Zero-Party Data for Consumer Brands
Let’s start on a spicy note: consumer brands that don’t collect and leverage zero-party data are just temporary businesses.
Yes, it’s that important.
Zero-party data is revolutionizing how businesses interact with their online customer base, creating strong shopper engagement, retention, and loyalty. It is essential to start laying the framework to collect zero-party data in order to navigate the future of online data collection, which is currently on the precipice of significant change.
What is zero-party data?
Zero-party data is information from customers that they voluntarily and deliberately share with you. You acquire it through quizzes/polls, website activity, customer profiles, messages with customers, and elsewhere. You can then use this data to build personalized and specific product suggestions, interactive experiences, and targeted marketing for each customer at scale.
Think about zero-party data as conversational data: what would you learn (and what would you want to learn) from a customer if you were chatting with them about themselves, their opinions, and their preferences?
Here are some examples: You might learn when their birthday is, that they identify as a man, that they don't like strawberry, that they take their coffee with cream and sugar, that their favorite color is blue, that they're a Yankees fan, that they exercise four times per week, that they own a long-haired cat, that they want product recommendations based on their website activity, and much more.
By engaging in this kind of dialogue with your customers, you’ll find that data collection, marketing, and interactions become more of a conversation rather than a one-way presentation of information and products. This shift gives you specialized data that improves your business and makes customers feel heard and valued while finding the best products for them.
Why is zero-party data so important?
In today's large, globalized marketplaces, it's not often that we get to feel special, understood, and taken care of.
When zero-party marketing is done right, you can make customers feel valued while gaining the necessary information to strengthen your business and improve customer experiences. Many brands have already incorporated it into their companies and are seeing the benefits.
There is also a more pressing reason for zero-party data to be taking the spotlight: consumer privacy issues.
Third-party data collection via cookies is being phased out, and it is likely that third-party data will be phased out across the board. Third-party data has historically comprised a significant component of eCommerce, creating a flow of passive customer acquisition through access to a larger pool of consumer information and strategic retargeted ads.
Brands have shifted more focus toward customer retention, but with this new future ahead of us, we will have to take a more balanced and active approach to customer acquisition and retention.
Apple's privacy changes
Apple no longer allows data aggregators and social media platforms like Facebook and Instagram to collect data from iPhones and iPads, which make up about 60% of mobile devices used today.
Companies will only be able to access this data if customers consent to allow data collection through pop-ups and user settings changes (only ~21% of customers had consented by September 2021). As these changes occur, businesses will lose over half of the third-party data they currently have access to.
Google's upcoming cookie changes
Google has also released a statement saying that Chrome browsers will no longer allow third-party cookies in 2023. As Google’s use of customer data transparency and privacy regulations has been called into question over the last few years, it seems to be steadily moving toward a more privacy-focused approach to data collection.
Customers want data privacy more than ever
Data privacy has become a major issue for customers, too, and many people do not want their data to be available to anyone. With recent legislation, third-party data acquisition is becoming more regulated, and sites are often required to inform visitors that they use third-party cookies.
When given the option, most people aren't interested in selling their data to a third party. Third-party data will no longer be a viable option in the near future.
That's where zero-party data comes in: it fundamentally requires consent.
An overview and comparison of customer data types
How does zero-party data compare to first-party data? Or second-party data? How much do they differ in improving customer acquisition and marketing improvement?
The best way to truly understand how zero-party data works and how it can benefit your brand compared to other types of data is to review and compare the differences.
What is first-party data?
First-party data is the information you collect from customers on your site. This data is collected passively: it includes sales information like personal information, purchase history, discounts used, and subscriptions periods.
It also includes customer behavior on your site, such as length of time on a page, frequency of clicks, which links are being interacted with most, and what items are being scrolled by.
Leveraging first-party data
First-party data is used for customer retention, personalizing suggestions and ads, and managing inventory. You can then use the data to predict trends and make inferences into customer preferences based on analytics of behaviors and purchase histories. First-party data, for example, is the foundation of RFM Analysis.
In comparison, zero-party data collection is collected actively and gets straight to the information you want faster. By collecting pertinent information on your customers, you can start recommending and personalizing their shopping experience before they even make their first purchase. You also can begin to make inventory choices and branding directions without having to wait for a pool of customers to shop to get data results.
Zero-party data vs first-party data
We're adding a specific comparison section here, because these two data types are often confused, which is understandable. Zero-party data used to be considered a subset of first-party data.
Zero-party data is information collected outside the standard procedures of eCommerce transactions.
A customer voluntarily provides shipping and contact information, and you collect their purchase data. All this falls under first-party data.
If you ask your customer something about themselves or what they like, that's zero-party data.
