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Customer data is nuanced. Depending on the context, it may have different meanings for different companies. The ability of brands to capture, organize, and activate customer data helps them answer various questions and shape customer experiences.
A holistic and connected approach fundamentally enables marketing experts to change how brands engage and interact with consumers. After all, having appropriate data helps marketers to set goals that are practical and achievable.
The prevalence of tracking in digital marketing leads to more than 70% of Americans feeling that most of what they do online is being tracked and analyzed by advertisers, tech companies, and other businesses.
On the other hand, tracking has enabled brands to deliver consumers a more personalized experience, predict user intent, and uncover growth opportunities.
With the demise of third-party cookies, businesses have to be prepared with alternatives that will allow for more compliant data collection. Here’s what you need to know about building a first-party data strategy and how to use it to optimize digital experiences.
What Is First-party Data?
Before exploring the intricacies of capturing and using this type of data, let’s focus on the definition of first-party data.
First-party data, otherwise known as 1P data, is the information your company collects directly from its audience. The ‘first-party’ refers to the player that collects data points to build customer profiles for their marketing campaigns.
First-party data marketing helps companies cater to every customer’s interest and need. With access to detailed data like consumer preferences, digital interactions, purchase history, and behavior, brands can deliver personalized experiences based only on the data their customers consent to sharing.
Shifting away from strategies that revolve around third-party data can help businesses create transparency and increase consumer trust in their brands. The past overreliance on 3P data was one of the reasons for most advertisers to tap into only 40% or less of their company’s first-party data potential.
Today, first-party data is still a work in progress for many businesses, with challenges that marketing experts have yet to overcome.
Challenges To Using First-party Data
Here are some of the most common challenges marketers face when looking to utilize customer data:
- Building customer profiles: Consumers typically engage with brands across various platforms and channels. Businesses can get a single customer view and personalize marketing messages only by consolidating data across channels and merging multiple customer profiles.
- Creating audience segments: Brands looking to shift away from the 3P data strategy must develop or expand their first-party data collection. If done right, they can define and create audience segments based on user interactions. Besides, such segmentation can help companies monetize their websites or mobile apps more effectively.
- Developing actionable data strategies: Historically, strategy guides the whole process. That is why companies need to understand the resources and data they need to collect. Then, they can customize the strategy for every touchpoint and map it across the customer journey.
Building a first-party data strategy might seem incredibly challenging. But rethinking your practical strategies can be the key to establishing more direct relationships with your audience and successfully communicating how your customers will benefit from sharing their data.
How To Collect First-Party Data
79% of American consumers feel a growing concern about sharing their personal information online. Sometimes, such privacy concerns can stop clients from interacting with or buying from a company.
The recent changes to third-party cookies have made it clear that businesses need to invest in data transactions that provide value, utilize a data management platform, and centralize all CRM and tracking data.
It’s crucial to understand that consumer data is a privilege that should be regularly re-earned by companies. Since now brands have to be transparent about collecting data, they need to get permission from customers to track and use their personal information.
Here’s what brands can do to build a value exchange, encourage consumers to opt-in, and ensure customer retention:
- Be upfront about the reasons behind data collection and usage
- Ensure transparency by giving customers control over their privacy
- Highlight the benefits behind sharing data like elevated customer experience, exclusive offerings, loyalty programs, etc.
From the business perspective, brands must capture and manage 1P data effectively. This way, they can build compelling touchpoints, provide more relevant experiences to clients, and strengthen customer relationships.
Did you miss our recent article on the upcoming switch from CCPA to CPRA? Check it out here to see how these changes will affect your company’s data compliance efforts.
Let’s take a closer look at three activities required for successful first-party information capture.
1. Establish the Basis for Data Management and Acquisition
Identifying inefficiencies and closing gaps in the data and analytics structure can help businesses with data management, integration, and formatting.
Effective integration is a foundation for utilizing consumer data. That’s one of the many reasons for marketing experts to implement effective data acquisition processes and specific technologies like LMS Sync — Phonexa’s lead management solution — to tap into audience insights, get value from every lead, and recalibrate marketing strategies.
2. Use Tailored Approaches to Data Collection
Offering your audience more control and education around data privacy is one of the primary ways to earn their trust.
After earning customer trust, companies can collect 1P data through website tracking pixels, CRM, marketing automation solutions, and Data Management Platform (DMP).
Ultimately, following best data privacy practices and ensuring compliant data collection can help brands improve customer experience across their marketing channels.
Create a Compelling Value Proposition
Getting your customers to share personal information often requires value propositions like transactional rewards, incentivized offerings, or loyalty programs.
Brands have numerous opportunities to learn about customers. For instance, they can leverage a post-purchase customer experience to learn more about the client and the product to enhance marketing and business communication. On top of that, retargeting campaigns and 1:1 communication through social media, phone calls, or email can also facilitate consumer data capture.
