There’s an emerging trend of privacy-enhancing data that uses opt-in, Zero-Party Data (ZPD). Will it improve the personalized user experience for general users or make marketing more challenging? How can businesses leverage it?
In the age of data privacy, this emerging trend presents a new way to collect and use data that sets a higher standard for transparency and creates a more ethical, efficient, and profitable way of targeting ads and content more precisely.
Keeping track of customer preferences and behaviors has always been part of a successful marketing strategy. But now, with more customers looking for control over the data collected and shared with companies, ZPD represents a certain cookie-less future with new ways of understanding customers and making business decisions.
Let’s look at the impacts of zero-party data and its implications for online businesses.
What is Zero-Party Data or ZPD?
Zero-Party Data (ZPD) is data that customers deliberately and actively provide to a company. Unlike first-party and third-party data, collected without a customer’s active participation, zero-party data is generated when customers volunteer information to a business.
Websites collect this first-hand information from users all the time, such as their preferred payment method, product preferences, purchase intent, and even future product aspirations.
It is typically done through interactive surveys, contests, and polls. By actively soliciting and collecting consumer data, companies can better tailor their interactions and offerings to the individual customer’s needs.
It involves the individuals giving consent for their data to be collected. The data collected is much more precise and focused than that collected from traditional third-party sources.
Some other examples of ZPD can be a person’s birthdate, contact information, location preferences, and consent to receive marketing materials. Companies can acquire more accurate data that better inform their marketing decisions by collecting it directly from the individual.
Zero-Party Data Vs. Third-Party Data
Zero-party data and third-party data are the two main camps that businesses and organizations need to know. Both have pros and cons, and each should be considered depending on the goal the company or organization is trying to achieve.
As previously discussed, zero-party data comes directly from customers, often through opt-in surveys or other direct requests. It gives companies the information they need to craft better personalization strategies and tailor the customer experience.
On the other hand, third-party data is data that has been collected from outside sources, such as social media or public records, without the consent of the customer.
Zero-party data is usually more accurate and relevant to the business because it is obtained directly from customers who have chosen to share information with the company. Third-party data is not always as accurate and current as zero-party data, as it has been collected from sources that may be outdated or inaccurate.
There are many other differences you may need to consider. We’ve put together the important ones in the following table:
|Criteria||Zero-Party Data||Third-Party Data|
|Definition||Data that a consumer willingly shares with a company or organization||Data collected by a company or organization from external sources|
|Ownership||Owned by the consumer who shared it||Owned by a third-party company or organization|
|Consent||Requires explicit consent from the consumer to collect and use their data||Collected without direct permission from the consumer|
|Accuracy||Generally, more accurate as the consumer voluntarily provides it||It may have accuracy issues as it is collected from external sources|
|Trust||Consumers trust companies who use zero-party data more as they have willingly shared their data||Consumers may not trust companies using third-party data as it is collected without their direct consent|
|Adaptation||Enables more personalized and customized experiences for the consumer||Enables broader targeting and segmentation options for marketers|
|Regulation||More likely to be compliant with data privacy regulations such as GDPR and CCPA||Likely to be subject to data privacy regulations and restrictions|
|Examples||Filling out a survey, providing feedback, sharing preferences or interests||Purchasing history, online behavior, demographic information, social media activity, etc.|
Table 1: Zero-Party Data Vs. Third-Party Data
Since third-party data is collected without the knowledge of the customers, companies are often worried about the security and privacy of the data.
When deciding which type of data to choose, consider the organization’s needs and the objectives the data intends to support. For instance, zero-party data is the better option if a business is looking for data that will accurately inform personalization strategies.
Advantages of Zero-Party Data
Collecting zero-party data effectively eliminates the need for third-party cookies. The cookies system has been infamous for its invasive and unpredictable properties.
Additionally, as the data is collected directly from the individual, companies can ensure the accuracy of their information and respect their user’s privacy.
Zero-Party Data also allows for trigger-based marketing, which enables companies to target individuals based on specific activities. It typically results in higher click-through rates and more effective ROI for marketers.
Challenges of Zero-Party Data
As with any new data collection model, Zero-Party Data also comes with its own set of challenges.
It isn’t easy to obtain the data for obvious reasons. Often, companies must establish a relationship with their consumers to obtain their Zero-Party Data.
For many relying on non-organic strategies, it can be time-consuming and costly.
Another issue is that since the data comes directly from the consumer, they have control over what they provide and can only provide brands with the information they are comfortable sharing. That could lead to less precise data and less effective campaigns by marketers.
The Future of Zero-Party Data
As data privacy becomes a priority for companies and customers alike, Zero-Party Data looks to be a major player in the evolution of data-driven marketing tactics.
It’s an opportunity for companies to collect data ethically and transparently. In that regard, ZPD could become the go-to solution for marketers.
Though there are some challenges, the advantages of ZPD greatly outweigh the risks and make this emerging data collection trend worth exploring for even the most risk-averse marketing teams.
Google plans to end its support of third-party cookies, and Forbes has named zero-party data the new oil. For us, it’s clearly a winner.
Zero-Party Data: Is Ethics in Data Privacy Really a Threat?
We don’t think that zero-party data is necessarily a threat. It will certainly change how things work, but that’s how the internet has evolved from the start.