Note: there can be overlap here. For example, if you're a fashion brand, you might find out a customer's waist size if they purchase a belt (first-party). However, you may not know their inseam, unless they also purchased pants. So, if you ask for their inseam in an email, you then might be able to recommend some pants to them, as you already have their waist size (zero-party).
What is second-party data?
Second-party data is one brand’s first-party data that is sold to another brand that is trying to bring in customers based on specific data.
Second-party data is not openly available. Instead, you must establish a relationship with another company and negotiate a deal in which data is exchanged. Second-party data gives access to much more niche and specialized data. It tends to be of better quality than third-party data but smaller in scope.
Having a strategic set of data through a private partnership can be ideal when reaching out to specific markets with a new product or branding direction. For example, when a credit card company teams up with an airline to create an airline-specific credit card, the credit card company can see customer data related to traveling habits and preferences to create targeted ad campaigns for certain types of travelers.
Leveraging second-party data
Because second-party data is often higher quality, it allows some room for negotiating costs of the data (for example, airlines can sell the value of their frequent flier programs to banks as part of their deals). The biggest hurdle to acquiring second-party data is that it requires building relationships and deals with strategic business partners.
For example, suppose you are a clothing store wanting to branch out into athletic apparel. In that case, you could work with an athletic store to see what kind of sports and physical activities are most popular, informing who to target as well as the kind of athletic clothes you should offer.
With zero-party data, the collection is all in your hands, requiring you only to modify some key features instead of having to factor in costs of outside data and negotiations. It also allows you to catch new trends, purchase preferences, and other customer insights without needing a specific plan or goal.
What is third-party data?
Third-party data is information you purchase from data aggregators, advertisers, or gain by running tracking ads with companies like Facebook and Instagram.
By having access to large pools of data or running ads that track people's data, you can gain information from people you have no previous relationship with that interacted with your business without registering or buying anything.
Leveraging third-party data
Third-party data has been a major cornerstone of consumer businesses for years. This type of data can connect you with people you otherwise would have never interacted with and shares information about their possible purchase intentions to send targeted ads.
Via channels like Facebook, third-party data has helped create a passive flow of customer acquisition, a significant component of online business.
That said, third-party data, especially from data aggregators, tends to be lower quality, publicly available, and less actionable. Additionally, prices tend not to be negotiable like second-party data deals.
How consumer brands benefit from zero-party data
Zero-party data supercharges your business. By creating more personalized experiences for your customers, you are setting yourself up for larger purchase orders, more customer engagement, higher customer retention, and even lower acquisition costs.
Have better quality data at your disposal
Using strategic questions to gain data directly from your customers, you will have the data you want rather than what you are handed. Your business will have the exact information that you need to perfect personal suggestions, plan future brand moves to match your customer base, and create targeted promotional campaigns that still feel personal while reaching the widest audience.
Build personalized campaigns
With this information, you will have better demographic data specific to your business and its products, creating campaigns customized to your customer base.
By getting a comprehensive understanding of what your customers love, as well as what they need and want from your business, you will no longer have to make assumptions based on prior purchase history and behaviors.
You'll know exactly what people are looking for.
Once you gain comprehensive data, you can create different promotional email and SMS flows that target those specific demographics. For example, if you are a book store and ask what genres and mediums customers like, you can target campaigns about new audiobook thrillers to folks interested in that medium and genre rather than sending it to everyone.
Once you start those customized marketing campaigns, you make people excited and curious to read your emails rather than skipping over what they will assume to be generic suggestions for anyone.
Accurate inventory management & forecasting
Preference datasets can create more robust customer profiles that will allow you to know what kind of products people are looking for. Understanding your customer data can help you understand what you should be keeping in your store and what future options could look like.
For example, if you have a beauty business, you could ask customers what their experience level is with the types of products you sell. Perhaps you’ll find that you have a large pool of newcomers in your customer base who are looking for more beginner-friendly items.
By cementing these kinds of early relationships, you are ensuring customers will stick around and could even start exploring the more advanced products. This trust will strengthen if you use personalized campaigns to help beginner customers grow and learn with your products, creating interactive shopping experiences that lead to strong customer loyalty.
Lower cost per acquisition (CPA) with personalization
- By creating a custom experience upon customer arrival to your site (by helping them find products through interactive pop-ups and quizzes), they are more likely to subscribe to your business when you offer their results via email.
- Adding in an additional optional discount along with that list of personal product recommendations to sweeten the deal makes the subscription experience feel more customer-focused and rewarding (we show some real-life examples a bit later in this article).
- Instead of just being asked for an email and phone number right off the bat, the customer sees signing up as a reward by engaging with the site rather than just another step in a buying process.
- Having email campaigns that offer personal recommendations, tips, and tricks based on preferences gives added value and relevance to your emails. This value exchange can mean needing fewer promotional discounts to have people interested in your email and SMS messages, which lowers the costs required for them to become invested in your campaigns.