Simply put, marketers need to get more sophisticated about utilizing data and more granular about capturing it. Increasing engagement through owned marketing channels will unquestionably decrease friction, improve customer retention, and uncover opportunities for gathering valuable data.
Sources of First-party Data
Today, consumers are more in control of their experiences than ever. They interact with brands across numerous devices and channels, and businesses constantly work on creating new touchpoints and personalizing these interactions.
Utilizing first-party data helps marketers develop and optimize the customer journey that consists of three primary stages:
- Building connections and getting repeat customers.
- Nurturing emotional relationships and increasing customer lifetime value.
- Practicing excellent customer service to fight attrition.
Each stage helps sharpen a brand’s customer focus and ensures customer satisfaction. However, collecting a wealth of first-party data and making the most of it requires a strategic approach to digital interactions and data sources.
Let’s explore in more detail some of the best sources of 1P data.
- Company website:A company’s website offers considerable volumes of high-quality data on visitors and customers, including on-site behavior, transactions, names, and email addresses that can be used for specific retargeting and engagement campaigns.
- Mobile app: Mobile marketing relies heavily on the in-app data captured by businesses or developers about customers and prospects. It’s no secret that app users are often the most loyal supporters of a brand. That’s why it is crucial to collect first-party data to understand your audience better, refine targeting, unlock the best app features, send push notifications, and maintain your edge in a privacy-focused and customer-centric world.
- Social media: Social media marketing is essential to any business strategy. It is also one of the best places to connect with the target audience and sources to obtain first-party data. It helps delve deeper into the intent and behavior of potential and active customers, create audience segments, deliver personalized content, and gain insight into overall customer satisfaction.
- Email and SMS: Brands can capture and leverage granular 1P data through email and SMS marketing software. With Phonexa’s E-Delivery email and SMS solution, businesses can compile all the data related to their SMS or email campaigns, refine and cultivate email lists, deliver personalized messages, and run campaigns targeted to different segments.
- Surveys: One of the best ways to find out what customers think of a brand, service, or product is to ask them. Running a quick poll or IVR survey can help businesses engage customers and collect 1P data. An IVR survey allows consumers to share their experiences, generating high-quality data about these consumers.
- Phone calls: Many meaningful customer interactions happen during phone calls. Implementing Call Logic — Phonexa’s call tracking and distribution intelligence platform — can help businesses collect first-party data, learn more about active campaigns and clients, create customizable journeys, and acquire detailed attribution.
How To Use First-party Data for Marketing
There’s no denying that 1P data is the foundation for understanding and connecting with customers. However, many marketers still lack the right data strategies and technologies to tap into its full potential.
The following is how businesses can use first-party data for marketing and activate customer data for business growth.
Determine How To Leverage First-party Data
Setting goals is the primary focus for any company looking to develop or implement a first-party data strategy. Businesses need to start by identifying how they want to speak to customers with their brands and what they want to offer them.
Consider answering the following questions to determine the primary marketing goals that will help you map out a successful strategy:
- What makes an excellent omnichannel experience for your customers?
- How do you trigger real-time personalization?
- What engages your audience?
- How well can you identify trends and understand specific customer behavior?
- Can you get a clear view of first-party data?
- How do you remarket to customers who abandoned a conversion flow?
Capturing 1P data and leveraging it can help you improve any program or campaign. That is why setting the right course and identifying primary goals can make all the difference.
Make a Plan To Gather First-party Data
Understanding how to collect first-party data is the foundation for an omnichannel strategy that can help companies improve customer loyalty, retention, and satisfaction.
The first thing businesses need to do is build a data roadmap and determine the initiatives required to reach the set goals. A data roadmap is an actual document that typically includes the deliverables, action plan, strategic goals, gap analysis, investment priorities, and more. It will help you create a frictionless path to purchase, allowing clients and prospects to learn about products and find out what they’re looking to gain in the process.
Ask Permission To Gather the Data
It’s no secret that businesses have to be transparent about data collection. Ensuring that your target audience understands the reasons, benefits, and your brand’s responsibilities that are behind first-party data collection is critical to the brand’s health and future growth.
After all, being transparent about the data you collect is not only about big scary acronyms like IDFA, GDPR, or CPRA. It’s about ensuring trust and building long-term customer relationships.
Check out our recent article about how the implementation of CPRA will affect how businesses can handle consumer data starting on January 1, 2023.
Test, Tweak, and Retest
Marketers can never stop learning, experimenting, and optimizing when collecting first-party data.
They also must devote time and effort to testing. It can help brands find the most effective ways to gather customer data and tweak how they use 1P data by A/B testing ad creatives, email templates, or campaigns to see how the target audience responds.
