20.08.2021
This detailed guide explores zero-party data and customer data platforms, and their role in marketing, particularly in eCommerce.
We cover the importance of data, the relationship between privacy and personalisation, ways to collect and use zero-party data, and the role of a customer data platform.
Why data matters in marketing
What is a marketer's most important tool? A budget? Imagination? Ideas? All of these matter, but the foundation is data. Without information about products, the market and the target audience, marketing campaigns are unlikely to deliver the desired return on investment.
In an earlier article, we explained first-party, second-party and third-party data. The key change discussed was a move away from reliance on third-party information and towards data collected directly from customers. Here is a brief recap.
Third-party data
Third-party data can be bought, obtained or used through intermediaries that are not the original source. These intermediaries collect information from first-party owners, organise it into databases and make it available to others, including through advertising platforms such as Google and Facebook.
Historical context: the original article referred to an anticipated phase-out of third-party cookies in major browsers during 2022. That was a forecast at the time of writing, not a statement of the current implementation timetable or of the disappearance of all third-party data.
First-party data
First-party data is information you collect yourself about your users and visitors through their behaviour and interactions on your website, or through previous purchases in your online store.
How can privacy and personalisation work together?
Major personal-data scandals, including Cambridge Analytica, made privacy and security increasingly important to consumers. Regulators responded too. The original article highlights the GDPR, applicable in Europe from May 2018, California's CCPA and personal-information protection laws in Asian jurisdictions, referred to as PIPA.
On the one hand, people want greater privacy, tighter control of customer databases and the ability to have their information erased. On the other, many of the same people appreciate personalised offers and products or service packages tailored to their needs.
There is no real contradiction. People want to understand and control how their information is used. When properly informed, they can choose to share it for a clear purpose and receive something useful in return.
For brands, the message is simple: ask instead of assuming. This is where zero-party data brings privacy and personalisation together.
Four types of consumer data. Source: Cheetah Digital.
An introduction to zero-party data
Zero-party data lets brands develop customer relationships and tailor their marketing messages and offers using information that customers intentionally and proactively provide. Instead of relying only on what someone did in the past, it reveals their preferences and future purchasing intentions.
Exchanging value and earning trust
A strong marketing relationship involves an exchange of value between the brand and the customer. Brands build trust while providing something useful, so that both sides benefit from the interaction.
The brand receives valuable information. The customer receives relevant information and personalised offers.
Value exchange between a brand and a customer. Source: Think with Google.
How to collect zero-party data
The starting point is to ask customers directly. Clear questions are more useful than assumptions. If people trust your brand and value their interactions with it, they are more likely to share information about themselves.
The information and permissions obtained can help tailor communication to each stage of the customer lifecycle. Product preferences and purchasing intentions are particularly useful for building a more accurate picture of each customer.
There are many ways to collect this information.
1. Prize draws and competitions
Eligible customers, for example those who buy a particular product or service, receive a QR code, link or leaflet directing them to a landing page or app. To enter, they provide the requested information.
The original article distinguishes two Croatian promotional formats. In a prize draw, participants have an equal chance of winning and winners are selected at random from a defined prize pool. It describes registration with the Ministry of Finance and payment of a fee as part of that format.
In a creative competition, participants submit work such as a photograph, illustration, poem or video on a specified theme, and a jury selects the winner. The article contrasts this with a random draw, while emphasising that personal-data rules still apply. These descriptions provide context for the example, not a substitute for checking the rules applicable to a particular promotion.
2. Gifts with a purchase
The registration mechanism is similar, but every qualifying customer who registers receives a benefit instead of competing for a limited prize pool. Examples include a discount on the next purchase, a voucher for a free product or free delivery.
This approach can suit businesses with many branches and repeat purchases that want to increase customer lifetime value.
To make participation more engaging, the registration journey can include a digital scratch card. After entering their information, the customer sees three cards, chooses one and reveals the reward beneath it.
