What is the difference between third-, first- and zero party data? What makes zero-party data so revolutionary? How do retailers benefit from it?
Although “a world without cookies” may seem daunting to marketers and businesses accustomed to third-party cookies, there’s a relief that only 3rd-party cookies are wiping out.
1st-party cookies will continue to exist, and there will still be opportunities for relevant advertising, audience segmentation and personalization.
What is zero party data?
Zero party data is information that a customer intentionally and proactively shares with a brand, whether it’s through surveys, questionnaires, pop-ups, quizzes, customer profiles and so on. This data is collected with consent, private (not shared with other companies) and up-to-date.
According to Forrester’s CMO Pulse Survey, Q2 2022, zero-party data collected from customers includes demographic info, buying intentions, product affinities and more.
What is the difference between third-, first- and zero-party data?
We know how challenging it can be to cut through the CDP jargon, so we’ve prepared this table in the hopes of simplifying the most important differences:
|Zero party data||First party data||Third party data|
|Origin||Information collected from the user with surveys, questionnaires, pop-ups, quizzes, customer profiles||Information collected from the user as part of purchase history, subscription status, discounts used, on-site browsing data, loyalty program data.||Information companies purchase from data aggregators and advertisers or gain by running tracking ads with companies like Facebook and Instagram.|
Most visited pages
|Privacy||Not shared, the company who owns the data is the one who collected it directly||Not shared, the company who owns the data is the one who collected it directly||Shared with many companies|
|Quality||Up to date, high quality data||Up to date, good quality data||Relatively low level of accuracy and reliability|
|Consent||Collected with consent||Collected with consent||Due to the aggregated nature of the data, it is difficult to discern whether all data was collected with consent|
The main differences between 1st-party data and zero-party data is that collecting zero-party data solicits a direct interaction from your audience and builds real trust.
Think of the kind of things you’d tell a store associate helping you find the right gifts to purchase for your family — size, style, skin concerns, gender, budget, tastes, eating habits, what type of pet they have, etc. That’s zero-party data.
On the other hand, first-party data gives you insights from web and app analytics, CRM, social media profiles, customer feedback and user behaviors.
The collection of zero-party data presents a real opportunity for brands to run more effective campaigns by collecting data from the source while building trust and transparency with their consumer base. While first-party data provides insight into your audience but doesn’t necessarily build trust between brands and consumers.
Brands have needed better data solutions for decades, and we’re well aware of the value of customer-offered insights.
Zero-party data removes the guesswork associated with third-party data by getting information about preferences and intent directly from the customers. Businesses can combine this information with transactional and behavioral data to provide the level of personalization that is needed today to successfully market to customers. When brands create experiences that are relevant to their customers, trust and loyalty will follow. This is why many call this the zero-party data revolution.
Cookieless identity solution
What makes zero-party data so revolutionary?
Everyone leaves a digital footprint whenever they use the internet.
Our information is out there, from the most basic to sensitive data. Every year that passes, the concept of privacy becomes thinner, while the risk of data breaches, identity theft and fraud increases.
There is growing concern regarding privacy, but how prevalent is this concern really?
- According to KPMG, 86% of people stated that they felt growing concerns about their data privacy. A further 78% expressed concerns about the amount of data collected.
- 67% of internet users in the US are not aware of their country’s privacy and data protection rules. Only 3% of Americans understand the current online privacy regulations.
- 81% of US internet users believe that their personal information is vulnerable to hackers.
- 86% of Americans have made attempts to erase or reduce their digital footprint online.
- 79% of internet users around the world feel they have completely lost control over their personal data.
- 35% of people in the US say they accept cookies without thinking about it and have no clear understanding of profiling or what happens when your data is exposed.
There is slightly greater sensitivity towards this in Europe, but there is still a significant need for education. People often trade their privacy against viewing options because they are tricked into acceptance.
Contrast this with third-party data, which is data collected from external sources, often without the customer’s knowledge or explicit consent.
Check out these statistics that look at this issue from a different point of view:
- 45,6% of websites use some kind of cookie.
- 83% of americans have seen targeted ads frequently or occasionally.
- 82% of web traffic contains google third-party scripts and almost 50% of them are tracking users.
- 50% of US adults said that online advertisers shouldn’t store any information on their customers.
Data laws like the General Data Protection Regulation (GDPR) have made third-party data less desirable and zero-party data more important.
Apple’s move to block cross-app tracking and the trend of browsers toward tracking prevention are making traditional tracking models obsolete.
