If the last few years have taught us anything, the real test of a retail brand is how well they adapt to change. The truth is, the retail industry has changed more in the past three years than in the last 50.
And to say customer acquisition and paid marketing costs have skyrocketed would be an understatement.
Customer acquisition costs have increased by as much as 60% in the last five years. But key factors have compounded the challenge for brands, including:
- The introduction of iOS 14.5
- The demise of third-party cookies
- Increased privacy legislation
The real question then is: How is the current state of today’s retail landscape forcing brands to think about other ways to attract new customers and retain loyal ones?
Essentially, you need to drive down ever-increasing advertising costs and focus on building more personal relationships with customers.
All of this can be done through zero party data. The goal is to be the customers’ first port of call when they need the product you sell – not catching them by chance through a paid advert.
This article shares the ways zero party data can bolster your retail brand through 2023 and beyond – starting with why it’s so important today.
Why is zero party data important in 2023?
In the past, brand building was an indirect consequence of traditional performance marketing. You got brand awareness by spending thousands on advertising, right?
But the traditional marketing landscape is changing rapidly.
The oversaturation of advertising slots and increasing costs – means your customer acquisition costs might be feasible for a few months. But expect it to take a greater portion of your profit margins by this time next year, when new retail brands are competing against you for those already limited placements.
If that isn’t scary enough, consider the looming death of the cookie. This limitation on the data brands can collect will hinder growth goals.
Just look at third-party data. Anytime you use third-party data, you could be exposing your brand to serious security and privacy risks that have the potential to compromise your buyers’ trust.
Likewise, relying on pouring more funds into advertising just isn’t feasible or desirable for most.
But brands can combat these changes by restructuring their marketing strategy to gather your own zero party data.
Let’s take a look at some of the key reasons why zero party data is so important, below.
Use deeper data to know the ins and outs of your audience
Data-informed decisions are critical to your brand’s success, helping you better understand your audience, optimise operations, and keep ahead of competitors. But it’s clear that to compete in today’s landscape, we need to go beyond basic demographic information and first-party data.
Instead, we need to know their interests and hobbies, how they like to shop, the challenges they face, and the social causes they care about. This is insight that needs to be gathered from customers directly.
This is where zero-party data delivers. It can provide a wealth of information to build customer profiles. Unlike first-party data, users can self-report preferences such as style/size/colour choice for clothing, motivations such as sustainability and interests, like hobbies.
This understanding allows brands to get a complete picture of customers and builds on that picture over time through progressive data capture. Of course, things change as our needs and circumstances change, so keeping what you know about your customers, current and relevant current is critical.
And it’s not just about thinking about how consumers engage with your brand, but what they need and what motivates a purchase, so that your brand can be super relevant and present at the right time with the right content and the right product.
Think about it: It might not always be about making the sale there and then. Using deeper data is also about adding value so that, as a brand, you are there when the time is right.
Unfortunately, so many brands still rely upon the insight gleaned from setting up a loyalty programme, and then rely on EPOS data going forwards. This leaves huge gaps in customer intimacy, potentially leading to disjointed offers, campaigns, and messages.
Deliver delightful customer experiences
The experience a customer has when interacting with your brand makes or breaks the commercial relationship you form with them.
Resonating with customers relies on communication, and to communicate effectively, you have to intimately understand your audience.
Understanding their behaviours and preferences on every level will make it much easier to craft valuable customer journeys.
An increasing number of successful brands are tuning to this idea, with 90% of marketers aiming to capture zero-party data within a year.
Take arts and crafts retailer, Michaels. Using a marketing gamification experience, it was able to gather 2500 previously uncapturable unique data points, including who they are, what they’re looking for from arts and crafts retailers, and their comms preferences.
The brand uncovered key insight, such as identifying craft skill level (novice, talented, professional). This insight was game-changing for Michaels product and marketing strategy.
Imagine what you would do with that kind of insight.
Think about it: If there were three bits of zero-party customer data that you would love to know, that in knowing would change how you talk to your customers and ultimately improve outcomes, what would they be?
Capture valuable data with consent
We’re entering an era of customers taking back control of their data, by exercising their data rights under existing privacy laws or by no longer buying from brands that don’t properly protect their data.
There is still a significant lack of data transparency and trust. And this lack of trust is understandable, given the recent history of high-profile consumer-data breaches. There are cases all around the world with regards to the rights to use third-party data.
It’s one of the reasons for Apple’s iOS 15 update changing its tracking to give users more control over how their data is shared. One of the biggest search engines, Google Chrome, also announced that third-party cookie blocking will come in next year.
Therefore, the way in which brands obtain this data is where the challenge comes in and earning zero-party data directly from your audience is the solution.
Gathering zero-party data will allow your brand to reduce its spend on advertising, as well as collect more valuable customer data to use in future campaigns — a win-win situation.
The added benefit of using zero-party data is that brands can relax knowing that customers know exactly who is using their data and how.
Rethinking data capture
Skyrocketing advertising costs and limited placements are unsustainable. The retail brands who fail to take zero party data seriously risk falling behind.
Time is of the essence when it comes to growing a retail brand in 2023. Consumer preferences, demands, and expectations are changing by the month.
The truth is: The strategies you used to reach your audience last year are unlikely to carry you through the next.
While customers are becoming more privacy conscious, that doesn’t mean they are unwilling to share their data if they see a direct benefit in doing so.
The key is to create a mutually beneficial value exchange.
Instead of static customer surveys with low response rates (2.5%) and inaccurate and degrading data, savvy brands are turning to marketing gamification. Our clients often see completion rates in the region of 50-70%.
Thinking of capturing more zero-party data? Instead of sending out mundane surveys, boost engagement with marketing gamification experiences. Discover more about how to quickly and easily earn zero-party data.