Customer engaging with phone

How to jump-start customer engagement with zero-party data

As cookies fall under greater scrutiny, the importance of zero-party data (and first-party data) will only grow

Zero-party data is the optional information customers choose to share with a brand. For example, it may be a preference, like telling a hotel company you prefer a king-size bed and a room on a lower floor. It can also refer to supplemental profile data, such as a product you plan to purchase, whereas information required to receive a product or service, like a customer’s name or address, isn’t considered zero-party data. That also includes information gathered as part of normal customer or prospect interactions like purchase or web-browsing information. So, the key to grasping zero-party data is remembering that it’s optional information customers provide to improve their experiences.

At The Lacek Group, we’ve been helping our clients better understand their customers and eliminate guesswork for a long time, and collecting zero-party data is one important strategy we use. If a brand gathers zero-party data, it no longer needs to infer a customer’s wants since they’re explicitly telling the brand what they want. That’s a win on both sides.

Zero-party data has grown in importance during the pandemic because more of our interactions are online. According to Adobe Analytics, US online holiday sales in 2020 were $188.2 billion – an increase of 32.2% year-over-year. If consumers trust your brand, they’ll willingly share information about their wants and desires in exchange for better customer experiences. And isn’t that one of our primary goals as marketers – to create an exceptional and seamless customer experience?

Knowing more about your customers and prospects helps differentiate how you market to them. Consumers wish to be seen and understood, and they want their favourite brands to recognise them across channels. Using zero-party data helps make a brand more personal.

Asking consumers for zero-party data lets brands give customers more control over the messages they receive and the customer journey they experience. If a customer shares that she wants an aisle seat and the brand provides it, that’s a positive brand and customer experience. Likewise, if a customer indicates he prefers a gluten-free option and the brand follows through, that’s a positive experience too. These brand-customer interactions fulfil a long-term goal of many marketers: to create marketing “so personalised, it feels like a service,” to borrow the words of a former colleague.

Many marketing strategies rely on customer segments or personas to identify the right set of messages for a particular customer. Unfortunately, sometimes it can take a high number of interactions or transactions to match a new customer with a relevant persona. Wouldn’t it be simpler, better, and faster to use zero-party data to help predict the right persona earlier in the customer engagement journey? By asking a few smart questions up front, a brand can leverage its prediction algorithms to understand a customer more quickly and much earlier in a relationship.

Let’s look at four brands that successfully use zero-party data:

  • Starbucks invites customers to save their favourite customised drinks on its app, allowing coffee lovers to order their drinks quickly from a ‘Favourites’ tab.
  • Firstleaf, an online wine club, invites new customers to answer about a dozen questions, including how adventurous they are about trying new wines, and which foods and drinks they enjoy from a provided list. Thanks to this short survey, customers then receive personalised recommendations.
  • Like many beauty brands, Klorane, a French hair- and face-care company, invites customers to answer online questions about skin and hair concerns, and then personalises the product advice they receive.
  • Netflix kicks off a new member’s recommendations based on favourite titles the member initially provides. Then, as the member watches Netflix, the company uses first-party data gleaned from the member’s viewing history to recommend further options from its selection.

Customers largely welcome targeted questions from brands, as long as the optional information they provide improves their experiences – their trust in those brands may even grow. Additionally, customers appreciate brands that maintain their data privacy, are transparent about how they’re using data, and make clear that customers are in control.

Subscription boxes are built almost completely on zero-party data. Causebox, Popsugar, Grove Collaborative, FabFitFun, and Stitch Fix, for example, all customise box contents based on each subscriber’s zero-party data. The more detailed a customer’s answers, the better a brand can fulfil his/her needs and the more likely a customer will feel satisfied.

Where do brands go wrong with zero-party data?

First, if a brand collects data and never uses it, they’ve missed an opportunity. Let’s say a hotel asks a customer what kind of pillow he likes, and he says he’s a stickler for firm pillows. If the hotel doesn’t deliver, no doubt he’ll be disappointed. Or if a customer indicates a vegan meal preference to an airline, but vegan meals aren’t available on board, that’s another disappointed (and probably hangry) customer. In these cases, it would’ve been better if the customer had never been asked for their preferences.

Second, if a brand requests information and then provides something altogether different, that’s a missed opportunity too. A colleague of mine and her husband, for example, were asked by their mortgage broker about the activities they most enjoy, e.g. pro sports, local theatre, concerts, etc. They were told to expect a thank you gift on their wedding anniversary. Unfortunately, they never received a gift or even a card on their anniversary. Even though they told the broker they don’t follow sports, twice a year they receive refrigerator magnets with baseball and football schedules. The key is to tell customers how you’re going to use their data, and then follow through.

Third, a brand should never sell zero-party data – doing so could create a damaging, negative experience. For example, if a brand learns something via zero-party data about a customer and then chooses to share that information with other brands, the customer might then see related internet ads. Let’s say a customer shares his preference for mint-scented soaps and lotions and is then presented with ads for other mint products like sweets, tea or ice cream – it won’t take long for the customer to figure out what has happened with their data and to feel like their privacy has been breached.

What are zero-party data best practices?

  • Don’t ask customers for information you already know or can infer based on transactional data.
  • Do ask customers for information that will help your brand personalise its messaging and deepen your customer relationships.
  • Do improve your customers’ experience – even surprise and delight them – by applying the zero-party data you have collected.
  • Do build customers’ trust by using zero-party data the way you promised to use it.

In a sense, requesting zero-party data turns customer privacy upside down. Instead of gathering information and then hiding how your brand plans to use it, you actually show your customers how you’ll leverage it. As cookies fall under greater scrutiny, the importance of zero-party data (and first-party data, for that matter) will only grow, change, and evolve. Marketing practices – and perhaps governmental regulations – will see to that. In the meantime, if your brand is focused on customers, it’s time to capitalise on zero-party data.

Read more thinking from The Lacek Group

Charlie Heitzig

VP of Data Intelligence Practice, The Lacek Group

published on

16 March 2021

Category

Technology & data Experience

Related Topics

Consumer behaviour Data privacy Ecommerce

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