A lot of marketers have already heard of first, second and third-party data. These different types of data are collected and leveraged to gain insights into audiences that help personalize the customer experience.
Now, however, there’s a relatively new type of data that’s being increasingly talked about—and it’s called zero-party data—a term coined by Forrester Research in 2018.
It’s really important that you as a small business understand exactly what zero-party data is, how to collect zero-party data—and what zero-party data means for social media.
In this article, we’ll be covering all three topics. We’ll also be rewinding and defining first, second and third-party data, as well as sharing tips on how to use zero-party data for your marketing campaigns.
How Will Privacy and Going Cookie-Less Affect How Companies Gather Customer Data?
Cookies have been fundamental to the way data has been collected since 1994, helping businesses monitor customer activity online.
In 2021, Google announced plans to ban cookies from Google Chrome by 2023 at the latest. Apple has already gone further, giving site visitors the chance to opt-out of third-party cookies if they so wish.
Looking at things logically, this means that third-party cookies will eventually be phased out completely.
What does this mean for companies who want to gather essential customer data? They will need to adapt and find new and ethical ways to do so.
Companies will also have to be as transparent as possible, collecting data in appropriate ways that don’t provoke the mistrust of their consumers.
With that all said, let’s take a look at first, second, third and zero-party data.
First-Party Data
First-party data is also known as owned data.
It’s essentially data that you collect firsthand—and own. It’s free and it’s data coming from the people who are interested in what you’re doing and selling.
For instance, let’s say create a multi-step checkout form for customers to fill out while they are purchasing one of your products. You can request specific information with the principal aim of gathering together data on them that will allow you to better understand what they like to purchase and their pain points.
This is first-party data because the end-user has voluntarily handed over their information/data to you.
It’s the same if a person visits your website and agrees to allow cookies. In such a scenario, the customer is allowing you to track their onsite behavior. This is first-party data that you can use for retargeting purposes, and to help you understand your customers and attract more customers.
Second-Party Data
Second-party data is just as useful (and crucial) as first party data, but you don’t obtain it yourself. Instead, someone else obtains it for you.
This could be a business you’ve partnered up with (not a competitor) that targets the same customers as you do.
In a sense, second-party data comes about as part of mutually exclusive interests. You might share your first-party data with another company, while that same company might share their first-party data with you.
It’s a win-win situation because it allows you to establish better relations with other businesses, which can bear even more fruit as the years go by.
That said, you don’t have to just wait for other companies to share their data with you. You could also buy data.
Purchasing data is certainly a faster way of getting access to data but you need to be absolutely sure who you’re buying the data from. If you don’t double-check, you may end up with data that’s totally irrelevant.
You can use second-party data the same way you use first party data. For example, you can use it to create retargeting ads as well as learn more about your existing customers. Doing so will allow you to create ads that attract more customers.
Third-Party Data
Third-party data is a type of data that’s collected from companies who are in the business of aggregating data, before selling it for a profit. These companies do not directly interact with customers.
As such, you’d turn to third-party data providers like ZoomInfo alternatives whenever you need large batches of data quickly.
There are upsides and downsides to acquiring this type of data. The biggest upside is that you’re gaining access to huge swathes of data that would otherwise be cut off from you.
The biggest downside is that you’re getting your hands on the exact same data that anyone else can get hold of (should they be prepared to pay for it).
Not just that, but huge volumes of data don’t always translate into huge volumes of quality data. You might end up with some data that’s relevant to you, but you also might end up with some data that isn’t relevant.
That said, third-party data can help you find patterns and trends among your customer-based, and it can therefore be a helpful supplement to your first and second-party data.
Zero-Party Data
Zero-party data is, in many ways, the same as first-party data. You approach your customers—perhaps with a survey—and you ask them directly and explicitly what they think of this or that.
Essentially, you’re approaching them for their unique insights, and they’re giving you their consent to use their data.
What kind of insights can you gain?
You could learn how they feel about your brand, what purchases they’re planning to make, skin type, hair type, what kind of budget they have, their demographic, and more.
Essentially, you can ask them questions that will give you insights into the things that will help you understand your customers better.
Zero-party data can be used in the same way as first-party data. You can optimize your retargeting campaigns with it, find and nurture leads, and ultimately provide your customers with a more engaging customer experience.
Why Is Zero Party Data Important?
Research has shown that 80% of customers want a hyper-personalized experience from retailers.
In order to provide a personalized experience, brands must first capture data that helps them understand more about their customers.
But here’s the catch: Customers are very suspicious in 2022 about brands capturing their data. They want more control over what data of theirs is shared, how it’s shared and who it’s shared with.
This is where zero-party data proves useful. It overcomes the “fear factor” a customer might have of a brand capturing their data and using it for nefarious ends.
It also helps you to build trust between your business and the end-user because you’re not simply taking data they’re not aware of. You’re asking for specific data while allowing them to retain ownership over it.
