How businesses use zero-party data to foster stronger customer relationships and improve the customer experience.
- Benefits of zero-party data. Zero-party data is obtained directly from customers who willingly provide their information, and it has a higher value for creating personalized experiences and building emotional connections compared to first-party data.
- Privacy awareness. The increasing concern about consumer data privacy, driven by privacy regulations, has resulted in a heightened awareness of consumer data privacy and an increased focus on obtaining data from consumers without violating their privacy.
- Data integration. Integrating zero-party data with customer data platforms (CDPs) can be highly effective in providing businesses with a comprehensive, 360-degree view of their customers, enabling them to create more personalized customer experiences that meet their specific needs and preferences.
Zero-party data refers to customer information that is intentionally and proactively shared with brands, usually through surveys, forms or preference centers. Unlike first-party data collected directly by companies, zero-party data is based on trust and transparency and can provide valuable insights into customer motivations and needs.
In this article, we will explore the benefits of zero-party data and how businesses use it to foster stronger customer relationships and improve the customer experience.
How Is Zero-Party Data Obtained?
Brands obtain zero-party data from customers who intentionally provide their information with the understanding that it will lead to a more personalized and relevant experience. There are several methods that are typically used to obtain zero-party data.
- Surveys and polls remain one of the primary ways that brands gather information about customer preferences, opinions and behaviors.
- Quizzes and assessments are often used to learn more about customer interests, needs and preferences.
- Preference centers enable customers to control the types of communications they receive from a brand.
- Contests and giveaways often require customers to provide information in exchange for a chance to win a prize.
Brian Mandelbaum, CEO at Attain, an adtech data company, told CMSWire that surveys, polls and quizzes are currently the most popular form of zero-party collection used by brands. “Asking consumers to answer some questions to provide a better customer experience can even be considered zero-party data,” said Mandelbaum. “There are also a few companies that are focused on collecting their own zero-party data where the value exchange is the product.” Mandelbaum said that data could also be collected through receipt scanning and bank account linking.
Because zero-party data comes directly from the customer, it has a much greater value for creating personalized experiences and building emotional connections. “Explicit consent usually equates to better quality data, though it does depend on the method of collection and the value exchange,” explained Mandelbaum. “You’re creating a direct relationship with the consumer and earning their trust through this value exchange. Most importantly, they are providing the data about themselves, instead of other methods of data collection that are based purely on assumptions.”
Raymond Velez, global chief technology officer at digital consultancy Publicis Sapient, told CMSWire that customers are aware of when and why they are providing preference information to a brand. “In the case of zero-party data collection, they’re digitally savvy enough to expect when that information will be used. So if done well, this zero-party data capture and the conversations that are had can actually build trust. Relationships are built on trust,” said Velez, adding that the sooner brands collect and activate zero-party data for better personalized experiences, the more likely they are to encourage true relationship-building and customer loyalty.
Related Article: From First-Party to Zero-Party Data
Consumer Data Privacy Drives the Need for Zero-Party Data
According to a 2022 Statista report, 53% of internet users are more concerned about online privacy than they were a year ago. Privacy regulations such as the European General Data Protection Regulation (GDPR), US Children’s Online Privacy Protection Act (COPPA), California Consumer Privacy Act (CCPA), and Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA), have resulted in a heightened awareness of consumer data privacy, and an increased focus on obtaining data from consumers without violating their privacy.
Tim Glomb, vice president of global content at Marigold, formerly CM Group, a relationship marketing solutions provider, told CMSWire that the data collection landscape is changing due to new privacy regulations and with companies like Google and Apple changing how data is shared. “Zero-party data is quickly becoming the source of truth for any organization’s personalization efforts if they want to succeed.”
As customers became more privacy-conscious, first-party and zero-party data have enabled businesses to build trust and establish stronger relationships with their customers. First-party data is obtained directly from a brand’s customers or website visitors. Customers indirectly provide first-party data through interactions with a brand, such as completing a purchase, filling out a form or subscribing to a newsletter, as well as through website analytics, which provides details about page views, time spent on site and click-through rates.
Main Differences of Zero-Party Data and First-Party Data
The main difference between first-party data and zero-party data is how they are obtained. First-party data is collected from customer interactions with a brand’s channels, so although it is quality information, it is obtained through customer interactions that inadvertently generate the data. Zero-party data, on the other hand, is collected from customers who intentionally provide their information to brands.
One of the greatest strengths of zero-party data is the transparency that it’s built upon. Traditional third-party data — and even first-party data — is created when consumers interact with a business, and the consumers are not aware of the specific info they are inadvertently providing, nor what it will be used for. With zero-party data, customers are fully aware of the data they are providing to a brand because they are doing so willingly.
Denise Hemke, chief product officer of the SaaS Checkr, an automated background checking service provider, told CMSWire that zero-party data gives brands deep insights into customer preferences and needs, but it also has some immediate payoffs that weren’t possible with old third-party data.
“When a consumer willingly chooses to share their data with you, it can help build brand trust,” said Hemke. “You gain instant credibility when you’re clear about asking for the information you want and how you’ll use it. Hemke said that, by its nature, the fact that customers are providing zero-party data is indicative that they’re exhibiting some immediate trust and saying, ‘Hey, I’m comfortable sharing this with you so I’ll opt-in.’
“When you don’t misuse that data and transparently share how you’ll use it, that trust-building exercise ends with more positive, lasting consumer relationships,” added Hemke.Read Original Article