The digital age has seen businesses embracing data more than ever before, as it is invaluable in understanding the customer and tailoring services to their unique needs. The better the quality of a business's data, the greater access they have to this insight - making it an indispensable asset for any successful organization.
However, with the rise of data privacy concerns and regulations, businesses are having to find new ways to collect and utilize data. One type of data that has been gaining attention in recent years is zero-party data.
In this article, we'll provide an in-depth look at what zero-party data is, why zero-party data matters, and how businesses like yours can collect and utilize zero-party data to gain a competitive edge and build more insightful relationships with your customers.
But before we get into that, what are the different types of data and how are they best used to provide customer insights to your brand and marketing team?
Zero-Party Data in short is data given to a brand willingly in exchange for something of value...(We'll dive deeper into "zero-party data" later in the article, so for now let's keep it brief and move on to the next type of data.)
First-party data is information that a business collects directly from its customers, as well as through internal sources such as website analytics and purchase history.
Examples of first-party data include customer names, contact information, browsing history and behavior, purchase histories, and more. This type of data can be used to create detailed profiles of each customer and understand their needs, habits, and preferences. It can also be used to personalize the user experience, target customers with relevant promotions, and much much more. First-party data allows you a very detailed profile of your ICP (ideal customer profile).
Second-party data is customer data that is collected by another company but shared or sold to your business. This type of data is usually anonymized so that individual customers can't be identified.
Examples of second-party data include web traffic, demographic information, purchase behavior, and more. This type of data is useful for companies looking to gain access to a wider range of customer insights without having to develop their own first-party data collection methods.
Third-party data is collected by an organization that does not have a direct relationship with the customer. Instead, this type of data is often purchased from outside sources such as digital marketing platforms or research firms and can be used to develop segmented audiences for targeted ads.
Experian happens to be one of the largest third-party data providers in the industry today.
Examples of third-party data include web traffic, demographic information, purchase behavior, and more. While this type of data can be useful for marketing purposes, it is less valuable than first or second-party data as it is not provided directly by the customer. Third-party data is also helpful when trying to understand overall marketing demographics and TAM (total addressable market).
Now that you have a better understanding of the different types of customer data available to businesses, let's turn our focus back to zero-party data.
So, what exactly is zero-party data? We mentioned this briefly in the previous section but, zero-party data refers to information that a customer willingly shares with a business. This data is typically given by the consumer in exchange for something of value, such as a personalized experience, a discount, or exclusive access to content.
According to Forrester Research, zero-party data is, "that which a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize them."
The true value of zero-party data is that customers aren't blind-sided by seeing their personal information used for marketing purposes. They have given it knowingly and sometimes even intentionally in exchange for something that they value from the business, often from a brand they trust or they wouldn't have given the information in the first place.
But why is zero-party data important for businesses - especially eCommerce stores?
First, privacy protections are making data difficult to collect and the quality of useful data is suffering. As an eCommerce brand, you're probably familiar with this phenomenon and have seen it become increasingly difficult to trust second and third-party data sources.
But that doesn’t mean customers aren’t willing to share. According to Formation, an Ai survey company, four out of five (82% to be exact) consumers are willing to share basic information for personalization and to create a better shopping experience. This means that your customers are willing to share, they just want to know that the data is being used for good and being protected.
This makes zero-party data vital to achieving brand success.
For this reason, zero-party data allows you the opportunity to collect real, reliable data that you can use to create better customer experiences and build relationships with your customers. This data becomes a piece of "owned marketing."
According to Appier, "Owned marketing," is a set of customer-focused strategies and tactics that are implemented through your own brand channels, also known as your owned media. These owned channels include your website, app, blog, social media pages, email, SMS, forums, and any other media that you own and have complete control over," and there's no better person to collect data than your remote concierge.
A remote concierge will use conversational commerce software like Humankind to interact directly with customers creating a 1:1 human connection and guiding them through shopping experiences. During these conversations, the remote concierge can find out what exactly the customer wants and collect zero-party data like their product preferences, purchase intentions, and more.
In fact, we also collect and store zero-party data from quizzes, questionnaires, and other steps before the shopper even talks to a product expert or remote concierge.