Instead, the use of Zero-party data provides a complete understanding of consumer preferences and behaviors and an opportunity to build trust with the customer.
It is an ethical approach to data privacy because it puts the consumer in control by giving them a choice and the power to decide what they want to share with the company.
Moreover, it would allow companies to use more precise targeting, improving their customer service and experience while protecting their data privacy.
How Can Marketers Leverage Zero-Party Data?
Marketers can create custom messaging and product offers that better meet their needs by more strictly understanding a customer’s preferences.
Additionally, ZPD will help develop more targeted product launches, create meaningful customer journeys, and create targeted ad campaigns.
If you think about it, top-tier customer service is also tied to ZPD. By understanding a customer’s purchase intentions and preferences, marketers can provide a better customer service experience, including tailored offers and more personalized, participatory interactions.
How to Leverage Zero-Party Data for Your Business?
It’s clear that companies can use data in both positive and negative ways. Some companies may not even realize how ZPD alone could benefit them. Let’s look
1. Figure Out Your Objective
Zero-party data enables you to understand your customers’ preferences intimately. Take your time to decide what you want to achieve with this understanding. Your opportunities may or may not include upselling, personalization, segmentation, enhancing customer experience, and increased customer loyalty.
2. Develop a Voice of the Customer Strategy
A voice of the customer (VOC) strategy focuses on reaching out to customers directly through surveys, focus groups, or collecting feedback from customer reviews.
A strong VOC strategy should include a data collection method that customers understand, a plan for what happens with their information, and a method to ensure it is secure.
3. Understand and Interpret the Data
After collecting the zero-party data from customers, you must analyze it to determine how best to use it.
Your analysis depends on what you’re trying to find. You need to understand the customer’s interests to create meaningful segments. For example, you can create segments to send customized emails or target specific audiences with relevant campaigns.
4. Offer Rewards and Incentives
Depending on the type of zero-party data you are collecting, develop rewards and incentives for customers to provide you with their information. You can create offers through points, discounts, coupons, or access to special events or experiences.
5. Take Action on the Data
After analyzing and segmenting your customers’ data, create specific strategies to target them.
It will allow you to personalize interactions across all your channels. You can also use the data to identify trends in customer behavior. It could help you develop new services or products that might interest customers.
6. Monitor Progress and Evaluate Results
Collecting and leveraging zero-party data is an ongoing process. So, track and monitor the results of your efforts.
Adjust your strategy and optimize for success. It is also essential to periodically evaluate your data to ensure accuracy and to update customer profiles.
How To Collect Zero-Party Data
An effective way to collect zero-party data is through interactive and participatory dialogues with your customers. You might want to consider an online survey, an in-person conversation, a focus group, or even a social media post.
Wherever possible, try to make the dialogue engaging and entertaining. If you can create an enjoyable user experience, customers will happily engage and provide data willingly.
Another way to collect zero-party data is to incentivize customers by offering rewards for providing information. We dedicated point number 4 to discussing it in the previous section.
In-app interactions are another way to collect zero-party data. Get your customers to answer questions or take part in quizzes.
Tools To Collect Zero-Party Data
With the present-day digital landscape, numerous tools are available to help businesses collect this valuable data in an efficient, cost-effectively, and securely.
Following is a quick list of our most recommended tools to collect zero-party data:
- Attest: Attest offers a comprehensive data platform that allows you to collect customer data through surveys. Through Attest, businesses can quickly set up surveys with multiple-question formats, such as open-ended, multiple-choice, and rating scales.
- WeShare: WeShare is a customer loyalty program platform that enables you to collect data such as customer feedback, reviews, and even purchase history. The platform also offers survey tools that allow businesses to uncover real customer insights.
- LiveRamp: LiveRamp’s IdentityLink helps businesses fill the gaps in their zero-party data by linking first-party customer data with third-party datasets. It helps you match customers across channels, enabling you to develop a more comprehensive customer profile.
- Qualtrics: Like Survey Monkey, Qualtrics is a platform to quickly create surveys and receive real-time customer feedback. Through the Qualtrics platform, you can easily capture customer opinions on products, services, and more.
- SoapBox: It’s a comprehensive contact center solution that enables businesses to capture customer feedback and survey responses. SoapBox’s analytical tools provide the insights you need to understand customer preferences and make data-driven decisions.
- Brightback: Brightback is a customer success platform allowing your team to quickly assess customer satisfaction, churn, and revenue risks. Brightback also offers a detailed analytics platform that analyzes customer health, churn, and more.
Tools make your job easier so you can spend your time making better-informed decisions and understand your customer’s preferences better. Focus on targeting segmentation and personalizing customer experiences to increase customer loyalty and cut out customer churn.
In the age of big data, there is an ever-increasing need to understand and apply ethical principles to data privacy. With data collection and access growth, the potential for many data breaches and violations has drastically increased.
Zero-party data has emerged from these concerns and gained traction to give users more control and transparency over their data.
This transparency comes at a cost, which we believe is quite reasonable. Is zero-party data really the new oil, as Forbes calls it, or will it make it difficult for corporations, especially small businesses, to survive in this cutthroat competition? For more tips on marketing on a tight budget, please see our blog “How To Keep Your Marketing Recession Proof in an Economic Downturn” We’d love to hear your thoughts!