First-party data meets zero-party data: A new approach to retail marketing

/ 8 March 2024

Yet again, the rules of marketing for retailers are changing. With fast-paced digital changes, there’s even more data available to provide better customer experiences.

** Shoppers breathe a sigh of relief **

Actually, these data-driven approaches are no longer a nice-to-have. So it might be time to ditch the traditional retail marketing tactics if you don’t want to be left behind the curve. Because two new types of data are a must-have if you’re aiming for personalised, trust-based customer relationships that stop dwindling engagements. ❌️

Enter: first-party data and zero-party data. ✨

In this blog, we’ll delve into why it’s crucial to build marketing strategies on these data assets. Let’s dive in…

🤫Psst. If you aren’t new to first-party data, you can skip this next section. ⏩

First-party data: What it is and why it matters

First-party data isn’t new to retailers who are ahead of other industries in consumer-insight led campaigns. But here’s a recap…

Essentially, it’s data that comes straight from customer interactions. Think: purchases in stores, on your website, product reviews, and survey responses.

It provides genuine insights into your customers’ behaviours and preferences. And unlike other data sources – like third-party data – it’s more reliable at creating value-adding customer experiences. 

Why? Because it enables retailers to anticipate needs before they arise and therefore:

  • Prevent stock-outs and avoid disappointment
  • Create tailored shopping experiences that make individuals feel valued
  • Anticipate customers’ future needs for upselling

Say goodbye to playing catch-up. 👋 First-party data lets you be proactive. Here’s a basic explanation of how…

Step 1: Mine data from customer loyalty programs, website analytics and other sources to gather first-party data in one place – without compromising privacy or loyalty.

Step 2: Analyse this combined data to spotlight what makes your audience unique – what are their underlying needs and motivations?

Step 3: Cater for these needs in messaging and customer journeys.

The result? You can see how this allows retailers to stand out in a crowded marketplace, generate higher engagement levels and support marketing ROI.

Want to hear how you can make this even better? Let’s introduce you to zero-party data…

Zero-party data: Letting customers take the wheel

While first-party data gathers insight based on observing customer interactions, zero-party data is the next level. This data puts the customer in the driver’s seat. They opt-in to sharing this information – preferences and intentions – voluntarily in exchange for more personalised and relevant experiences.

The major difference here is the consent and knowingly sharing this data. This value exchange transforms impersonal interactions into customers feeling seen and valued. And it builds trust and loyalty.

On top of this, while first-party data provides clues for customer behaviour, zero-party intelligence reveals why these behaviours occur and what exactly customers expect from brands. They can literally tell brands “This is what I want” which takes away the guessing game with customer needs.

The result? It’s easy to see how this drives growth through repeat visits, referrals and brand advocacy.

So, how do the two work best together? The answer is right here. 👇

When first-party meets zero-party data

Looking for data-driven, next-level marketing campaigns? This is the strategy you need.

Combining first-party and zero-party data creates a massive opportunity for retailers. 

Quite a bold statement. Here’s why it’s justified…

Blending first-party and zero-party data creates a comprehensive view of observed behaviour and directly communicated preferences. With this, you can create much more resonant marketing campaigns. Messages aren’t just based on customers’ actions, it’s based on their stated preferences and needs.

It opens the doors to:

Personalisation on mass: Sounds contradictory 🤔 But, wait. Not only can you understand an individual’s needs, but you can use it to create clearer and accurate target personas – for those you haven’t captured insight on – and create campaigns that resonate.

Future-proofed campaigns: Rather than just reactive campaigns based on current behaviour, pulling in zero-party data gets you ahead with predicting future needs so you can provide more exciting and intuitive shopping experiences – ones that feel tailor-made and considerate.

Long-term relationships: Genuine personalisation creates deeper emotional connections with customers – inevitably boosting loyalty, advocacy and repeat purchases.

Heightened engagement levels and ROI: Dipping engagement plagues the retail sector. That coupled with the need to improve ROI levels is a headache for marketers. But with this data duo, you aren’t so much in the dark on customer preferences which means you can direct budget and efforts towards the right customers, with the right message.

Here are some practical examples of how this works so you’ve got a little more context.

Examples in action 

Now, we’ve got some examples of retailers combining first-party and zero-party data into campaigns. 

