The Importance of Zero-Party Data in 2022
By Carl Bleich
Mar 10, 2022
15 min read
The Importance of Zero-Party Data in 2022
Table of Contents
Note: Much of this content is derived from Bloomreach and Ansira’s “Zero-Party Tech Data” webinar. To go even more in-depth on zero-party data, watch the webinar on demand.
As the internet becomes more privacy-centric by the day, the role of zero-party data becomes increasingly important.
Zero-party data is data that a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal contexts, and how an individual wants to be recognized by the brand. Forrester Research was the first to introduce this term and collecting zero-party data has since become increasingly important to companies across the globe.
But why? Because customers are becoming more and more concerned about their personal data. How their data is being collected and used is much more important to many online shoppers after the amount of data breaches over the past few years.
With enforcement becoming more strict on governing regulations and laws like the General Data Protection Regulation (GDPR), the time to begin collecting this important type of personal data that respects the customer and keeps your company protected from legal issues is now.
What Makes Zero-Party Data Stand Out
Understanding the importance of zero-party data is impossible without first understanding what makes zero-party data unique. To do that, you must comprehend all of the different types of data that can be collected on your customers.
In addition to zero-party data, there is first-, second-, and third-party data that companies work with. Let’s do a brief breakdown of each for awareness.
Definition: Data that a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal contexts, and how the individual wants to be recognized by the brand.
Advantages: It’s accurate. Since it’s provided by the customer, you don’t have to question the source. Additionally, it is freely given to your company so there are no concerns about how the data was acquired.
Disadvantages: The expectation of a value exchange. Some customers expect something in return for giving up their information. There also can be a disconnect between what customers think and what they truly want.
Definition: Information that a company directly collects via its own channels and sources. These channels include mobile apps, websites, social media, SMS, email, and more.
Advantages: This type of data is unique in that it belongs to your company because you collected it. This is a competitive advantage. It is also reliable because you know the source that it came from and there are no outside sources involved.
Disadvantages: There never seems to be enough first-party data. It takes a lot of time and effort to collect this information—especially for newer customers—and you need an ample amount of it for it to be valuable.
Definition: The first-party data of another company, packaged and sold.
Advantages: The main advantage is obvious—additional information on customers to help drive sales and fill in the gaps left by your other types of data. It is also ready to use upon purchase.
Disadvantages: Trust is a major disadvantage here. Since the data was not gathered by your company, you need to ensure that you trust the supplier in order to make good use of this information.
Definition: Aggregated data collected from multiple different sources, packaged and sold by a company that did not collect the data itself. This is often sold on a data exchange platform.
Advantages: Since this data comes from multiple sources, the size and scope of it is generally massive. It is much larger in scale than the other forms of data.
Disadvantages: Since this data is being sold to multiple companies, your company would not have exclusive rights to this data if you made this purchase. Like second-party data, there are also many compliance issues that could arise from third-party data.
The real value in zero-party data comes from your customers’ intent to give it to you. While first-, second-, and third-party data can be collected in some manner, all of those types of data are not freely given. That matters when data privacy concerns are at an all-time high.
Understanding the ease of collection with zero-party data and the potential disadvantages of some of the other types of data help make it easy to see why zero-party data is such a hot topic in today’s market. Let’s dive deeper.
The Benefits of a Zero-Party Data Strategy
We briefly discussed the concept of the customer value exchange above but will explore it more as we examine a zero-party data strategy.
The heart of the concept is this—customers are willing to share data with brands in exchange for an experience that is customized to their wants and needs. Customers want personalized content, but they want to be in control of what data is shared to obtain that personalized experience with a company.
Collecting zero-party data eliminates the “creepy factor” customers can often experience with a brand. Is there any worse feeling as a consumer knowing that you did not provide a company a piece of obviously personal information and learning that the company has that personal data through marketing efforts?
A good zero-party data strategy eliminates that creepiness—because the data is collected freely and directly from the customer—and eliminates the guesswork in customizing consumer experiences. It also helps companies measure and build trust with their customers.
Capturing zero-party data helps to solve for the personalization-and-privacy paradox, a true catch-22 for marketers. The modern customer expects true personalization but that cannot be achieved because of increased government legislation and browser privacy features.
The solution to this problem is zero-party data—so long as there is transparency around the value that customers get in exchange for their data. Consumers can choose to share their data if they desire a personalized experience. That generally leads to things being more convenient and faster in the shopping experience with your brand.
To launch a successful zero-party data strategy, take the following tips into consideration:
- Align it with your overall customer data, content, and marketing strategy
- Combine zero-party data with your first-party data by integrating with existing systems
- Clearly communicate the value exchange
- Make it a part of your overall omnichannel experience
Collecting Zero-Party Data
There are really a multitude of ways that zero-party data can be collected compliantly. Creative marketers have found several innovative ways to collect this data, even while entertaining customers in some cases.
Consider Bloomreach customer My Jewellery, a clothing jewelry retailer based in The Netherlands. In 2020, My Jewellery created the style profile test, a quiz that helps shoppers identify which pieces fit their own personal style, to gather zero-party data from interested visitors and repeat customers.
The quiz upgraded customer personalization, increased customer service, and curbed additional risk taking in data collection for My Jewellery.
Other popular ways of collecting zero-party data include creating user-friendly micro experiences, creating NPS surveys, or by asking for information during opt-in.
Zero-Party Data and E-Commerce Personalization
If you're a competitive business in today's market, you're fully aware of the importance of e-commerce personalization.
At Bloomreach, we define e-commerce personalization as the practice of using commerce data responsibly to get to know, guide, and impress your customers with experiences that are so relevant and contextual, they feel like magic. E-commerce personalization spans cross-channel, on-site, and in-app, resulting in measurable journeys that engage and lead customers through brand awareness to product discovery to repeat purchases.
But what do zero-party data and e-commerce personalization have in common? Quite a bit, really.
We define commerce data as the combination of customer and product data that fuels your company's e-commerce personalization efforts. Collecting zero-party data is one of the most compliant ways to feed the customer data portion of that equation as you don't need to worry about potential non-compliant collection procedures as the customers freely gave you their data themselves.
Another massive advantage of zero-party data in regard to e-commerce personalization is that it is usually accurate. This means your company's personalization efforts can match who customers really are and best drive them to action with your brand.
Harness The Power of Your Zero-Party Data with Bloomreach and Ansira
The Bloomreach Commerce Experience Cloud is the perfect solution to help you launch or revamp your zero-party data strategy. Our powerful Content, Discovery, and Engagement offerings will help your company achieve true e-commerce personalization and drive unparalleled business growth.
Ansira is a marketing technology and services company laser focused on creating exceptional customer experiences. Recently recognized by Forrester as a ZPD Service Provider and also named a Strong Performer in Loyalty, Ansira is ready to help you orchestrate a successful zero-party data strategy.
With strong partnerships with a host of full service agencies like Ansira, Bloomreach is equipped to help your company take its zero-party data collection and strategy to the next level. Schedule a personalized demo today to learn more about what Bloomreach can do for you.
To learn more about zero-party data, watch Bloomreach and Ansira’s “Zero-Party Tech Data” webinar on demand.