This data is invaluable for any brand because it allows you to build a deeper understanding of your customers and create personalized experiences that they will appreciate and keep coming back for more.
Collecting zero-party data is essential for consumer brands, especially as Apple's privacy settings and Google's upcoming cookie changes affect who sees our marketing. The prospect of a cookieless world is very real, making it critical to have a way to identify users without relying on third-party data and tracking.
It's also vital as the market becomes more conscious of data security and customers want data privacy more than ever. Consumers are becoming more aware of data breaches that are costing them time, money, and the constant distraction of being emailed, texted, and called until they're completely fed up.
Overall, zero-party data is a great way for eCommerce stores to mitigate these challenges and to make sure that their marketing efforts reach the right people by collecting valuable customer information in an ethical manner. Did I mention that it's a great way to build relationships with customers, which will ultimately lead to better long-term success?
So how can you, as a brand, create an effective data strategy and begin collecting zero-party data?
Creating a zero-party data strategy involves several key steps. The first step is to identify the types of data that would be most valuable for the business to collect. This could include information such as customers' preferences, interests, purchasing behaviors, or other insights that could inform marketing and product development efforts.
Once the types of data have been identified, the next step is to develop interactive experiences that encourage customers to share their information. This could include surveys, quizzes, polls, or other interactive content that provides value to the customer in exchange for their data. It's important to make the experience engaging and easy to participate in so that customers are more likely to share their information willingly.
Once you have the interactive experiences identified, collect customer data from your email interactions, SMS, and website interactions with remote concierges and from pop-ups on your website. Separately, Humankind stores interactions with customers so you can access this data and use it to inform customers' purchasing decisions with expert recommendations.
Another important aspect of a zero-party data strategy is transparency and control. Companies should be clear about how the data will be used and give customers control over their data, including the ability to opt out of data collection or to request that their data be deleted. This builds trust with customers and helps to ensure that they feel comfortable sharing their information.
There are a lot of questions about collecting and storing zero-party customer data - we'll try to answer as many of them as possible here:
Start by engaging with your customers on a human level and make sure that your remote concierge is equipped to collect this valuable data. If you're already using conversational commerce software by Humankind, it's easy to interact 1:1 with your customers through the quiz (first and foremost) and then also via the trained product experts who will walk your customers through the buying process of high-consideration products via SMS.
A remote concierge can be hired internally by your team and use Humankind, or hired and trained by our staff to engage customers and collect zero-party data. During conversations, the remote concierge can look for clues in a customer’s profile and ask the right questions to gather important information that will help you gain more insight into their needs.
They can also showcase ancillary products, share reviews, offer product bundles, and make recommendations based on a customer's profile and purchase history. These interactions give you the ability to segment your customers and deliver product recommendations, promotions, and more that are tailored to their needs.
One specific way to collect zero-party data is by offering customers a value exchange. This can include quizzes, and personalized experiences, such as customized recommendations or exclusive content, in exchange for data
Also, establish trust and provide your customers with peace of mind by telling them about how you've secured their data and offering them the option to opt-out at any time. More on this in a bit...
There are various types of quizzes and experiences that businesses can use to collect zero-party data from their customers. The most effective ones are those that are engaging and interactive, and provide some sort of value or benefit to the customer in exchange for their participation.
For example, a brand could create a quiz or survey that helps customers discover their ideal product or service based on their preferences and needs. I've seen this used by healthcare, supplement, and skincare brands to make customized recommendations on products for specific conditions.
An introductory quiz would not only provide the brand with valuable data on customer preferences but also offer a personalized experience for the customer and potentially a special offer or promotional bundle.
Other types of experiences that can be used to collect zero-party data include polls, contests, preference centers, and feedback forms.
Ultimately, the key is to make the experience enjoyable and worthwhile for the customer, while also providing the brand with valuable insights into its target audience.
Once you have zero-party data, what can you do with it?
Businesses can leverage zero-party data in a number of ways to improve their customer relationships and marketing efforts.
Some examples of this could be:
These are just a few of the ways that you can leverage zero-party data to your advantage. By collecting, analyzing, and using this information to build better customer relationships and products eCommerce stores and brands can gain valuable insights into their customers and develop more effective marketing strategies.
