consumer behaviours so brands can plan accordingly to accommodate the demands for products and services.
However, it’s important for organisations to be transparent and respectful when collecting and using zero-party data. Users should always have the option to opt-out or limit the data that is collected about them, and organisations should be transparent about how the data will be used and protected. By building trust with their customers, organisations can create long-lasting relationships and increase their chances of success in the competitive marketplace.
Zero-Party Data in The Future
As individuals are becoming more aware of their data privacy and security, they are becoming more cautious about sharing their personal information with organisations. This means that organisations will have to work harder to earn their trust and incentivise them to share their personal information.
The future of marketing will be heavily influenced by the use of zero-party data to better understand customers and personalise marketing efforts. Zero-party data offers brands a cost-efficient, accurate, and effective way to deliver on these consumer needs. A proactive response from marketers would be to acknowledge and utilise this data to their advantage as the marketing industry is saturated with the use of zero-party data. This will not only improve customer satisfaction but also increase customer loyalty and drive repeat business.
