Zero-Party Data​: The Shortcut to Next-Level Personalized Customer Experience

In marketing, content and creativity are important but data is everything!  

That’s how you get to know your customers, understand their needs and pain points, create products, design messages, deliver content, and offer experiences. Without data, it is just a random effort.

But it seems like marketing data is getting more and more difficult to collect. On the one hand, you have tech giants like Google and Apple cracking down on tracking pixels (aka "cookies"). Google is working on phasing out tracking cookies from Chrome altogether. Apple has recently instituted its App Tracking Transparency (ATT) framework, empowering users to decide whether they want to be tracked or not.

Then, on the other hand, customers are increasingly concerned about online privacy. One study found that 71% of American adults are aware that apps and websites collect information about them — and a whopping 65% think that tracking users across platforms to customize ads is wrong. I know that it always creeps me out a little when I'm shopping for a specific product online, and then every single digital ad I see for the next three weeks features that product.

The point is digital marketers can't expect to rely on third-party data to inform their campaigns much longer. And first-party data has some definite limitations in terms of usefulness. So where can they turn for key insights into consumer behavior and preferences?

ZERO-PARTY DATA

No, not just another fancy word. Zero-party data (ZPD for short) is a term that was coined by Forrester back in 2020. It can be defined as data that a customer intentionally and proactively shares with a company in order to enhance their overall experience. You still collect it via your owned channels, but it is different from first-party data.

Our Customer Engagement Team Lead Nurçin had a great example of this in a recent blog post. She wrote collecting zero-party data is like asking your mom what she wants as a Mother’s Day gift (of course, she will answer as “you” but we love giving gifts to our mothers, don’t we?) So in this case, if you get your mother a gift based on what you think she might need based on her generic taste, likes, and dislikes, then that is a gift based on first-party data.

Netflix provides a simple example of how this works in the real world. Have you ever set up a new Netflix account? If you have, then you probably remember that Netflix asks you to pick a few movie or TV show titles that you're interested in watching. Then the Netflix platform uses that info to "jump-start" its list of recommendations for you. In effect, Netflix asks for ZPD, collects it, and then turns around and uses it, all within the span of a minute or two. Plus, its watchlist "evolves" with the user as they continue to watch new shows (thus providing even more ZPD to process).

Granted, zero-party data is an emerging solution. It's still a relatively new concept for marketers who've been raised on a steady diet of tracking cookies. And not every customer is going to buy into this approach. As you can imagine, people won't share this kind of data with just any organization. That's why ZPD is, in effect, "earned data." Companies that lean into this strategy must have a baseline level of credibility among their consumer base - possibly deriving from past memorable experiences.

And they probably would be more likely to share if they see an immediate result out of it - like a personalized product recommendation. Of course, just as a diamond in the rough must be cut and polished in order to become a priceless gem, ZPD, though somewhat valuable on its own, can become a real treasure when it's properly refined, processed, and used as a driver for marketing decisions. But as Jennifer Peters from OLLY recently said in our webinar, if you are not going to use it for the benefit of your customer, don’t ask for it!

Nevertheless, it is worth the effort. ZPD offers brands the tantalizing potential to acquire helpful, relevant data straight from the source (and thus provide highly personalized user experiences), while respecting consumer concerns over data privacy. It's a de facto "shortcut" to increased personalization and loyalty.

The BIG question marketers have to answer is: How can we effectively capture zero-party data from our users? And before they can answer that, they need to come to grips with the number #1 challenge of zero-party data collection: how to make it as unobtrusive as possible.

Let's be real. Nobody's going to respond to long surveys that a brand sends out (especially if they arrive in the form of annoying pop-ups or push notifications). Nobody's going to cooperate with a company that wants data for personalization purposes if the company tries to forcibly extract it from them.

But if you and I can keep the ZPD collection quiet and inconspicuous — or, better yet, if we can make it FUN — then we'll be sure to capture at least some of those key insights that can drive a better customer experience.

Some brands have invested in ZPD "microexperiences" — e.g., small and mobile-friendly interactions between a brand and its customer. For instance, Tide gives customers the chance to answer a few quick questions about their laundry preferences, and then recommends specific products for them based on their answers.

Other brands add interactive elements to their content that are not only fun, but also designed to gently capture key ZPD. For example, many brands add quizzes and polls to Storyly Stories in order to boost customer engagement and get some valuable feedback. Some of these interactive Story elements have yielded response rates of up to 48%! which is exceptional in terms of zero-party data collection. Especially when you consider the in-app survey response rates, which sit around 13%.

The bottom line is that by investing in zero-party data collection, and maybe getting a little creative, you can get the marketing information you need. At the end of the day, you'll be able to gain valuable and actionable insights into your core customer demographic, deliver highly personalized user experiences, and ultimately build a loyal following that will support your business for years to come.