📧Real-life example: Michael’s revive your reactivation campaign

Michaels, the largest arts & crafts retailer in North America, activated more than eighty-thousand lapsed email addresses, with the use of a survey and holiday-themed gamified Advent calendar to capture fresh and new insight (zero-party data). 

Through these interactive campaigns, they obtained valuable, previously uncapturable, earned data needed to create more personalised and highly relevant marketing communications.

The results? 80k+ unique emails were reactivated with an estimated value of $400k. Engagement soured with 41% of clicks engaging with the experience. 🚀 

The best bit? Michael’s captured 2,500 previously uncapturable zero-party data points. Data they can use on an ongoing basis to get even more personalised on an individual level. 

👙Real-life example: Fitting room fun with ThirdLove 

ThirdLove, an underwear retailer, like other brands, faced the challenge of having to stand out from the crowd. Bringing in a fitting room quiz, they nailed how to weave zero-party data into their marketing strategy. 

How? ThirdLove invited consumers to share why they are shopping for underwear and all their preferences, such as colour, style, and fit. A little brave. But with this insight, ThirdLove could dig deeper into purchase motivations, what types of products their consumers seek, and how competitors’ products have failed them. 

And from this, ThirdLove could curate an appealing list of recommendations for shoppers – plus discounts off their first purchases if they opt-in. 

On top of this, ThirdLove now uses this zero-party data to help guide key business decisions. For instance, the company built an internal algorithm that uses data gathered from the surveys to inform supply chain decisions, like how to manage the inventory of particular sizes. And it helps them to understand how size trends change over time.

In each of these examples, first-party and zero-party data work together to create more personalised and valuable experiences for customers. Something that customers now expect and retailers can’t live without.

Looking for more ideas? Take a look at these data-driven strategies…

9 strategies for retailers to use zero-party data with first-party data

Getting customers to hand over this juicy intel requires creative campaigns that focus on value exchange and transparency – so they know exactly what will happen with the data they share. Here’s how to earn those gems of data:

#1: Make participation irresistible: Gamify the experience with entertaining quizzes and surveys that reward customers for their time.

#2: Incentivise profile upkeep: Encourage customers to complete preference centres and update contact details through personalised loyalty perks.

#3: Make feedback frictionless: Reduce barriers to input with convenient and adaptive experiences that remember the customer and ask the most relevant questions.

With these streams of qualified information, retailers can now deliver their end of the deal through genuine personalisation:

#4: Match messaging to interests: Align campaigns to individual preferences (if they’ve been shared). And when they haven’t, build more reliable personas to target specific groups of shoppers.

#5: Let data guide stock: Avoid over or under-purchasing of stock and dissatisfied customers by aligning inventory with consumer preferences.

#6: Improve experiences: Invest in digital experiences like interactive campaigns to create more relevant, impactful and enjoyable interactions.

While actively applying data, remember transparency and consent remain critical:

#7: Share usage policies: Clearly detail how their data will be used and stored. Basically, how you’ll safeguard their information.

#8: Communicate value: Share the value exchange and show exactly how openness powers special access, offers, and more individual-tailored treatment.

#9: Make opting out effortless: Provide easy revocation pathways without question. Don’t add friction to avoid unsubscribes – it’s not a nice journey and it quickly breaks down trust.

Put these strategies into play to effectively gather first-party data and then activate zero-party intelligence. When powered properly, data volunteered directly by customers can completely shift engagement and loyalty – hence the results we touched on earlier.

Using first-party and zero-party data to beat dwindling results

If you’re looking for a better approach to building loyalty, advocacy, and repeat revenue, combining zero-party data with first-party data strategies is a winning combination. Not only does it provide a holistic view of customers and their preferences and behaviours for better personalisation and engagement, but it also supports business decisions like product development and stock management. 

Here’s a roundup of the key takeaways:

🔶 First-party data is the foundation – Tracking customer interactions across channels should remain the base of intel.

🔶 Zero-party data digs deeper – Layering on top direct customer input is invaluable for properly tailoring experiences and building trust.

🔶 Transparency is key – When capturing any data, don’t just tick legal boxes. Make it easy for customers to opt-out and be obvious what you’ll do with their data. 

🔶 Be proactive, not reactive – With both first-party data and zero-party data, you stand a stronger chance of anticipating customer needs and preparing both marketing and wider business strategies.

With an integrated data approach, doors open up for retailers to build meaningful experiences and customer loyalty. It just requires interactivity, value exchange, and transparency.

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