We all know how important data is when it comes to marketing and sales.
And we know that becoming truly data-driven is the best way to affirm the decisions you’ve made are the right ones.
And, as far as serving the customer goes, collecting information is the first step in personalizing their experience with your brand.
Traditionally, marketing teams have focused on collecting three different types of customer data:
Primary, or first-party data, refers to information solicited and collected directly from the customer. Survey responses, product reviews, and other kinds of prompted feedback are all considered first-party data.
Secondary, or second-party data, is data that organizations have collected on their customers, which is then used by another company. So, Company A collects first-party data on its customers, which becomes second-party data when used by Company B.
Finally, third-party data has been collected and curated from a variety of sources, then compiled into a single report or document. The various “State of the _____ Industry” reports that come out every year are perfect examples of third-party data in action.
But in recent months, there’s been a lot of buzz about a new addition to the family: zero-party data.
What Exactly is Zero-Party Data?
The term “zero-party data” refers to any information that your individual customers have proactively provided to your company about their personality, their preferences, and their lives as a whole.
The key word in that last sentence:
Proactively.
Information is only considered zero-party data when a customer voluntarily gives it to your company.
Here’s a quick example to show the difference between zero-party data (ZPD) and first-party data (FPD) in eCommerce.
- FPD: An Instagram follower responds to a poll you post in your Stories. You then direct message this individual with a follow-up question, which they answer.
- ZPD: An Instagram follower sends you a direct message regarding a recent experience they’ve had with your brand.
Now, in this simple example, the difference between the two may seem inconsequential.
But as we’ll discuss, this slight difference means a lot more in terms of how and why your audience engages with your brand.
Zero-Party Data Reduces Incorrect Conclusions
The main problem with first, second, or third-party data is that there’s always a lens over every piece of information you collect— and seeing data through such a lens means you’re not viewing it 100% objectively. Rather, you’re seeing your (or a third-party’s) interpretation of the data, which may not always be so accurate.
With ZPD, though, you’re getting information straight from the source: your customers.
Sure, there’s no guarantee that they’re telling the whole story at any given time. But since they’re volunteering the information in the first place, you can be pretty sure they’re telling you as much as they’d like you to know.
In contrast, FPD requires that you set the stage for what your customers tell you. As such, they might only provide surface-level information based on the questions or prompts you’ve given them.
This can lead your team to make assumptions about customers based on these specific responses—without accessing any other information they might have provided if given the opportunity.
This isn’t conjecture, either: according to Sitecore, 54% of marketing teams make assumptions based on singular interactions with their customers. These assumptions can lead to poor personalization efforts and other subpar customer experiences. And the more degrees of separation (i.e., when collecting second- and third-party data), the easier it becomes to misinterpret the information being collected.
Now, like we said, there’s no guarantee your customers will tell you everything you want to know when they volunteer information. At some point, you’ll have to make educated inferences based on what they’ve told you.
To be sure, there’s a huge difference between making an educated guess and making an assumption. While the former can allow you to provide a better overall experience to your customers, the latter… well… you know the old saying, right?
Zero-Party Data Amplifies Your Customer’s True Voice
By giving your customers the opportunity to tell their whole story (and not just answer questions you’ve prepared for them), you make it more likely that they’ll actually do so.
In contrast, if you approach the situation by asking certain questions or delivering certain prompts, you’re going to get what you asked for. In other words, your customers may tailor their responses to the context you’ve set for them.
For example, the question “What did you enjoy about using our product?” assumes that they did, in fact, enjoy something about your product. In this case, those who didn’t like anything can’t respond truthfully—and may sugarcoat their response just to answer the question and move on.
Unfortunately, this means you’ll be collecting inaccurate data—which may actually be worse than collecting no data at all. If you’re using these responses to further personalize their experience with your brand, your efforts are going to be off base. And it’s the customer who will end up suffering.
With zero-party data, the only considerations leading the customer to respond in a certain way are their own thoughts, preferences, and experiences. They won’t be telling you what they think you want to hear; they’ll be telling you what they want you to hear.
When you can truly listen to your customers, you’ll be in a much better position to give them everything they really want from your brand.
Zero-Party Data Helps Identify High-Intent Customers
If a customer is willing to volunteer certain information, it’s highly likely that they’re interested in further engagement. This makes it much easier for you to identify qualified leads and potential high-value customers.
Your proactive customers have been able to make their true preferences and expectations crystal clear and are likely to be highly valuable to your company. This puts you in the perfect position to ramp up your personalization efforts for these individuals.
Sure, your ultimate goal should always be to deliver a highly-personalized experience to all customers. But it just makes sense to prioritize those most likely to buy from you and who you already know a lot about. For these individuals, you want to get as close to the coveted segment of one as you can.
So in addition to allowing your audience to provide zero-party data as they see fit, you also want to take note of which specific customers have actually done so. Chances are, this will open up some major opportunities for your company.
Zero-Party Data Signals Customer Consent
With the ongoing discussion around consumer privacy, it’s more important than ever to obtain consent for information used for marketing and other purposes.
To be clear, you need to obtain this consent even if a customer voluntarily provides information about themselves without being asked. You also need to be transparent when explaining how you’ll be using this information and what they can do in the future if they wish to amend the agreement in any way.
But if a given customer is willing to provide such information unprompted, you can be fairly confident they’ll give you permission to use it accordingly. You can also be sure they’re providing consent because they understand the benefits of doing so, not because they’re feeling pressured in any way.
Incorporating Zero-Party Data into Your Data Collection Efforts
Okay, so:
We’ve established that compared to other data types, zero-party data provides the most accurate representation of who your customers actually are.
But this isn’t to say that first, second, and even third-party data isn’t important, too. In fact, each has its unique advantage and should be employed in conjunction with the others.
- Third-party data can give you a broad idea of which direction to take a certain hypothesis
- Second and first-party data can tell you whether you’re on the right track with your thought process
- Zero-party data can then confirm that everything you’ve learned thus far is accurate and representative of your customers
(Or, of course, your zero-party data could refute the more hands-off data you’d collected thus far.)
Overall, you should always be looking to collect as much information from as many sources as possible. But by staying focused on zero-party data, you can always be sure the information you collect will allow you to better serve your customers—and keep them on board for as long as possible.
