What is Zero-Party Data?

At its most basic form, zero-party data (ZPD) refers to data a consumer has voluntarily given to a company or organization, for the purposes of marketing to them in a more personal and meaningful way.

“Our 2019 B2C Marketing predictions hone in on the impact of rising customer power. Forrester has been evangelizing the age of the customer for a decade,” – in fact, the term Zero-Party Data was first coined by Forrester – “but the message is approaching a crescendo. This year, we called that consumer desire for better data control, better experiences (especially in social), and better connections to their values will force marketer change.” (Brigitte Majewski, VP, Research Director, Forrester)

You’ve likely already participated in zero-party data gathering. Any time you subscribe to a company’s newsletter you freely hand over basic personal data such as your full name and email address, often for more than the value of the newsletter alone. You may have been offered something of higher value like a discount on your first purchase, an ebook, or a free gift. This information has now become zero-party data and the company can use it to personalize the communications they send to you. You can revoke permission at any time – by unsubscribing from the company’s email list or requesting removal from the company’s database – or you can offer more data to signify that you want emails about certain product lines, on specific days of the week, or to alert you of sales and promotions.

Why is Zero-Party Data Important?

The General Data Protection Regulation (GDPR) is the toughest privacy and security law in the world. Put into effect on May 25, 2018, the regulation protects an individual’s personal data by enforcing the right to have that data collected only by unambiguous consent, as well as the consumer’s right to the erasure of any data they no longer wish to be used or stored.

Data is collected in a number of ways. The most common method affected by the GDPR has traditionally been first-party data collected via cookies when you visit a website. Cookies – first created by Netscape in 1995 – are tiny bits of data that websites capture and hold onto for different purposes and lengths of time. Before the GDPR came into effect, cookies were used by embedding a code into the site, which secretly collected data as you browsed. Cookies are responsible for the advertisements which appear to follow you around as you browse other sites, check your email, or scroll through Facebook.

The General Data Protection Regulation requires companies using cookies to obtain unambiguous consent — which is why you now see numerous warnings that ask you to “Accept Cookies” as you enter a site. Do you ever read the full details on what accepting cookies entails before you accept or decline? Or do you, like most of us, click accept as quickly as you can to declutter your browsing experience, and then move on to the content you were looking for?

Each user gives companies first-party data consent hundreds of times a year by accepting cookies, but those users aren’t translating into customers as often because first-party data usually isn’t enough to create meaningful communications. More often than not, consumers view use of first-party data as a breach of the social contract and their privacy. “The social contract, in the context of online communication, is a hypothetical contract that people feel they have when they share their personal information to online businesses.” (Breaching the contract? Using social contract theory to explain individuals’ online behavior to safeguard privacy, Sanne Kruikemeier, Sophie C. Boerman & Nadine Bol)

The difference from the consumer’s perspective with zero-party data comes from the request for data. ZPD is requested in a transparent exchange for a higher level of service, whereas first-party data is collected covertly, with the ask bundled in with cookies. Zero-party data has a higher value to your company because customers who trust you with their information do so when they are engaged with your brand. They are customers who walk into your storefront and ask for recommendations without browsing; they shake your hand and introduce themselves; they recommend your store to their friends and neighbors. These customers trust your brand and willingly enter into a social contract with you, knowing that you will treat their data with respect.

Zero-Party Data vs First-Party Data

The bulk of the data that companies collect about consumers for marketing purposes is considered first-party data, generated through cookies on websites as previously established.

Session cookies enable e-commerce sites to add products to your cart without you having to sign in or create an account (whereas registering as a customer is an example of ZPD). Alternatively, permanent cookies, also called persistent cookies, are kept for a longer period of time. They trace your activity across multiple different sites, sending this information to the issuing site if you return to it within a certain time frame. Permanent cookies are also used to remember your username and passwords, for analysis and performance data tracking, and are valuable for website owners to make informed decisions about marketing, design, and site performance.

