Zero-party data: how to reconcile personalization and confidentiality
What is zero-party data?
Zero-party data is data that consumers intentionally and proactively share with brands, such as their purchase intent, personal context, and how they want the brand to recognize it.
Current consumers require brands to maintain absolute privacy in their personal data, but also expect them to recommend tailored products and meet their personalization requirements.
Retailers are therefore in a paradoxical situation, but that should not be considered as an insurmountable challenge. On the contrary, for those wishing to offer ever more personalized experiences, this dilemma represents a unique opportunity to create lasting relationships with their customers.
Exceed the first-party data approach
Today, data is the cornerstone of marketing. Companies are devoting more and more of their budget to manage the first-party data they have collected and to acquire third-party data.
Third-party data has its usefulness, but too many retailers have relied on this data to anticipate consumer intentions. In the same vein, first-party data collection is still important for brands. However, future purchase intentions are often deduced only from the purchase history. In fact, traditional personalization strategies tend to be based on an analysis of online behaviors, such as browsing paths or search terms.
Admittedly, these are data that allow retailer to deduce the intentions and desires of the buyer, but the problem of this personalization approach is that they are hypotheses. Assumptions are often wrong because the quality of the data that shaped them is rarely examined.
Ask instead of deduce
Zero-party data isn’t deduced by purchasing behavior or collected via cookies. It is simply data that the customer has voluntarily shared with a retailer, such as their purchase intent and preferences, to improve personalization and help identify it.
Brands can connect directly with their visitors and collect the data, information, and permissions they need to create personalized marketing at every stage of the customer's lifecycle. Thus, rather than inferring the intentions and preferences of their customers, they ask for them.
Offer personalized and interactive experiences to collect zero-party data
However, it's not always so simple: in exchange for their personal data and preferences, consumers want to be entertained and receive a reward or advantage from the brand. Retailers must therefore offer interactive experiences with a tangible exchange of value for the consumer.
For this, they can offer interactive campaigns (questionnaires and surveys) incorporating incentive mechanisms such as unlocking content, instant winnings, gifts or coupons, which make it easy and quick to collect.
Preference centers are also a great way to collect this data. By giving customers the control and choice of data they share with the brand, preference centers help create a climate of trust. Customers can indicate, for example, their preferences as to how businesses contact them, the frequency and format of receipt of newsletters, or their intention to buy.
Create a special relationship with consumers
Today's consumers want their relationship with brands to be personalized. By adopting a zero-party data approach, retailers have the opportunity to create direct relationships with consumers and better personalize their services, offers and product recommendations.
In fact, capturing motivations, intentions, interests and consumer preferences on a large scale will allow you to truly personalize the experience of each customer. As a result, it will no longer be necessary to use approximations to build strong relationships with your customers.
Can we really rely on zero-party data?
But can we trust the preferences shared by its customers? Even if zero risk does not exist, consumers have no reason not to be sincere about their intentions or preferences. If they trust your brand and believe that you are going to offer them concrete benefits in exchange for their personal information, they will gladly share them.
Having said that, asking for too much information at one time can be tricky and may incite your customers to provide false information just to get to the end of the journey. So make sure your user experience is tested and thoughtful when you request zero-party data.
Of course, some customers may be ambitious about their buying intentions: they may say that they are planning holidays on the other side of the world or buying an apartment in the next six months, while the date real is rather in a year or two. But that's still a relevant piece of information that will allow you to push them content and make sure you are in their minds when they are ready to buy.
What about third-party data?
So, do we have to abandon third-party data in favor of zero-party data? Third-party data is excellent for collecting valuable demographic and behavioral attributes about your customers and prospects.
Zero-party data is a different approach because, instead of deducing customers' wishes from an aggregated data set, they provide explicit data about the intent and preferences of each individual. And, in the post-GDPR era, zero-party data fares much better with the consent test.
As a retailer, you should not completely stop using third-party data, but introducing zero-party data into your marketing set will provide you with unique information about your customers. By using the right mechanisms and offering a value exchange, your customers will tell you what products they want, what they are looking for in a service and what motivates them to buy. This will have the direct consequence of improving the efficiency of your personalization efforts.