Feature
The Gist
- 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.
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Zero-Party Data and CDPs
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. CDPs currently unify customer data from first-party, second-party and third-party sources to help brands gain deeper insights into customer preferences, behaviors and intentions. By integrating zero-party data into a CDP, businesses can create more personalized customer experiences that meet their specific needs and preferences.
Zero-party data can help CDPs create more detailed customer segments based on preferences, interests and behaviors, enabling businesses to deliver more targeted marketing campaigns and personalized messaging. Because zero-party data comes directly from customers, they are more likely to be very specific about their interests, behaviors, likes and dislikes, enabling brands to more effectively tailor product recommendations or promotions based on the customer's specific preferences and interests.
What Companies Are Using Zero-Party Data Today?
Brian Munce, co-founder and managing director of the branding agency, Gestalt Brand Lab, told CMSWire that zero-party data is the best option for businesses who want to make analysis-driven decisions based on their customers' feedback.
"Because the information is coming directly from those consumers — typically through a survey or poll — it tends to be the most reliable. This has huge benefits for companies across the board, but it's particularly helpful in understanding how your business is viewed," said Munce, adding that brands can also use this information to determine how strong a connection people feel they have with the brand, allowing them to address any weak areas and further develop those relationships.
"Brands like Pepsi Co., American Airlines, and Colgate aim to collect zero-party data to better scale across their brands to deliver exceptional experiences," said Glomb, who related the experience of SmartBox, one of Europe’s most notable gift-giving services. “SmartBox had the unique challenge of having three different audience groups: buyers, beneficiaries and prospects. They utilized Cheetah Experiences to learn more about their audiences and get them to spend more time on the website," said Glomb. “With seasonally-themed spin-to-win games, contests and advent calendars designed to entice visitors to return daily, SmartBox has doubled the size of their active audience group in less than a year.”
Similarly, other brands have created programs that encourage customers to voluntarily provide information:
- Sephora, a large beauty retailer, developed a Beauty Insider program that incentivizes its customers to share information about their preferences, skin type and beauty habits in exchange for personalized recommendations, free cosmetics and a birthday gift.
- Airbnb, the home-sharing platform, provides customers with a Wish List feature that allows customers to save and share their travel preferences and interests, which provides the brand with valuable insights they can use to create more personalized travel experiences.
- Ikea’s Kreativ campaign encourages customers to virtually design their own living area using AR, fine-tune their preferences and designs, and purchase online or take their design to the nearest Ikea store.
Aleksandra Korczynska, CMO at GetResponse, an email marketing solution provider, told CMSWire that consumers who share their data or preferences with a particular company are more likely to buy from this brand as they have already passed the awareness stage and are either in the consideration stage or very close to purchasing.
"Marketers ultimately benefit a lot from zero-party data as it leads to higher conversion rates. It is, however, crucial not to misuse this data," said Korczynska. "Firstly, companies obviously shouldn't share this data with anyone else. Secondly, I've seen many brands bother their customers with frequent newsletters and irrelevant offers." Korczynska suggested that doing this is a surefire way to turn hot leads into unsubscribes because no one is willing to receive irrelevant and bothersome communications.
Final Thoughts on Zero-Party Data
As an increasing number of brands recognize the value of zero-party data, its use is expected to grow across industries. Many brands are already leveraging this type of data to improve their marketing efforts and enhance their customers' experiences while respecting their customers’ privacy concerns.