Such a mutually consensual relationship deepens a relationship between a brand and a customer by promoting transparency (read Corporate Transparency Act by FinCEN Report Company) and openness.
At the same time, it allows you to ask the questions that matter to you. In other words, questions which you know will help you to provide a personalized customer experience.
In short, zero party data allows you to ethically and openly learn about your customers:
- Pain points
- Motivations
- Desires
- Interests
- Demographics
You can also use this information to capture leads, nurture leads and optimize retargeting campaigns that bring back customers who were otherwise hesitant about making a purchase.
Not just that, but because zero-party data is directly and privately gained, it’s not the same as, say, third-party data in that it’s exclusive to you and your brand. You don’t need to share this data with other brands who have purchased it from a company. It’s yours.
Ways to Collect Zero Party Data
As long as you collect zero party data consensually, there are multiple ways you can do it:
Social Media Polls
Twitter polls, Instagram polls… you name them, social media polls are super popular because they’re so engaging.
Brands ask fun and creative questions, and their followers come along and answer them.
As well as allowing you to collect data, polls also give you the chance to interact with your audience.
What kind of questions should you be asking?
Whatever you think will help you learn more about your customers. You could ask them about their specific preferences, their current pain points (the things they struggle with the most), what features they’d love to see from your products, what apps and tools they use – and so on.
Chat Via Messenger
Facebook is really cool because there’s a feature called Comment-to-Messenger. When someone leaves a comment on one of your posts, you can automatically reply to them via Messenger and initiate a conversation.
Then, you can activate a quiz or ask question 1:1 that directly addresses the end user, using personalized language to engage them and draw out insights from them that help you understand them and their preferences better.
Messenger conversations are low-barrier, they’re personable, and they’re also end-to-end encrypted. The customer feels safe and, should you get your conversation flow correct, they will open up to you.
Email marketing remains one of the most popular digital marketing methods—and it’s still a superb way to reach out to your customers and gather information from them.
For example, if you already have an email marketing list, now is the time to create a survey.
However, in order to get as many people as possible to fill-out your survey, it’s a smart idea to offer an incentive, such as automatic entry into a prize draw for anyone who fills the survey out.
Pop-ups
Pop-ups can be annoying, and they can really frustrate the end-user.
But if you get them right (perfect timing and perfect context) they can also be fun and helpful.
And while most brands use pop-ups simply as a means to persuade a customer to take a specific action while handing over their email address, you can use a pop-up to collect a bit more data.
For example, you can ask people a relevant question that gives you more insight into them, such as their birthday, their location or even just their favorite color. Basically, anything you think will help you create a stronger picture of your customer-base.
Product Quizzes on Your Website
Imagine if a customer walks into a brick and mortar store and is confronted by thousands of items.
Where do they start!?
They could feel so overwhelmed that they exit without buying anything.
To circumvent this online, you can create an online quiz on your website that answers specific questions that help your customer learn more about their own interests, needs and wants, and guides them towards just a handful of products that are within their price range, and which are perfect for them.
Pro tip: While zero-party data marketing can be more affordable than, say, third-party data, it’s still important that businesses explore financing measures, such as startup loans, to give you access to the tools and software that makes data-collecting so much easier.
What Does This Mean for Social Media?
Why do people join social media networks?
While a lot of people undoubtedly engage with brands on social media, most people sign-up to social media platforms to be social.
And because zero-party data at its core means you have to actively engage your customers, reverting to a zero-party data “campaign” also means you get to be more social on social media—and you get to build better, more lasting relationships.
That alone increases the trust factor between you and your followers, which itself can go a long way to boosting conversions. Indeed, research has shown that 70% of consumers will buy from brands they trust.
Naturally, how you ask questions on social media matters. You can’t hammer down the door and impersonally ask people for answers. You have to instead introduce yourself, be friendly and frame your questions in non-invasive ways.
Here are two examples:
- Looking for that perfect gift for your partner? Maybe we can help you out?
- I’d like to ask you a few questions to help you find what you want faster.
Remember, while your customers do sometimes use social media to engage with brands, they are first and foremost there to be social—not to suddenly hand over their information, data and insights to you.
Therefore, you need to spend time warming them up, allowing them to get to know you as much as you get to know them.
In essence, zero-party data marketing means using your social platforms to:
- Ask questions
- Engage your audience
- Reply to comments
- Build trust
You can do this via:
- Polls
- Quizzes
- Surveys
- Question posts
Final Thoughts on Zero Party Data
Zero-party data isn’t something for the future—it’s something for the here and now. It’s what customers want, and in many ways it’s actually easier to collect than other types of data.
It’s just that, from now on, you’ll have to be more creative with how you get data, as well as more transparent with how you use it, and you’ll also have to be as engaging and as open as possible on your social channels so that your customers listen to you, engage with you, and provide you with the insights you need.