A user grants consent to cookies and, in turn, their browsing data to dozens of companies a day within the first minute of landing on their page. First-party data is a very powerful marketing tool because advertisers can use it to re-target customers who have already expressed an interest in a product, enticing them back for a second look or to suggest a product similar to one they’ve purchased in the past. “This strategy is a major element in Amazon’s astonishing success: their personalized recommendations of books and other products are a perfect first-party data example” (Retargeter).

When used appropriately, first-party data can be useful for engaging with first-time visitors and converting them into zero-party data consumers by drawing them back to your site where you can ask for new information. However, as consumers become savvier about protecting how their information is used, first-party data becomes more problematic. Accepting cookies or permissions has become as second nature as dismissing an ad, and as such doesn’t translate into knowingly granting permission. As consumers have grown more aware of first-party data being used (without remembering how or why it was attained), they’re aligning it with the increased paranoia about corporate and governmental surveillance, so when you use this data it’s perceived as an invasion of privacy by almost half of consumers: “According to a nationally representative phone survey of 1,006 U.S. adults conducted by Consumer Reports in May 2019, 43 percent of Americans who own a smartphone believe their phone is recording conversations without their permission” (Is Your Smartphone Secretly Listening to You?, Bree Fowler). Not to mention, running into ads for products you’ve already purchased is more likely to turn you off a company than to turn you into a repeat customer. In a recent study by Adobe, “61% of the 1,585 U.S. consumers surveyed said they would stop engaging with brands that offer frustrating experiences. Among their overall complaints: spam email, pop-ups, slow page loads, and expired special offers” (Study: The Stakes Are Getting Higher For Customer Experience, Giselle Abramovich).

Funnily enough, the more trust a customer has in your company, the more information they’re willing to bring to the table as they enter into a social contract with your brand. A trusting customer will freely give you information about their purchasing habits and intentions (zero-party data). This trust and collection of ZPD can be used to create a personalized digital experience and customer journey that makes sense for the individual. Incorporating zero-party data into your campaigns can elevate your customer experience, build brand trust, help to anticipate the buyer’s needs, and provide superior customer service to increase retention.

Continue learning more about the difference between first-party data and zero-party data here

The Benefits of Zero-Party Data

“The probability of selling to a new customer is 5-20 percent, while selling to an existing customer is 60-70 percent.” Retention is key for business, and zero-party data unlocks new avenues for retaining customers by maintaining a high level of personalized customer service. “Loyal customers are worth up to ten times as much as their first purchase.” (Customer Service: The New Proactive Marketing, Hulya Aksu)

Customer service has been around since the beginning of business. Ensuring your customers are treated fairly and with respect, while putting their needs above everything else, is the hallmark of great customer service and the backbone of a thriving company. With instant customer reviews on everything from Google Maps to Yelp, it’s more important than ever to keep your customers returning with a smile. Because of its value-exchange collection model, ZPD can help build brand trust through the customer journey, establishing a connection with the customer that is based on more than product features. Selling a brand is always more effective for longevity than selling a product. (Your Complete Guide to Retention Marketing)

“The next task is to understand… the customer journey —the series of interactions with a brand from initial consideration, to purchase and use, and then to subsequent purchases. Marketers can do this by integrating information from internal sources such as visits to the company website, purchases at a store, or calls to the contact center, with information that can be acquired from external sources, such as prospects’ visits to a competitor’s website.” (Marketing’s Holy Grail: Digital personalization at scale, Brian Gregg, Hussein Kalaoui, Joel Maynes, and Gustavo Schuler)

How much data do you ask for during checkout for a pair of sneakers? Name and contact info are a given, but do those data points give you insights for future purchases? Consider a scenario where more data was collected with a survey about their style preferences, by asking if they found what they were looking for, or their shoe buying habits, which would allow you to provide them with recommendations on other shoe styles, seasonal options, or accessories that complete the look.

