April 15, 2020

What is zero-party data and how do you collect it?

minute read

More data, more problems? Not quite. Zero-party data—or “declared” data, as it’s sometimes called—is the latest tool in the marketer’s toolbox. As privacy laws and consumer preferences continue to complicate brand communications, marketers are prioritizing self-reported customer data to contextualize their outreach without violating consumer trust.

What’s the easiest way to learn more about your customers?

Is it by tracking your customers’ behavior across the web using anonymous cookies and using that information to make inferences about their purchase intent?

Is it by purchasing massive lists of emails and other consumer contact information from third-party sources?

Is it by observing previous purchases and loyalty program activity and, again, making inferences about what customers want and how they’ll behave in the future?

Nope, nope, and almost. In the new world of retail and ecommerce, the answer is more simple: Just ask.

Instead of buying, inferring, observing, or assuming information about customers, today’s fastest-growing businesses are directly asking consumers for insight into their needs, interests, and intent. This information, collected through consensual and proactive brand engagements, is known as zero-party data.

What is zero-party data?

Coined by Forrester in its Predictions 2019: B2C Marketing Report, zero-party data is a response to growing privacy concerns and regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). Zero-party data is a subset of first-party data, which refers broadly to all of the data a business collects directly from interactions with its customers.

Today’s consumers have more power over their personal data, and companies need to make a commitment to consensual and transparent data collection processes—else they risk both reputational and financial damage. Rather than continuing to collect data with methods that skirt consent, companies are asking consumers to volunteer information about themselves as a clear and fluid value exchange: Zero-party data for one-to-one personalization.

Unlike second-party or third-party data, which provide marketers with implicit information based on observed consumer behavior, zero-party data consists of explicit information that consumers freely and proactively share with brands through surveys, questionnaires, and other deliberate brand engagements. It might include preference insights, purchase intent, personal interests, and other information that consumers are willing to provide in exchange for more relevant brand interactions.

Because zero-party data is owned by the consumer, it cannot be shared or sold to other parties without the consumer’s consent. Additionally, zero-party data requires “fluid” opt-in processes, meaning that a consumer can withdraw their consent at any time.

Why should you care about zero-party data?

Google recently announced its plan to eliminate third-party cookies by 2020, a move that will fundamentally change the digital marketing landscape.

“Users are demanding greater privacy,” said Director of Chrome Engineering Justin Schuh in a blog about the initiative, “including transparency, choice and control over how their data is used—and it’s clear the web ecosystem needs to evolve to meet these increasing demands.”

This means that third-party cookies in the digital ecosystem are becoming increasingly inaccessible. Marketers who rely heavily on third-party data must switch gears, and do so soon.

The good news is, zero-party and first-party data are significantly easier and cheaper to collect than third-party data. And because these data types are based on actual interactions that customers have with brands, such as purchases, surveys, and email engagements, marketers can feel more confident in its accuracy. From more accurate data comes more accurate insights, and from more accurate insights come more relevant and personalized brand communications.

Ultimately, brands that can collect, manage, and use zero-party data effectively will be able to build stronger, longer-lasting relationships with their customers.

But collecting zero-party data requires the right tools and techniques.

To the modern marketer, zero-party data is as good as gold. It’s a direct indicator of consumer trust—but consumers don’t just hand over this information to any brand that asks for it.

Remember, consumers provide zero-party data as a direct value exchange, so you need to offer them something in return. This return might take the form of a monetary gift or coupon, but it could also take the form of engaging experiences or access to exclusive content.

Additionally, zero-party data shouldn’t be collected, managed, and activated in isolation. Instead, you should use zero-party data to augment your first-party data and continuously refine your segmentation, personalization, and retention efforts. Tools like Customer Data Platforms (CDPs) can help you manage this with ease.

By unifying all of your data to achieve a single customer view, you can identify your high-value customer audiences and figure out what makes them tick. Your zero-party data strategy should kick off with these high-value lookalike audiences because those are the audiences with the highest potential return. As your customers continue to respond to your surveys, quizzes, and other zero-party data collection tactics, you’ll augment your database for more holistic insight into who your ideal customers are and how to keep them engaged with your brand.

Here are some popular zero-party data collection tactics you can try:

1. Surveys, Polls, and Quizzes

Surveys, polls, quizzes, and other ask-and-answer formats are great ways to facilitate a clear and direct value exchange with consumers. By offering exclusive content, discounts, or other incentives in exchange for consumer information, you can collect zero-party data and acquire new customers while also improving the quality of your current data.

