The role of zero-party data in building better customer profiles

/ 1 June 2023

Understanding your customers has always been the foundation to success. But right now, relying on poor-quality data makes this a challenge. Why? Because building customer profiles relies too heavily on past data. 

Accurate customer profiles identify, describe, and segment customers based on numerous characteristics and variables, for example, their personalities, buying habits, and behaviours. But as your customer data ages, it can become outdated or inaccurate due to changes in customer behaviour, business operations, or market trends.

The once tried-and-true practice of relying on outdated data or poor-quality third-party data is no longer enough. 

Cue: first-party data (a.k.a. zero-party data). Zero-party data increases your likelihood of success because by earning zero-party data, you will have access to up-to-the-minute high-quality data to gain a complete understanding of customers and ultimately generate more revenue.

Sound intriguing? This article will give you practical tips on how zero-party data can build the most robust and accurate customer profiles.

Let’s start with a quick recap of what zero-party data is. If you’re familiar with it, you can skip to the next section.

What is zero-party data? A quick recap

Sometimes also referred to as first-party data, zero-party data is data which customers intentionally and proactively share with a brand. It can include how a customer wants a brand to communicate with them and preference centre data.

But zero-party data isn’t just about contact preferences – it’s also about building a profile of customer needs, motivations, interests, product preferences, and even personal life goals. 

By establishing a complete picture of customers, you will be better equipped to tailor marketing to the needs of each individual – ultimately better serving them, leading to generating more revenue.

Plus, zero-party data also mitigates the risk of data privacy issues. Think of it as the gold standard of data because it’s straight from the source (so it’s highly reliable) and can be used to make the personalised experiences customers have come to expect. (More on this later)

Benefits of building customer profiles with zero-party data 

In the following section, we’ll take a closer look at the benefits of building customer profiles with zero-party data: 

#1: Personalised marketing 

Perhaps the biggest benefit of using zero-party data to build customer profiles is the ability to create highly personalised marketing. 

Think about it. When you ask customers about their preferences directly, you can really maximise personalisation. And customers want this too. 

In fact, there are quite a few stats to back this up:

🔍 59% of customers want businesses to use the data they collect about them to personalise their experience.

🔍 70% of consumers spend more with companies that offer fluid, personalised, and seamless customer experiences.

Actually, the impact of using data for personalisation is quite high:

🔍 Consumers’ patience for impersonal experiences hits a low as 66% of consumers say they will quit a brand if their experience isn’t personalised.

🔍 Real-time personalization improves customer lifetime value 86% of consumers say that personalised experiences increase their loyalty to specific brands.

These are hard stats to ignore.

#2: Accurate segmentation

Building on the point above, zero-party data helps create more refined customer segments based on explicit preferences. 

By categorising customers based on their specific interests or requirements, brands can develop more precise marketing campaigns and product offerings that resonate with each segment.

This targeted approach can improve conversion rates and overall customer satisfaction.

#3: Provide immersive experiences

Customers demand natural, fluid interactions with companies. This all boils down to one simple idea: people want to be seen and heard, to be treated not as a transaction number, but as the individual, highly valued customer they are. We call this ‘humanising the customer experience’.

By doing so, brands stand to greatly strengthen customer relationships, a benefit which cannot be overstated. 

#4: Product and service improvement

Zero-party data can guide businesses in product development and service improvement. By understanding customers’ stated preferences and expectations, companies can identify areas for enhancement or new features that align with customer desires. 

This customer-centric approach increases the likelihood of delivering products and services that meet or exceed expectations.

#5: Contextual relevance

Zero-party data provides businesses with contextual information about customers, such as their preferred communication channels, content formats, or frequency of interactions.

This knowledge enables brands to deliver messages and content in the right format and at the right time, maximising engagement and response rates.

#6: Deeper customer understanding

Zero-party data can uncover valuable insights into customers’ motivations, goals, and pain points. By asking direct questions or conducting surveys, businesses can gain a deeper understanding of customer needs and expectations. 

Think about it. Your sales data will tell you what customers buy from you. But it won’t tell you what they buy from other companies or what they are thinking of buying. Yet it’s those sorts of insights that really help refine customer profiles, allowing for more targeted and effective marketing strategies.

#7: Trust and transparency

Lastly, collecting zero-party data involves a transparent exchange between brands and customers. 

When customers willingly share their data, it signifies a higher level of trust in the brand. By respecting this trust and leveraging zero-party data responsibly, businesses can foster stronger customer relationships, leading to increased loyalty and advocacy.

Customer profile tips and best practices

Now that you understand more about zero-party data for building customer profiles and segmenting data, let’s talk about some tips and best practices. 

To successfully capture zero-party data to build better customer profiles, it’s vital to:

✅ Engage your audience

✅ Use the right mechanism

✅ Make sure you have consent

Let’s get into it.

💡 Engage your audience with a value exchange

The first step to capturing zero-party data is to find ways to entice customers to provide it. And the best way to achieve this is through a value exchange. This could be exclusive content, access to special offers or discounts, personalised recommendations, early access to new products and features or even badges or status that lead to benefits – such as early access to offers and sales.

Ultimately, when customers perceive the value they will receive, they are more likely to be motivated to share their data. 

💡 Use the right mechanism 

Apply gamification techniques to make the data collection process more engaging and interactive. You can incorporate gamified elements like badges, points, levels, or challenges to incentivise participation and provide a sense of achievement or fun. 

💡 Make sure you gain consent

How you capture consent is key to using data further down the line. It’s also key to staying within data protection guidelines. 

So, be transparent about how the data will be used, stored, and protected. Assure customers that their privacy is a priority and that their data will be handled responsibly. Think about how you can display trust symbols, security certifications, or privacy policies to instil confidence in your audience.

Start building accurate customer profiles with 3radical

Overall, zero-party data empowers brands to build more accurate and detailed customer profiles. 

By combining this data with other relevant information, such as first-party data and third-party data, companies can develop a comprehensive understanding of their customers’ needs, preferences, and behaviours. And this knowledge enables brands to deliver personalized experiences, create targeted marketing strategies, and continually improve offerings to meet customer expectations.

One way to do this? Earn zero-party data, capture consent and engage audiences with gamification in one place with 3radical. 

The tools in your tech stack will help you engage the right audiences the right way with the right consent. 

If your team is ready to leverage zero-party data to build better customer profiles, try 3radical to:

  • Create engaging gamification campaigns
  • Create questionnaires, quizzes, and polls that capture the right insight
  • Capture consent in a secure way

💪Related reading:

Ready to build closer relationships with customers, better conversion rates, and higher customer lifetime values? Get in touch with our team and we’ll talk you through how tech can help.

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