All the talk about zero-party data and what it means for you
We marketers have never been accused of being impervious to buzzwords. Every year we can count on a new trend or topic to infiltrate the lexicon of marketers across industries. And while many of these buzzy concepts quickly explode then fade into the background like a jargon supernova, every so often one becomes a permanent tool in the marketing toolbox.
This year, zero-party (or declared) data is one of these rare marketing topics that is having its moment at just the right time, making it likely to be a trend that sticks with us for the long-haul.
It’s not surprising that many people are perplexed by what zero-party data actually is. So, let’s explore what it is not to help to highlight why zero-party data is vital to successful organizations as we enter the COVID-19 recovery economy. Zero-party data is not:
- First-party data: This is observed, behavioral, and transactional consumer data collected or captured by a brand (often on a consumer opt-in basis) within its experiences that can be used to understand and act upon a consumer’s past behaviors.
- Second-party data: This is identifiable consumer data shared between two or more parties on a private basis, which allows the receiving party to better understand the consumer’s behavior outside of its experiences. Think of this as purchasing another company’s first-party data.
- Third-party data: This is data purchased or publicly available from a source—often one that does not have a direct relationship with the consumer—that the seller did not collect themselves. It is used by organizations to better understand the consumer’s habits, socio-demographic status, financial health, and more. The key distinction with third-party data is that while it may be identifiable, it is more widely available than the other data sources and, therefore, less exclusive.
So then, what is zero-party data and why is it so topical?
Zero-party data is most easily defined as “data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her.” It is collected via qualitative methods and doesn’t require a brand to infer information about the customer. This data can help a brand understand practically anything about the individual it chooses to ask or explore.
In some respects, the original zero-party data was profile and preference data. But today in a world where marketers are able to store and utilize truly limitless amounts of customer data, it has become so much more. And this is particularly valuable in a situation like the post-pandemic environment in which past behaviors are less predictive.
Marketers are becoming increasingly aware that their customer data from both before and during the pandemic period is no longer as useful in predicting future consumer behavior—at least at the moment. So, short of waiting to see how consumers behave in a post-pandemic world, why not just ask them? And here’s where zero-party data comes in.
Like a customer intercept survey scaled to and utilized at an individual level, marketers are turning to zero-party data to develop a deeper understanding of individual consumers in the moment. They are asking questions of their customers focused on their attitudes, intentions, preferences, and truly any other subjects of interest. This data can then be utilized to better target, time, personalize, and optimize communications and offers. This presents an obvious opportunity, in light of the ebbing pandemic, to understand how the consumer’s attitudes are changing. What is driving their decision-making, and the timing of their intended behaviors in the weeks and months to come?
Practical advice on how to use zero-party data
We are advising clients on how they can utilize zero-party data to enhance their customer relationships and propel their COVID-19 business recovery. A few key themes have come to the fore:
Zero-party data is particularly valuable today in understanding when, how, and who of your customers may be (more) willing to engage with you.
While the pandemic has been a disruption to economic activity at a macro-level, individual’s reactions to it are uniquely personal. And while there are significant correlations between demographics and pandemic-related individual behavior, a public health crisis is precisely the kind of deeply personal issue that it is better for marketers to not make assumptions about how individual consumers are feeling and behaving. Instead, smart marketers like our clients at Wyndham are using zero-party data to simply ask the customer simple questions about when they may be willing to come back and how they want to be communicated with in the interim and using this to inform their marketing efforts. The results are greater efficiency and return on investment.
It’s important to ask only for information that is both perceived as—and is—useful.
You may be surprised that more customers than you would think will be willing to share some amount of additional information with your brand. Take advantage of this but don’t be exploitative. If your questionnaires/surveys become too long, or the questions seem too far afield of the type of business/relationships you have with the customer, they will stop responding. The customer needs to see or feel the value in providing this information. As a marketer, it’s important to keep these expectations in mind as you formulate the information you seek.
Make it worth their time to provide more information.
Consumers’ time is valuable, and they may initially be skeptical of the ask to provide you with additional information about themselves. In addition to ensuring that the data you ask for is both useful and used, it is worth considering incentives to get consumers to provide it. Incentives don’t need to be financial. Gamified experiences can have great outcomes, too. Once they have seen that the data is improving their experience, these incentives may no longer be necessary as there is an established understanding of the value of providing the information.
Zero-party data is useful in building a culture of consumers who are “hand-raisers.”
We’re well past the beginning of a new era of data privacy. While marketers have access to ever-increasing amounts of data, consumers are constantly being afforded (and are taking advantage of) new privacy tools and regulations. With consumers increasingly likely to opt-out, tune you out, or shut you out, zero-party data collection offers and exciting opportunity to build a culture of “hand-raisers” within your consumer base. Treat their trust like the precious thing that it is.In summary, in relation to other trendy marketing topics we have seen in recent years, zero-party data is not a particularly novel or complex topic. Nor is it “new” to the scene for marketers. But in this moment, it’s taken on heightened significance and it offers marketers a particularly useful opportunity to react to a rapidly evolving consumer.