Data collection is — and will always be — a critical part of marketing. Having the right customer data enables companies to connect with customers in the most relevant way possible.

In the hierarchy of data types, first-party and zero-party data must be prioritized by companies. Not only are first-party and zero-party data more accurate and reliable, they’re increasingly becoming the most viable type of information.

Third-party data in particular, is on its way out. With rising consumer privacy concerns, companies such as Google and Apple have taken steps to prevent user tracking and curb the collection of their data. Third-party data is becoming increasingly unreliable, which is why companies need to take it up to themselves to get to know their customers.

This is where first-party and zero-party data comes in.

First-party and zero-party data defined

Marketers must familiarize themselves with first-party and zero-party data, as each type has unique acquisition, ownership, and governance rules.

First-party data. This is data that a company owns and has collected itself. First-party data is generated throughout the interactions between the business and its customers. Examples include cross-device identity matching, customers’ purchase history, loyalty program activity, etc. First-party data is governed by the company’s privacy policy.

Zero-party data. This is a type of data that customers voluntarily and proactively share with the company, as they totally trust the company they share their data with. This data should always be used to improve the value delivered to the customers. Some examples include contact information with opt-ins, feedback surveys, tastes and preferences, etc.

Why marketers should embrace first-party and zero-party data

Focusing on first-party and zero-party data types helps companies reduce risk, improve their marketing initiatives, build long-lasting one-to-one relationships with customers and ultimately drive revenue.

Some of the key advantages of having a solid first-party and zero-party data strategy are:

Better customer segmentation. First-party and zero-party data provide unparalleled insights into customer behavior. What do customers like? How often do they buy from the business? When was the last time they visited the company’s physical and online store? These questions can only be answered by first-party data and zero-party data. And the information the companies gain from the above enables them to better group and segment their customers, so they can make more informed marketing decisions.

True personalization. First-party and zero-party data enables companies to personalize the customer experience based on actual needs and intentions. In other words, companies can better target their marketing efforts and ensure that they’re sending the right messages and offers to the right customers at the most optimal moment — i.e., when they are ready to buy what they really want.

Better ability to provide value and increase trust. First-party and zero-party data enable companies to offer more value to customers, which helps increase trust. When customers see that companies are putting their information to good use, they’re more likely to share more of their data.

Increased customer lifetime value. All of the above ultimately strengthen the relationship between companies and customers. With the right data, companies can keep customers loyal and active, thus enabling them to drive revenue continuously and in ways that weren’t possible before.

How to collect first-party data and zero-party data

There are a number of ways that companies can collect first-party data and zero-party data. Online, it’s relatively easier to collect data, through tools such as:

  • Website
  • Social media
  • Email

In the offline realm, companies traditionally adopted strategies such as collecting data through their point of sale system and looking at customer loyalty program data. However, these methods are quite limited, as they can only collect information when customers make a purchase.

Today, there are more effective solutions that enable companies to tap customer data. They include:

  • WiFi and QR codes to collect phone numbers and emails with opt-ins
  • WiFi, BLE, and GPS to collect offline behavioral data, both inside and outside the company’s physical locations

Whichever ways that companies choose to collect customer data, it’s essential to unify all that information. Companies must ensure that their data and marketing systems are tightly integrated so data flows smoothly across multiple platforms and channels. The goal is to create 360-degree customer profiles so that everything is consolidated and accessible.

Switching to a first-party and zero-party data strategy won’t happen overnight

Shifting to a first-party and zero-party data strategy should be a top priority for marketers. The death of third-party data will happen within the next two years, and it’s imperative that marketers take immediate steps to prioritize the collection of first-party and zero-party data.

Switching to a first-party and zero-party data strategy won’t happen overnight. In addition to adopting and implementing the right tech solutions, shifting a company’s data strategy requires taking steps to protect customer data. This won’t be a one-click action. Companies must fully understand the different laws and regulations that govern data protection in their areas, and set up systems to ensure that they are collecting data legally and that information is well-protected.

As such, taking action ASAP will help companies be more prepared, particularly as the world opens back up.

Now is the time to lay the groundwork for better data collection and management. If you need help doing so, get in touch with Cloud4Wi. Discover how we helpedBurger King, Campari, Carmila, Guess, and HFE get to know customers better while boosting their experiences at the same time.