What if you also knew the shopper had two children and a family trip planned to Bermuda in a month? An email offer with a set of matching flip-flops, towels, and sunglasses for the whole family only a couple of clicks away shows you’ve listened to the needs of the customer, whereas ads for more sneakers shows you know their shoe size and price range.“Nearly half of shoppers surveyed (49%) have purchased a product that they did not initially intend to buy after receiving a personalized recommendation from a brand.” (The 2017 State of Personalization Report)

The key to attaining this data, and to retaining this customer, is in targeted digital strategies that create a two-way dialogue with your customers rather than broad campaigns based on cost-per-impression (CPM) metrics. A traditional shoe salesman may put a variety of styles in the window to bring lots of people through the doors, but the real work goes into listening to the customer once they’re inside, asking the right questions, and giving personalized recommendations to each person.

ZPD achieves this exchange digitally with a clear ask for information in exchange for something that will give the customer better value. This exchange will provide you with the information you need in order to suggest what options in your product line will work best for each customer’s unique interests.

How to Collect Zero-Party Data

The best way to collect zero-party data is to ask for customer information in exchange for something of value to the customer such as providing customized product recommendations based on their data, or by offering a free eBook relevant to their role. Of course, this works best when you already have a relationship built and the customer is willing to answer you honestly and trust that the value you offer is high quality. There are a number of ways you can build up that relationship and demonstrate your commitment to high-quality content, while learning more about your customers’ habits, tastes, needs, and how you can help them without being invasive. These include:

  • Newsletters
  • Surveys
  • Engagement Tools
  • Purchase Histories
  • Follow-Up Emails

Newsletters

When someone signs up for your newsletter it’s a clear sign they’re interested in your company or product line and it is a great opportunity to start consistently delivering value that you can offer in exchange for more zero-party data. This data can help you segment that larger audience and target different groups with exactly the content they want, creating a virtuous circle of value and data exchange.

“Just visit the email subscription center of the New York Times site and you can spend an hour viewing and subscribing to the almost 70 different versions of newsletters that they provide, from business news to parenting, art to education and hobbies. Going beyond that, the Times also shows how often these newsletters go out, and who they are written by – you can of course also opt-out of any of the communications” (The Next Level of Permission Marketing: Zero-Party Data, Inga Romanoff).

So how do you determine what data you need to effectively segment your audience and further personalize your messaging? What are the types of services you provide? Is the subscriber only interested in receiving sales and coupons? “According to a 2017 report, over 60% of consumers say getting a discount within an hour of interacting with a brand can help drive loyalty” (The 2017 State of Personalization Report). Do you offer services in different cities or countries? Are subscribers interested in your company’s growth and human interest stories? “With the rise of personalization, consumers are becoming increasingly less accepting of generic ads: Impersonal shopping experiences frustrate nearly three-quarters of customers. On the other hand, over 70% of shoppers respond to marketing only when it’s customized to their interests.” (26 Essential Personalization Stats for B2C Marketers)

These are all questions you can ask directly in your newsletter signup form, letting customers know you won’t be bothering them with weekly emails and information they don’t need so long as they provide a little bit more information about themselves. They’ll be able to trust that when they open an email from you, it will be of value to them each and every time.

Surveys

Surveys are one of the simplest and most straightforward ways you can acquire ZPD from both existing customers and prospective clients.

With many tools available on the market, you can fine-tune your approach and identify the right time to ask the questions you need to better understand and serve your customer base. Services like Hotjar, for example, offer surveys and popups that can be embedded into specific pages of your website and only appear if/when the user is about to leave the page. This allows you to directly ask what the customer was looking for but didn’t find when they came to your website. If the customer is willing to answer this question, you can direct them to a page with higher value and relevance to the user – a win-win.

According to research by Hotjar “customer surveys and customer calls are the top methods used to better understand individual customers. Not only is collecting direct customer feedback critical for companies to execute their strategy: feedback is also the building block for creating the strategy to begin with” (CX stats and trends).

