It is without question that the internet has become an inseparable part of everyday life.
People live, learn, work, play, bank and shop online — with their smartphones now serving as the central hub of just about everything they do. With so much of that activity happening in a space that, for much of its history, saw little regulation, it’s not a surprise that consumers are beginning to ask big questions about the data brands collect — and how they use it, and they’re willing to say when they don’t want to be tracked.
Until recently, the third-party cookie was king. Brands used third-party cookies to track website visitors and collected hordes of data that helped them target ads to the right audience. But as consumers increasingly demanded greater transparency around data, the third-party cookie crumbled under the pressure. Add the element of data privacy regulations such as GDPR, coupled with third-party cookie phaseouts by Apple, Google and Mozilla, and brands are wondering how they will acquire the data necessary to target and measure consumer behavior.
The answer is simple: Consumers will simply give it to them, provided they get the right value for their zero-party data.
Defining zero-party data for brand advertisers
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Zero-party data is personal information that customers proactively share, and in many ways, it’s more valuable than first- and third-party data.
By comparison, first-party data is what brands collect when consumers land on their website — it’s all the behavioral details and inferences that come from what they do on-site, from browsing to buying. Brands might glean an email address and purchase history, and then build out some consumer models from those that help inform future marketing
Zero-party data, on the other hand, goes beyond the behavioral and passively left-behind information that shoppers create. It emerges from the surveys they take and the information they enter about themselves. Zero-party data offers a unique understanding of a customer that is accessible solely by the brand that collects it. Unlike prediction methods derived from first party data, which require deduction and assumption, zero party data tells marketers exactly how customers plan to purchase in the future — and it’s 100% consented and privacy compliant.
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Consumers willingly share data when there is a clear value exchange
A 2019 study by McKinsey revealed that consumers are not willing to share data for transactions they don’t view as important. Conversely, the study found that consumers are willing to set aside privacy concerns for transactions that offer a positive value exchange. So, what constitutes value? Convenience is high up on the list of consumers’ preferences for their shopping journey as well as hyper-relevance.
An April 2020 survey of 1,000 U.S. adults by Epsilon and GBH Insights found that the vast majority of respondents (80%) want personalization from retailers. What’s more, data retrieved by eCommerce marketing platform Yotpo indicates that the vast majority (87%) of consumers are “open to brands monitoring details of their activity if it leads to more personalized rewards.”
It’s clear that customers want their shopping experiences to be custom tailored to their personal preferences and are more than willing to share their data in exchange for recommendations that check their boxes.
Collecting zero party data from every channel
Katherine McKeever, loyalty product marketing manager at Yotpo, said that brands are using a multitude of zero-party data retrieval techniques, such as loyalty programs, to create enriched digital experiences that are both convenient and hyper-personalized. These experiences can also be distributed among multiple channels, integrated into loyalty programs and can happen before and after customer acquisition.
“Using zero-party data, brands give customers bespoke experiences most relevant to them, like personalized product recommendations, rewards, perks or exclusive access,” she said.
Digital shopping often leaves a lot of guesswork up to the consumer, so experiences that allow shoppers to virtually try-on products or have their skin tone color matched are desirable enough that consumers will willingly hand over their biometric data. And because customers are freely volunteering their information, zero-party data isn’t intrusive. Instead, consumers play an active role in a brand’s data-driven experiences.
For example, DTC players such as Curology, Madison Reed and Third Love incorporate quizzes into their brand experience. These quizzes ask questions about purchase intent and preferences that help the brand make ultra-personalized product recommendations. Similarly, fashion brands leverage style quizzes to learn a customer’s size, color, style and fabric preferences, and more. After logging into the brand’s site, members are then recommended pieces that reflect these quiz results.
Other bands use loyalty programs as a tool to collect customer data. By joining a rewards program, customers receive a percentage off their first purchase and, in return, brands acquire their email and phone number. From there, the brand now has a point of contact where it can collect even more data through personalized outreach.
For instance, Mizzen and Main, a men’s fashion brand, sent its style quiz to loyalty members as a means to collect information on customers’ height, weight, how often they wear business attire, how often they wear workout wear and more. Using the data they collected, the brand helped members overcome decision paralysis by suggesting tailor-made recommendations. And they got loyalty points in return. It was a two-fold win in terms of both customer experience and the value exchange of the points for data.
By using the data they collected, McKeever said the brand could help members overcome decision paralysis by suggesting tailor-made recommendations. “Rather than guess what customers want based on third-party data — social media engagement, device identification, page views — zero-party data allows consumers to tell brands exactly what they want,” McKeever said. “The data pivots from assumed to proven.”
The positive brand interactions created from zero-party data are a natural precursor to long-term brand loyalty. Once a shopper has been converted into a customer, brands can continue to receive zero-party data through loyalty and rewards programs — in each case these represent next steps in the evolution of zero-party relationships, generating compelling, immediate incentives — flash discounts for loyalty program members, special invitations to pop-up events and the like — that further drive zero-party data collection opportunities. The cycle continues, the data enriches and the customer experience deepens.
“Any form of outreach becomes hyper-relevant when leveraging zero-party data,” McKeever said. “SMS marketing, email, customer service solutions — all can be enhanced by the zero-party data you collect through a loyalty program.”
When a brand consistently makes a shopping experience both convenient and accurate, the chances that the customer will return are high — and loyalty programs that collect zero-party data help ensure that they do.