So if you're looking to build better relationships with your customers and create more personalized experiences for them, a remote concierge and a zero-party data strategy are for you…
But why zero-party? We've talked a bit about each type of data, why would you choose this over another customer data type?
Both zero-party data and first-party data are important types of customer data that can be used by businesses to improve their marketing efforts. Each type of data has its own advantages and disadvantages.
As we've previously covered, zero-party data is data that is voluntarily shared by customers, typically in exchange for a personalized experience or exclusive offers. This means that the advantages of zero-party data include its accuracy and relevance. Because customers are sharing the data willingly, it tends to be more accurate and up-to-date than other types of data.
Additionally, because the data is specific to the customer's purchase history, interests, and preferences, it can be highly relevant for marketing and product development purposes.
First-party data, on the other hand, is data that is collected directly by a business from its customers. The advantages of first-party data include its completeness and reliability. Because the data is collected directly from the customer’s actions, businesses have more control over the quality and completeness of the data.
Additionally, first-party data can provide insights into customer behaviors and preferences that may not be captured by other types of data. Using first-party data can help businesses make more informed decisions about their marketing and product development strategies.
If you're considering one vs. the other, both zero-party data and first-party data have their own advantages and disadvantages - but if you can use both, you'll have a better dataset than one source alone.
If you're trying to build a complete ICP that includes demographics, psychographic, and behavioral data, one of the best ways to do so is by asking your customers questions. When collecting zero-party data, there are several types of questions that can lead to the best data:
Overall, the best questions for collecting zero-party data are those that provide insights into customers' attitudes, behaviors, and preferences. By asking a mix of open-ended, behavioral, preference, and demographic questions, businesses can gain a more complete understanding of their customers and use that information to create more personalized and effective marketing strategies.
Once businesses have collected zero-party data, there are various ways to utilize it. One method is to use the data to create more personalized marketing campaigns. For example, a retailer could use zero-party data to offer personalized recommendations based on a customer's preferences and purchase history.
Accessing this data through Humankind's conversational commerce software can help a product expert or remote concierge create bundles for customers increasing AOV by a significant margin. Customer's like Gathr Outdoors (for example) use the services of a remote concierge to help a customer purchase a rooftop tent for their Toyota Tacoma or Jeep Wrangler. Once they've added the tent to their cart they can add sleeping bags, foldable chairs, and other items that would help the shopper prepare for their trip.
Once the trip is over, the remote concierge can follow up with the customer and collect data that can be used to improve product development by providing insights into what customers liked or disliked about the products they purchased - creating better options for customers in the future.
While third-party data is often gathered through data aggregators and social media platforms, zero-party data collection allows brands to gather data directly from their customers, reducing privacy concerns and complying with data privacy laws such as the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). By proactively sharing information with brands, customers expect to receive personalized experiences, loyalty points, and SMS campaigns.
To review, a zero-party data collection strategy is a proactive approach to gathering data where the customer intentionally shares information about themselves with the brand. This method of data collection typically leads to better quality data because the customer is providing information that is relevant and meaningful to them. By asking questions that lead to the best data, brands can create a zero-party data strategy that captures purchase intentions, customer preferences, and demographic information. This valuable data can be used to create personalized experiences for the customer, drive sales, and build strong customer loyalty.
Compared to first-party data, which is data collected directly from the customer through owned channels, zero-party data comes from conversations and interactions with the customer. This conversational nature of zero-party data collection can be achieved through techniques such as conversational pop-ups, customer surveys, and preference center data. Brands can use this data to create customer profiles and tailor their marketing efforts to better target potential customers with targeted ad campaigns and personalized content.
In conclusion, zero-party data is becoming an increasingly important type of data for businesses to collect and utilize. By proactively and willingly sharing data, customers are providing your business with valuable insights into what they want, their interests, preferences, and behaviors. By collecting and utilizing zero-party data, you can improve your customer experience, create better products, and more personalized marketing campaigns, and gain a competitive edge.
If you'd like to see how Humankind can help you create 1:1 human connections with your customers and collect better data, book your demo to chat with someone from our team!