Interactive Engagement Tools

Often seen on financial websites, product selectors, calculators, or tools are interactive experiences that allow the website visitor to exchange personal data for detailed product explanations. In the case of financial products, this information can be extremely valuable in breaking down and explaining complex products.

So how do you optimize these experiences to collect zero-party data? At BlueRush we use our interactive personalized video platform to collect information about the individual before delivering a highly personalized product summary. A simple email field can connect the inputs with the customer profile to enrich their ZPD.

Or in cases where the customer is already known, for example, if they engage with your tool in an app, or from a personal email, no email field is needed. You can connect all interactions right to their user profile. See an example of this in action here: https://www.youtube.com/watch?v=wiOue7CM0AQ

As you’ll see in the example, when the customer interacts with the video, they are inherently providing zero-party data. At the same time, their interaction allows the video experience to deliver more value for the customer by creating a personalized pension recommendation.

Follow-Up Emails

“Did you find what you were looking for?” How often have you answered this question at the time of payment and answered honestly? Is the problem the question, or the timing? Follow-up emails give you the chance to ask questions after the client has had more time to think about their answer. They’ve had a chance to reflect on the journey, their transactions, and what they need from you in the future.

Don’t dismiss follow-up emails as part of your process in communicating with customers. This is your time to engage without trying to sell them anything. Delivering pure value now and with a promise to do better in the future. This deepens the customer relationship and continues the virtuous ZPD collection cycle.

Use follow-up emails to learn more about your customer, showing you care about them in a personal way. Thank them for their recent transaction, using personalization tools to further enhance their experience. You can provide them with tips on how to best access a new service they’ve signed up for, other services they may be interested in, or suggest articles they may enjoy about your product.

While following up with a satisfaction survey may let you know how they felt about one product, following up with a well thought out questionnaire can help guide you down a path together towards lifelong brand loyalty.

However, it’s important that you refrain from using every piece of communication with a customer as an opportunity to sell them something. Brand loyalty and trust are built by showing customers that you truly care about their wellbeing, and they’ll reward you with their continued patronage.

How to Use Zero-Party Data

A critical part of retaining the trust given to you as a company is treating the zero-party data you’ve received with respect. That means viewing ZPD as more than just data. There is a person behind each sale, and those people have given you important information that makes them feel like more than a number, so don’t treat them like one. The unique difference between ZPD and first-party data is that each data set directly coordinates with a person, and will be used only for that person. Coordinating your marketing efforts, personalized asset creation, and customer service using ZPD will require a more sophisticated management system.

Deal with the Data:

Depending on the size of your customer base and company, managing all of this data is a daunting task without automation. There are several systems that can collect, store, and then use segmenting, tags, machine learning, and artificial intelligence to sort and quantify ZPD to inform your marketing strategy. When used alongside a high level of human-centered strategy, automation can bear much of the heavy lifting of sorting your zero-party data.

In emails and advertising, using ZPD effectively starts by ensuring it’s collected and stored properly. Creating tags and groups for the categories of data you need is a great place to start. Consumer profiles help determine the customer journey from need to purchase, which will influence how you segment your customer base for communications.

Automate Effectively

How important is automation? According to a study by a software company, 53% of the companies surveyed were using marketing automation in 2017, and 37% said they were planning to use it” (How To Use Marketing Automation To Boost Personalization, Blair Williams).

However, beware, “companies that go overboard on automation can come across as detached and generic.” Automating social media, for example, often misses the mark surrounding cultural, and current events. When the world is suddenly focused on the death of a cultural icon, a tweet or email from your company boasting lower insurance rates will come across as insensitive and out of place. “On the other hand, those that get too personal with customers can come off as intrusive and creepy. Brands need to get it right to maintain a trusting relationship with their customers” (How to Balance Marketing Automation and Personalization, Albizu Garcia). Automation can save you a lot of time and money when it comes to follow-ups – actions that are the direct result of a customer interaction like a new follower, or sign-up – but not to replace personal interaction with customers. Generic replies to a question often miss the mark, showing that their issue wasn’t valued enough to warrant a personal reply.

