First-Party Data & Creating a Virtuous Cycle With Customers
Let’s make the case for first-party data. Which would you trust had better quality: a piece of fruit you picked up from the local farmers market or one from a large supermarket chain?
If you’re like most consumers, you trust the quality of food more when it hasn’t been passed through multiple hands and when you have a clear understanding of its origins. The same idea holds true for companies when it comes to first-party data vs. third-party data.
First-party data is collected by a company itself, directly from its audience. It’s based on past transactions, customer service data, product/content interactions, and other derived information.
Conversely, third-party data is collected indirectly from outside sources who do not have a direct relationship with the end-user. Unsurprisingly, this results in data that is often inaccurate, outdated, and simply not as effective when trying to engage customers in a personalized and authentic way.
Buy Local: Why It’s Time to Move on From Third-Party Data
Brands traditionally have used third-party data — purchased on a large scale from publishers — to better understand customers. The challenge is that in order to reach this scale, accuracy can be sacrificed.
But accuracy is far from the biggest roadblock that brands face when using third-party data. We’re living in a post-GDPR world, where consumers continue to feel frustrated and violated by brands that are using their personal data for profit and without their consent. Brands that continue the practice of buying data from third-party brokers are not only forgoing the opportunity to build trusted relationships with customers, but they are also risking breaking the law under GDPR. Not to mention upcoming data privacy laws — CCPA (the California Consumer Privacy Act) and LGPD (Brazil’s data protection law) — that will start being enforced in 2020.
Over a year past the GDPR deadline, the time has come for organizations to eliminate these processes and use data only when it is earned through explicit customer consent. The thing is – consumers want to share data with brands that they trust in exchange for more personalized marketing offers and messages. Recent data shows that 80% of consumers would be happy to do this, as opposed to just 17% who said they were okay sharing the same data with third parties.
Data From the People Who Matter: Your Customers
We’re entering a new era in consumer marketing — one that is consent-based and where first-party data is king. Think about it: First-party data is owned. It’s also transparent and brings clarity, in terms of previous transaction history. Most importantly, it has been gathered straight from the source and is rooted in the real behaviors, actions, and interests of the people who matter most to your brand.
Analysis of this data provides valuable insight into individual opinions, beliefs, emotions, and sentiments, which are then leveraged to inform outreach strategies and to help predict what the customer might do next. When all of this comes together, it helps brands build stronger, more trusting relationships with their customers.
It comes down to this: First-party data can give brands the power to deliver more value to customers, kicking off a virtuous cycle where one positive action reinforces another. Customers who feel understood will continue to engage with brands and in the process, leave behind first-party data that the brand can then use to continue the cycle and slowly build trust and loyalty.
So, what are you waiting for?