3. User-generated content
Social-media users and brand followers often enjoy creating and sharing content. Having their work featured by a favourite brand makes the experience more rewarding. Other customers also enjoy browsing relevant, authentic content that has not been professionally produced.
Invite followers to submit their work and basic information, then use the content on your social channels, website or promotional materials with the necessary permissions. This can make the brand feel warmer and more approachable while providing useful customer information.
4. Voting contests
Run occasional votes on your website or social channels, asking people to choose favourite products, customer photographs or other relevant content. A small reward can encourage participation, with registration and a few basic questions forming part of the entry process.
The subject must make sense for your audience. A bookshop with 50,000 titles might generate considerable interest with this format. A handmade bag and jewellery business with around 30 designs may be better served by another approach.
5. Video competitions and challenges
Video plays a major role on platforms such as YouTube and TikTok, as well as Facebook and Instagram. If your brand lacks the resources to create a large volume of video, an interesting or valuable incentive can encourage followers to contribute their own.
Challenges are a popular format: the brand sets a theme and participants respond with a video showing how they completed it. This can be particularly effective when part of the audience is younger. Promoting the activity on relevant TikTok and YouTube channels can introduce the brand to new followers.
6. Personalised recommendations
A questionnaire can generate recommendations based on the customer's answers. The outcome might be a restaurant, a holiday destination, a travel package, an insurance or loan category, or an everyday product.
Technically, the recommendation process can work by matching answers to product attributes and filters already available in the store or platform. Customers could apply those filters themselves, but a short questionnaire feels more engaging and personal.
The journey can continue with an automated email after three or five days, presenting the recommended product with an additional discount or a truthful availability reminder, such as “Only three available”. The aim is to help the customer take the next step.
7. VIP treatment
If you regularly research the market to develop products and services around actual customer preferences, create a VIP programme for people who consistently take part in your questionnaires.
In return, give them early information about new products, small gifts with purchases or invitations to a collection launch. Recognition and privileged access can make participation worthwhile.
8. Loyalty points
If customers already collect and spend loyalty points, offer an additional five or ten points for completing a questionnaire. Choose the reward carefully: too little may not motivate people, while a generous offer may produce a much larger response than expected.
Make the value tangible. If you sell chocolate, for example, show the chocolate that the extra points could buy in the invitation email. A recognisable reward is easier to understand than an abstract points total.
How to use zero-party data
Once collected, the information supports two main activities: customer-level marketing automation and customer segmentation.
1. Customer-level marketing automation
Consider the article's hypothetical customer: a 45-year-old vegan living in Split with three children, who typically shops monthly around the 15th. A rule could send a relevant offer a few days earlier, featuring vegan products, a three-for-two promotion, quantity discounts suited to a monthly shop and a reminder of where to find the offer in Split.
Personalised marketing does not require a separate rule for every customer. Rules apply across the database and are triggered only for people who meet the specified conditions. The same rule could therefore cover customers with the same relevant characteristics.
Automation can become more specific. The SHAPECore system described in the article supports automated emails from the store's CMS, without requiring a separate email-marketing system for these scenarios:
- Reminders about unfinished baskets.
- Notifications when a favourited product goes on promotion.
- Notifications when a product added to, then removed from, a basket goes on promotion.
- Offers for a product viewed more than X times, but not purchased, when it goes on promotion, for example after three views.
- Promotional notifications for products the customer previously bought.
- Follow-ups for products viewed more than Y times without a purchase, where Y is higher than X, for example six views.
2. Customer segmentation using zero-party data
Analysing information supplied directly by customers can complement, and in some cases reduce reliance on, expensive external market research.
Imagine a fictional survey that collects an email address and answers to just three questions: gender, age between 15 and 75, and monthly income. A scatter plot can display each customer as a point, with colour indicating the gender category used in the example.
Zero-party data before segmentation.
Visualising the information instead of examining only a table makes potential groups easier to spot. This may confirm an existing segmentation model or reveal new customer groups and emerging trends.