Add Value with Personalization:

Personalization is the perfect place to combine your zero-party data with marketing and automation strategies. Services specializing in personalization use your ZPD database to incorporate details from each customer into your asset creation, resulting in a unique product that speaks to each customer directly.

Video remains the leader in online content, “as for the content that resonates with consumers most, video takes first place, according to the study. Nearly half (48%) of people are more likely to stay engaged with a brand’s content if video is included as part of the experience. We’ll see brands continue to double down on video this year and beyond as a means of building relationships and also moving customers through the purchase funnel” (Loni Stark, senior director, content and commerce at Adobe). If you’re not offering video content on your website, in your social feeds, and as part of your marketing strategy, you’re already being left behind. Personalized video platforms are a great outlet to use and collect zero-party data. Personalized video using ZPD ensures high-quality, hyper-personalized content that creates a superior customer experience from acquisition through to engaging customer care.

Of course, a popular ZPD use marketing strategy is the special offer. Promo codes, one-time discounts, and flash sales when combined with personalization are not only welcomed but are expected by your audience. The 2017 State of Personalization Report conducted by Segment revealed that 54% of consumers expect to get a discount within 24 hours of identifying themselves (logging in or providing an email), and 63% say receiving a discount within an hour of interacting with a brand will drive loyalty. When you combine personalization with a special offer, you deliver specific value to the customer, targeted to their expressed needs.

Shopify, a multinational e-commerce platform, knows which analytics drive sales and recommends how to build brand loyalty: emails. “Research from Bain & Company showed that depending on your industry, an increase of just 5% in customer retention can increase your profits from 25% to 95%. Seriously” (8 Post-Sale Emails To Turn New Buyers Into Lifelong Fans, Desirae Odjick). Retention emails they suggest include thank you emails, how-to informational emails, and surveys. Make your customers feel valued after a purchase by telling them how much their patronage means to your company.

The 80/20 Rule

While the long-held rule “that 80% of your social media posts should inform, educate, and entertain your audience, while only 20% should directly promote your business” (The New 80/20 Rule of Social Media Marketing, Tanya Hall) may need some adjusting for your business and products, it’s still just as important that your brand focus a large portion of your marketing strength into connecting with your customers. This will help you to better understand their needs before trying to close a sale. Consider the types of questions below for engaging your customers and acquiring zero-party data.

Do they have everything they need to go with their new product? Use ZPD generated to:

  1. Suggest complementary products.
  2. Reward them for sharing pictures, or giving a review.
  3. Send them a discount on a future purchase.

Is there information they’d appreciate knowing about your service going forward? Use ZPD generated to:

  1. Send them to your FAQ page.
  2. Recommend articles on how to use their new service.
  3. Suggest they ask the community, and recommend a vetted user group.

Are there other ways we can help make your life easier? Include a list with checkboxes of products and services you offer. Use ZPD generated to:

  1. Build consumer profiles, allowing you to choose which journey each customer is best suited for.
  2. Recommend other products and services that align with their goals.
  3. Offer resources and information about those services.

Collecting data during the checkout process is another great way to learn about the original goals and needs of the consumer. You can find out if your marketing is working by asking them about the path they followed to your page, or you can find out about their motivations by asking more direct questions about their thought process that led them there.

  1. How long have you been in the market for X?
  2. Have you bought X in the past six months?
  3. Have you purchased, or considered Y or Z?
  4. Are you in the market for Y or Z in the next six months?

Zero-Party Data Examples

Leading brands are already using zero-party data to enhance their communication strategy.
Check out these examples:


Collecting ZPD for Better Customer Service

Example 1 : You need to call your credit card company to ask about a charge. The automated service on the phone asks you to enter your card number, respond to security questions, and then asks you to describe the nature of the problem you’re experiencing. A standard customer experience that quickly becomes frustrating when you finally reach a human who proceeds to ask most of these questions over again.