How to collect zero-party data
Collecting zero-party data can be pretty easy when done right. A few key ways to do this include quizzes and conversational pop-ups in your registration process and marketing campaigns.
Collecting zero-party data collection upon registration
Collecting zero-party data can just as easily be just another part of the onboarding process that comes with a subscription or membership. Along with asking for basic personal information like name, phone number, email address, and demographic information like age and gender, add questions that give you an insight into that customer's relationship with your products.
For example, if you are selling fitness products, you could ask about their experience level, workout frequency, and possible health issues affecting product use. Registering customers into loyalty programs is another great way of collecting zero-party data.
By rewarding customers with loyalty points for reviews, engaging in preference centers, and participating in surveys and polls, you can learn a lot more about what they’re interested in, their preferences, and the products to show them on your owned channels.
Collecting zero-party data on your site
The conversational pop-up: Show a customer who has landed on your site a pop-up that asks a question or two to give them a personalized list of recommendations based on their needs and preferences. Or, you can ask a question that can put the customer into a tailored email flow. It is a more natural approach to acquiring zero-party data, and it will get a customer more comfortable before they potentially provide an email and subscribe (or make a purchase).
Vuori does a great job of this by offering customers a discount via an exit-intent popup in exchange for product preferences and their email:
Preference centers: You gain valuable data by allowing customers to pick and choose what ads and emails they want to receive or customize product preferences. Preference center data can be used to see what customers are and are not interested in seeing, helping you make inventory choices.
Collecting zero-party data from social media
Social media is a great way to reach out to and solicit a large group of people, including new potential customers. You can gain a large set of data about trends, community demographics, and even brand and product directions by creating and posting polls.
Collecting zero-party data from email campaigns
Introductory quizzes can also be a part of your welcome email flow, making the process a more engaging experience and building the habit in customers to read your emails as they are more than just spam. Beyond that, send customers the occasional survey to see how they feel about your brand and products.
If you are interested in testing a new product or brand direction, run a poll or questionnaire on your current members' thoughts. Customers like to feel heard, and zero-party data is more about having a conversation than just talking “at” customers.
Use cases for zero-party data
Quizzes to facilitate and personalize product discovery
Studies show that people tend to enjoy answering questions about themselves and building stronger relationships with the businesses they are engaging with. You can create custom experiences with new customers that feel welcoming and conversational by asking the right questions.
Harper Wilde does a great job of this by getting more information from customers with clever copy and a quiz from their home page:
By using the data your customers provide, you can bring them a pleasurable shopping experience, and can personalize your home page and other browsing pages based on their preferences.
Seeing a shorter list of items that fit your customers' specific tastes or cater to their particular needs makes them feel special and heard. When you can send them information about new products and campaigns that fit those interests, it shows that you have a genuine interest in their shopping experience.
Personalized email and SMS campaigns
Creating personalized email and SMS campaigns is a great way to use zero-party data to make people feel personally catered to. Using data gained from introductory quizzes and supplementary surveys, you can create email flows specific to different customer groups.
For example, suppose you run a brand that sells hiking gear. In this case, you could have a flow of emails that target people based on whether they like to hike alone, or in larger groups, marketing specific packages and location deals to one or several of these groups.
You can also customize the messages with a specific deal to fit customers' preference data. So, if you were offering a special deal for hikes in California, you could send out emails to people highlighting this as an opportunity to visit hiking trails in California. At the same time, you have another flow of emails for other hikers that tell them to come to enjoy California's warm beaches.
Personalized content (blogs, ebooks, other information of interest)
You can use zero-party data to personalize the customer's website experience beyond just personalized product recommendations. Uqora, for example, offers content in exchange for email and age, which is key demographic data for them:
How Daasity makes it easy to leverage your zero-party data
If you don’t know about us, hi! It’s nice to meet you. Daasity is a data and analytics platform purpose-built for consumer brands. We automatically organize and manage all (really, we mean all) your eCommerce, Amazon, retail, and/or wholesale data, centralize it, update it daily, allow you to run custom reports, and build custom metrics and dashboards.
We can collect zero-party data from tools across your tech stack (e.g., Gorgias CS interactions, Enquire Labs post-purchase data, Survey Monkey survey responses, and much more) and push that data into marketing channels using our Audiences product.
Audiences enables truly 1-to-1 marketing personalization. Want to send a certain customer segment through an email flow in Klaviyo, based on a particular survey response? You can. Want to send another segment based on an SMS offer through Attentive, based on a product preference? You can. Want to build lookalike audiences on Facebook based on your own zero-party data? You can. In terms of what you can personalize and do with Audiences, there’s no limit.
Want to learn more? We’d love to show you a demo.