Zero-party data after segmentation.
How could this guide future marketing? Suppose the business sells health foods and dietary supplements. The groups below illustrate possible hypotheses, not facts that should be assumed about individual customers or medical recommendations.
Group A: younger, health-conscious customers
Some may be students or just starting work. Others may be new parents, and some may be physically active. The original example cites 29 as the average age of childbirth in Croatia at the time. Follow-up questions could establish whether customers study or work, how often they exercise and whether they have children.
- For a relatively limited household budget, suggest affordable, filling foods that provide sufficient energy.
- For people new to healthier cooking, provide quick recipes and introductions to ingredients, including preparation methods and appropriate uses.
- For young parents, work with qualified nutrition professionals on articles about introducing suitable foods from around six months of age.
Group B: working professionals
The example assumes relatively well-educated working adults, including single people, couples and parents.
- With a relatively higher household budget, offer a broad selection of quality cooking staples such as flour, oils, pasta, seeds and sweeteners.
- The original example considers relevant supplement categories, such as vitamins, spirulina and chlorella, while also noting that some households may include children aged 10 to 18. Suitability must not be inferred from a marketing segment alone.
- For families with teenagers, publish recipes for meals that can be reheated or easily finished the following day.
- For single-person households, suggest a weekly or fortnightly meal plan with a shopping list to support convenient repeat purchases.
Group C: customers in a later life stage
The illustrative segment mainly comprises women, although purchasing decisions may be shared within the household.
- The original example mentions menopause-related product categories and calcium and magnesium. These are examples of potential content themes, not individual health advice.
- A relatively comfortable household budget may support better-quality ingredients for familiar family meals, such as wholegrain rice, wholemeal pasta and homemade bread.
- Quantity discounts may appeal to customers who prefer to buy larger amounts.
Group D: retired customers
This example describes retired people with relatively modest pensions and a strong interest in their health.
- Suggest appealing, affordable foods, taking account of individual needs rather than assuming everyone needs the same calorie intake.
- Offer relevant vouchers and promotions to customers who enjoy comparing prices and offers.
Each group can provide more useful information. Once basic characteristics are known, follow-up questionnaires can explore actual needs instead of relying on assumptions.
For example, ask Group B: “When do you prepare meals for your family?” Possible answers include:
- In the morning before work, on the day the meal is eaten.
- Immediately before eating.
- The evening before.
- At the weekend, for the whole week.
Collecting zero-party data is an ongoing process. Information needs to remain current and relevant, so questionnaires should be repeated thoughtfully, with care over timing and the number of questions.
Remember that the exchange of value between the brand and the customer must remain balanced.
CDP: the customer data platform
What should a business put in place before collecting zero-party data systematically? Start with a healthy first-party audience: customers, subscribers and followers who can be invited to share their preferences.
Organise that information in a structured customer database that supports future actions and automation. The article presents the CDP as an extension of the customer-management foundation provided by a CRM.
A CDP brings together information from multiple sources, such as the ERP, the online store's CMS and social channels. Information is verified and associated with the relevant customer profile, then made available to other marketing tools, including email platforms and advertising systems.
The intended day-to-day users are marketing teams. Once integrations are configured, ongoing IT involvement can be relatively limited. The platform provides a persistent, unified customer database that receives information through integrations with the other systems the business uses.
With the platform and data-collection processes established, the business can use zero-party data more precisely, create smaller and more clearly defined segments, and support one-to-one marketing.
Stages of zero-party data use. Source: Cheetah Digital.
The SHAPECore eCommerce platform described here has three main back-office areas: product management, order management and customer management. The third provides the foundation for the customer-data capabilities discussed in this guide.
In this context, a CDP extends customer relationship management with more comprehensive collection, tracking and processing of first-party and zero-party customer information.
If you would like to discuss building an online store, the cost of development or broader digital-marketing support alongside your eCommerce platform, contact us for an initial conversation.
Sources cited in the original article
20.08.2021