For example, we helped the West Coast Eagles develop an online survey to genuinely engage their fans and collect customer insights. Using the Lexer CDP and its secure forms feature, we created highly targeted audiences and tailored messaging in hopes of driving responses. The survey explored the fans’ propensity to buy a mortgage, their interest in an Australian Football League Women’s membership, and the likelihood of disengaged fans having their excitement for the team reignited. In exchange, participants were entered to win double passes to the AFL finals match. In a matter of days, they saw a 61% response rate and grew their database by 5% with a cost per submission of only $0.36c AUD!

Remember, however, that surveys don’t need to be a standalone activity. You can easily integrate them into current data capture processes like email sign-up forms or customer profile creation. Our client, Spyder, does this by asking prospects for their ski-style: Back Country, Alpine, or Freestyle. A quick question like this can provide immense value to your personalization efforts.

That’s the beauty of zero-party data collection: It’s quick, it’s cheap, and it adds compounding value to your database.

2. Giveaways, Contests, and Sweepstakes

Sweepstakes are a great way to incentivize consumers to provide their emails and other personal information. The potential for a prize gives consumers a reason to engage with your brand, whether or not they’ve interacted with your brand in the past.

Because sweepstakes are usually intended to gain email opt-ins from prospects for future marketing campaigns, they’re often considered to be short-term loss leaders. Our client Black Diamond sent their sweepstakes campaign to targeted, high-value lookalike audiences created using the Lexer CDP, however, and the return on ad spend from this campaign was so high that Black Diamond yielded more than $1 of sales for each new email address captured.

3. Social Stories, Forums, and Communities

Humans are social creatures, and building a tight-knit community—whether online or off—has always been a powerful driver for sales. Likewise, offering your customers and prospects the chance to engage with each other, share user-generated content, and connect on social platforms is a great way to source zero-party data and improve customer relationships.

Sephora’s Beauty Insider Community, for example, allows users to ask questions, post product reviews, connect with other members and stay informed about in-person events. Consumers can only access the community by joining the Beauty Insider loyalty program, which provides the brand with rich zero-party data and opportunities for hyper-personalized marketing.

Communities like these provide immense value beyond zero-party data collection; they close the feedback loop between brands and their customers, creating a one-to-one relationship and improving future service engagements; they deepen customer loyalty by developing emotional connections with your brand; and they give brands copious amounts of information about their customers, enabling them to optimize their personalization tactics, improve their products, and more.

However, managing this type and amount of customer data is next to impossible with siloed retail systems or inefficient data management processes. As the importance of zero-party and first-party data continues to rise, brands will need to invest in tools like CDPs to simplify the collection, unification, analysis, and activation of their customer data.

CDPs are a vital tool for collecting, managing, and drawing insight from zero-party data.

Because zero-party data collection leads with transparency and explicit consent, it allows brands to balance privacy with personalization. By augmenting your first-party data with zero-party data, you can identify your highest value customers, develop one-to-one personalization, forecast trends, and build enduring customer relationships.

But you can’t do it with siloed, channel-based data.

A marketing-friendly CDP like Lexer can help you reshape your data around the customer, providing 360-degree customer profiles and predictive insights based on proven models. As the central hub for your zero-party, first-party, and enriched customer data, a CDP gives you the ability to analyze and activate your data across every channel. Additionally, Lexer’s Secure Form Builder gives you the ability to natively collect this data and unify survey responses to individual profiles without having to use third-party tools.

Leveraging zero-party data to improve customer relationships isn’t easy—but a CDP offers significant efficiencies across the board. Whether you’re collecting surveys, running sweepstakes campaigns, or monitoring customer engagement in your social communities, a CDP helps you hone in your strategy and increase the efficacy of your campaigns.

Interested in partnering with a CDP vendor that can offer strategic guidance and support as you scale your zero-party data strategies? We’d love to help. Schedule a demo below to see what the Lexer platform can do for you.

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Elizabeth Burnam
Content Marketing Specialist
Elizabeth Burnam is a content marketer and a poet at heart. She has a degree in Professional Writing and experience developing high-impact marketing assets for a broad range of industries.Outside of work, she enjoys reading, painting, people-watching, and exploring the natural wonders of Vermont.