Example 2 : You look up the phone number to call your bank and notice an interactive personalized video contact center widget that wasn’t there before. You call the bank anyways, and while on hold waiting to speak to a representative, you click the interactive experience. After a few quick triaging questions, a custom video proceeds to visually explain how to make a change within your online banking portal. You hang up the phone, follow the video instructions, and complete your change immediately. A follow-up email contains the video snippet in case you ever need to perform the action again.

These two examples of customer service demonstrate how easily zero-party data can be used to help or hinder common customer interactions. Which example made you want to conduct more business with the company?

Using ZPD for Better Smart Home Interactions

The next example of zero-party data usage that we will take a look at is smart home software.

Google Assistant—which consists of many pieces of both hardware and software connected to help you in your home, office, commute and more—can use ZPD to give you notifications, suggestions, reminders, directions, and even entertainment from the moment you wake up, to the moment your head falls back onto the pillow at night. If you’re willing to share your personal preferences, your calendar and schedules, your connections to other services like Waze maps, and Spotify accounts, Google can be seamlessly integrated into your daily routine.

Construct a wake-up routine for your Google Home, which can include telling you the weather, the upcoming activities in your calendar, and traffic status for your commute to work, all while you lay in bed after silencing your alarm—also brought to you by your Google Home. Throughout your day it can update you on the weather, play your favorite afternoon playlist, or let you know when your friend’s new podcast is available.

All of this data can be freely given to Google through access to your Google Calendar, your location data, and adding your most frequented places in Google Maps. AKA a zero-party data value exchange. The connected future lives and breathes off access to your information, and the more you give it, the more you’ll find yourself interacting with smart devices in a whole new and efficient way.

What Does ZPD Mean for Your Business?

Go the extra mile by anticipating what your clients need.

Using zero-party data to add personalization to your marketing strategy and customer service can yield big rewards, not only for customer appreciation, but also retention, sales ROI, and acquiring new customers.

“80% of customers are more likely to purchase a product or service from a brand who provides personalized experiences, and respondents who believe companies are doing very well on offering personalized experiences shop more than three times more frequently.” (New Epsilon research indicates 80% of consumers are more likely to make a purchase when brands offer personalized experiences)

Don’t let competitors take advantage of personalization before you do — remember, the probability of making a sale with an existing customer is 60-70% — and giving those customers a personalized experience can convert them into a customer for life.

“Emails with personalized subject lines are 26% more likely to be opened and marketers have found a 760% increase in email revenue from segmented campaigns.” (The New Rules of Email Marketing)

It only takes a simple click of a button in many e-newsletter services to add a personalized subject line, but segmenting your audience is where you see the biggest performance value, and you can only do this effectively with the right zero-party data.

“In 2019, marketers say the top benefits of personalization are increased conversion rates (61%, up 10 points from 2018), increased visitor engagement (50%), improved customer experience (56%) and increased lead generation/customer acquisition (56%).” (2019 Trends in Personalization Survey Report)

The proof is in the percentages, personalization works, and zero party data is the way forward in implementing the strongest personalization strategies in your sales and marketing. The visitors entering your website are expecting you to tailor their experience to them, and are willing to give you their data in exchange for a better customer journey.

Transparency is the last and first thing to remember with zero-party data and personalization. It’s the most critical difference when it comes to how consumers view zero-party data vs first-party data. Bombarded by bids for attention as they browse the internet, people know they’re being sold to. They know that their phones and websites are tracking them.“In society, almost half of the people perceive the social contract as less reliable and those people do not have the confidence that online businesses keep their data safe” (Breaching the contract? Using social contract theory to explain individuals’ online behavior to safeguard privacy, Sanne Kruikemeier, Sophie C. Boerman & Nadine Bol). The best way to make people feel seen, and not watched, is to establish a high level of transparency regarding why you want their data and why you can be trusted with it. Let them know you want to connect with them and understand their needs so you can help. Show them you care and are committed to upholding your side of the social contract by carefully considering their needs during your interactions and treating each customer as a person, not a dataset.

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