Since Google announced the elimination of third-party cookies (initially in 2019, then postponed to 2023), marketers have become increasingly concerned about the cookieless future and how to identify shoppers, customers, visitors and transactions in a compliant and trust-generating way.
Zero-party data strategy: key benefits for retailers
As the internet becomes more privacy-centric by the day, the role of zero-party data becomes increasingly important. But this does not only benefit internet users and shoppers, it also benefits retailers.
Let’s take a look at the 6 biggest benefits of a zero party data strategy for retailers:
Since it already exists within your systems, collecting zero-party data is very cost-effective. Unlike other data collection types (second- and third- party), you don’t pay for zero-party data as customers simply hand it over.
Since zero-party data comes directly from the customer, it’s more accurate and trustworthy than third-party data. Because customers supply it directly, there’s less opportunity for errors or inaccuracies.
Customers that love you want to hear from you. This is one of the main reasons they provide you with this information.
Because customers share it willingly and know that it’s being used by the brand, they’re more likely to pay attention to that brand’s offers and marketing messages in the future.
Brands that use it can create more personalized customer experiences, which leads to higher engagement rates and longer customer lifespans.
Because zero-party data comes straight from your audience, you learn exactly how customers would like for you to connect with them, based on their preferences.
Consent is highly critical due to growing consumer privacy concerns.
Under the new GDPR rules, any entity that controls data has a legal obligation to do so under regulations. Data laws and regulations are becoming more strict over the last few years, and this trend is expected to intensify, with governments and agencies demanding more and more compliance.
Being compliant for zero-party data collection is generally risk free because companies know the source of data, in addition to how it was collected.
Zero-party data collection examples
By using interactive funnels, businesses of all sizes can gather data that’s reliable, accurate and engaging—at every step of the customer journey.
Traditionally, the approach to collecting zero-party data would be done with tedious and manual processes, tracking and data entry.
Today, data can be collected, cleansed and unified through powerful software solutions of different types, and seamlessly integrated with a central Customer Data Platform that will help you make sense and activate all this customer data.
In fact, Customer Data Platforms have seen an incredible surge in adoption in the last years, with the CDP industry generating an estimated $1.6 billion in revenue. Marketers are slowly moving away from using data management platforms (that rely mainly on 3rd party data) and opting for customer data platforms instead.
Let’s take a look at a few fun ways in with different companies and brands encourage web visitors, shoppers and loyalty program members to share their preferences:
What we like about this quiz:
Not only does it anticipate a personalized experience, but it allows Trendhunt to segment their subscribers right off the bat.
Website visits, registration or onboarding processes
What we like about this web journey:
Instead of letting visitors navigate a complex site and figure out where they are going with endless clics, the web journey is defined from the start, without even having to fill in an opt-in form.
What we like about this email:
This message is short and sweet! Builds connection and offers value in a couple of short sentences.
Opt-in forms (with qualifying questions)
What we like about this form:
It is so smart to let web visitors express their preferences through an action (even if it is just a click of a button!) before showing them a specific coupon or offer.
Loyalty program App
What we like about this app:
We simply love the nuanced elements of gamification.
When do brands collect zero-party data from loyalty members?
Marketers collect zero party data mostly at start of campaigns. According to a study run by Forrester:
- 58% of companies collect ZPD at the launch of a new campaign or promotion
- 49% on the loyalty app, periodically, to keep customers engaged
- 45% onboarding new members into the loyalty program
- 45% post-purchase to get customer feedback
- 40% in emails and other customer communications
- 35% when conducting market research
Adapting to a cookieless world
Although “a world without cookies” may seem daunting to marketers and businesses accustomed to third-party cookies, there’s a relief that only third-party cookies are wiping out. First-party cookies will continue to exist, and there will still be opportunities for relevant advertising, audience segmentation and personalization.
The solution requires choosing alternative tracking signals that help retailers identify consumers and transactions and not only collecting massive amounts of data, but having a powerful customer data platform that enables advanced retail insights and powerful customer activation capabilities.
How Loyal Guru makes it easy to leverage your zero party data.
Loyal Guru is the leading Customer Data Platform for grocers and retailers, helping them collect and activate their omnichannel customer data in a single customer view. As a result, our clients can access accurate predictors of customer behavior and quickly improve their marketing and sales efforts with more personalized experience for their customers.
Customer data can be used to create micro-segments based on purchase behavior, preferences and intent and launch millions of 1:1 personalized offers and loyalty program initiatives, improving consumer-retailer relationships across every channel: point of sale, ecommerce, customer support, mobile app and more.
If you are considering upgrading your Customer Data Platform, please get in touch with our team – we’ll be happy to show you examples or talk through your company’s unique challenges.