First-party Data Marketing Use Cases
Understanding the entire buyer journey is an important aspect that helps marketers improve the brand’s overall marketing performance.
Integrating and activating first-party data from all touchpoints can help brands become more customer-centric and successful. The case study below shows how collecting first-party data and using the right martech stack can move the needle on brand consideration and customer experience.
Source: Google Marketing Platform
Another excellent example of how focusing on first-party data can foster business growth is the case study of Kia’s journey to becoming a more customer-centric company.
For Kia, leveraging customer data implied creating cross-channel marketing plans, shifting the focus from car dealers to end-users, discovering the need for new website features, implementing new tech solutions, and much more. That is just a fraction of the company’s digital transformation journey as they continue to adapt to a privacy-centered environment.
Understanding First, Second, and Third-party Data
Let’s refresh everything we’ve learned about the first-party data and explore the principal differences between first, second, and third-party data.
Key Takeaways: First-party Data
- First-party data is the information brands collect from customers.
- It includes digital interactions, subscriptions, customer preferences, in-store purchase history, cross-platform data, etc.
- First-party data can be collected through marketing automation solutions, CRMs, DMPs, or website tracking pixels.
- First-party customer data can be used to gain audience insights, personalize content and ads, predict purchasing behavior, and comply with the latest privacy regulations.
- It guarantees data quality, accuracy, and relevance.
Second-party data is another company’s first-party data. The company collects this information to put it up for sale or share with another company.
Here are several second-party data examples:
- A media publisher can sell his first-party audience information to advertisers.
- A store or an airline can sell customer data to a credit card company.
- A tourism business can sell its customer information to an airline.
First-party Data vs. Second-party Data
Naturally, all three types of customer data have their benefits, drawbacks, and differences. Let’s look at the principal ones.
Here are some of the main second-party data advantages:
- More insights into existing customers and prospects
- Improved targeting capabilities
- Opportunity to expand a company’s marketing reach
- Insights into the similar audiences
Principal drawbacks of using second-party data:
- Different standards of data collection and data management
- Lack of knowledge about the data quality
- Possible data integration issues
If compared, it is evident that companies using second-party data have neither exclusive ownership nor the competitive advantage the first-party data provides.
Third-party data is information purchased from a third party — an outside broker — that did not collect data but aggregated it from various sources. It originates from online social media interactions, search history, or online transactions.
Here are a couple of third-party data examples:
- A ski resort looking to advertise in Utah buys information on local internet users from a broker or at a marketplace.
- A customer support team can use relevant 3P data points to understand customer needs better and improve service quality.
First-party Data vs. Third-party Data
Given its nature, third-party data can include myriad insights that might not be matched even by the first-party data. But there’s a catch: methods used to collect it.
There is no way to verify that a third party was following data privacy laws while collecting customer information. That is one of the reasons why the use of such data is often restricted.
Let’s take a closer look at the benefits and drawbacks of using third-party data.
Here are some of the principal third-party data advantages:
- Helps to build upon existing customer profiles
- Provides additional audience insights
- Often distilled into audience segments
Main drawbacks of using third-party data:
- The use is often restricted
- Data may not be unique
- Parts of datasets can be of low-quality
- No transparency in data collection
- Possible data integration issues
From the business perspective, using third-party data can be risky due to the lack of data collection transparency. Apart from the fact that there is a risk of breaching data privacy, the information might not be unique.
Since your competitors can purchase the same datasets from brokers, chances are you will toss this data aside and focus on capturing relevant and valuable first-party customer data.
Discover the Power of First-party Data
There’s no denying that third-party data is insufficient to succeed, and brands keep looking for ways to acquire unique and relevant consumer data. Most savvy marketers focus on transforming their brands into customer-centric, increasing the use of first-party data, and developing data-driven strategies.
Schedule a consultation to learn how Phonexa’s suite of solutions for marketing automation can help you build customer profiles, tap into audience insights, and recalibrate your marketing strategy.
Frequently Asked Questions
What is first-party data?
First-party data is information collected by your organization about your customers or website visitors.
Why is first-party data important?
First-party data grants marketers access to unique information that can be used to control data quality and accuracy, increase reliability, improve personalization, and secure data privacy.
How is first-party data stored?
Companies typically use CRMs or Customer Data Platforms (CDPs) to store captured first-party data. CRMs help businesses leverage customer information like family and education details, several purchases, career details, and some website visits.
As for CDPs, they help brands organize captured data into encrypted profiles and gain a centralized view of customers across all touchpoints.
How to get more first-party data?
Businesses can capture more first-party data by profiling customers on a deeper level with the help of polls, IVR surveys, feedback forms, and follow-up emails. Besides, brands can use call tracking software to acquire detailed attribution on inbound call traffic and analytics tools to get in-depth behavioral data about clients and prospects.