From segmentation to email, A/B-testing, and website analytics, marketers use data in every facet of their roles. And before the new era of privacy, marketers used third-party data to provide customers with personalized interactions and messaging.
However, in the wake of data breaches and scandals, coupled with the introduction of more stringent data and privacy regulations, people have become increasingly wary of handing over their information. Marketers now need to turn to a different source of data.
To build trust while maintaining personalization, marketers are turning to zero-party data.
What is zero-party data?
Brands generate first-party data via interactions with their audiences. That can be obtained by installing a tracking pixel on your website to monitor user behavior or it can be obtained from website analytics, apps, social media, CRM, surveys, purchase history, etc.
Zero-party data, on the other hand, is data a customer intentionally and proactively shares with you. Though it sounds a lot like first-party data, there are some significant differences.
Zero-party data is directly collected from your customers—not by using tracking pixels, cookies, or cross-device identification. Most importantly, zero-party data is more accurate information because it comes directly from the customer; it's not inferred information.
For example, if people provide you their birth date because they must be 21 years old or older to enter your website, that's first-party data—not zero-party.
Why? Because the customer gives it out of necessity, and without the intention of allowing your company to use it for anything other than allowing them access to your website. However, if they give you their birth date because they want to receive your offer for a free demonstration of your service, that is zero-party data because it was shared directly and intentionally by the potential customer.
Zero-party data typically includes personal preferences, emotional leanings, and lifestyle behaviors. It benefits marketers by painting a holistic picture beyond the standard demographic and purchase history data that most marketers are used to. Zero-party data is controlled by you and your customers, as opposed to a third-party vendor that may or may not have gained the data from unreliable or unsecured sources.
Why should you care?
Now that we've established what zero-party data is, let's discuss why it matters.
Transparency
How companies collect and use data has become such a hot-button issue that 9 out of 10 consumers will stop purchasing from brands that lack transparency. With zero-party data, all the cards are on the table: Customers give you their data willingly with the expectation for you to use it in a specific way.
Relationship-Building
Zero-party data can empower your company to offer interactive, digital experiences with audiences that create close emotional bonds. You can develop direct relationships with your audience and create a better picture of each customer, allowing you to share personalized marketing content, offerings, and product recommendations.
When marketers use inferred data to customize communications, there's a very real chance they'll get it wrong. That can damage the relationship you've built with your customers, potentially causing attrition. Incorporating zero-party data creates more accurate personalization and targeting.
Establishing Loyalty and Trust
Companies that are transparent and provide a value exchange will see increased loyalty and trust, allowing customers to feel more inclined to share data in the future. Creating a systematic, engaging process for collecting zero-party data is a great way to build trust and then continue engaging the customer over time.
How do you collect zero-party data?
To collect zero-party data, you must entertain, engage, and provide something in return to keep a customer's attention and receive their preference data. You can accomplish this through interactive experiences, such as questionnaires, polls, quizzes and more, delivering a better experience with a tangible value exchange for the customer.
To see a real-world example of zero-party data, let's take a look at Air New Zealand's Yay to the USA campaign. To promote and recommend a range of its US long-haul flight destinations, Air New Zealand giving entrants a chance to win free flights for themselves and three friends.
After answering six multiple-choice questions, contestants entered a few personal contact details to secure their entry to the sweepstake. They could also opt-in to future marketing communications, providing Air New Zealand with rich zero-party data to use for personalized retargeting. On completing the questions, entrants received a recommended travel destination based on their answers. After the winner was drawn, all other participants were sent a personalized email offering them a 5% discount code to buy tickets to their recommended destination for the next 30 days.
The campaign was a smashing success, resulting in an ROI of 38:1 and more than 100,000 zero-party data records captured.
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Today's marketers face a growing list of challenges:
- Consumers demand more personalized experiences, while legislators continue to implement privacy regulations both at home and abroad.
- More companies are recognizing that changes need to be made for transparency and security.
- Even browsers are reducing marketers' ability to use tracking cookies to get data on users.
- The accuracy and effectiveness of third-party data is declining, even as company leadership calls for increased ROI on marketing dollars.
Smart marketers should leverage zero-party data, which offers the opportunity to create digital experiences that deliver value to customers in exchange for their information.
And since they proactively provide the zero-party data, digital marketers stay in compliance with GDPR and other privacy regulations while creating more opportunities for advanced personalization and the delivery of exceptional experiences.
