Success in running a small or medium-sized business is usually about big numbers. The first dozen or so customers can help prove you’ve gotten the right product-market fit. Attracting thousands of followers on social media makes it a lot easier to share your story with the world. A website that gets millions of visits a day reflects a growing brand. A zero, on the other hands, is often equated with “nothing.”
That all changes with the concept of zero-party data, a term first coined by market research firm Forrester and sometimes referred to as ZPD. It adds a new dimension to the ongoing conversation businesses are having about how to strike the right balance between personalizing customer experiences and not overstepping or abusing the trust those consumers have given them.
Until recently, most brands relied heavily on third-party data, such as data that was picked up about a customer’s browsing habits via website cookies and aggregated. Third party data was helpful when you wanted to retarget a customer who ignored your online ad the first time as they continued their digital journey. Changes from Google, however, mean cookies will likely be depreciated over time.
This shifted the emphasis towards first-party data, which companies can collect and manage based on what is happening on their own digital properties. From people who browse through product pages to those passing through the various steps of an e-commerce checkout, there are plenty of moments where first-party data is ripe for the picking. Purchase histories and app usage count here, too.
Zero-party data focuses on another segment of activity entirely, and opens up another avenue for consumer goods brands that want to be more intentional about how they develop customer relationships.
What is zero-party data?
First-party data is valuable because, in a sense, it’s close at hand. It’s generated automatically based on customer behaviour. Customers may be aware on some level that companies are beginning to make greater use of first-party data, and even appreciate the improvements to their experiences with a brand. Nothing can beat the data that customers directly and explicitly agree to let companies use.
Zero-party data is named so because there’s no middle entity scraping, selling, or sharing the data other than the person to whom it belongs. Customers in this context may be asked to share their data, or do so of their own accord. In either case, though, they make their consent clear when the data is passed on.
Zero-party data examples
Imagine a customer reaches out to a company via a chatbot on its website. At the beginning of the interaction, the chatbot asks the customer how they would like to be identified. The customer responds, and the information is recorded. That’s zero-party data.
As more SMBs embrace the power of digital technologies, many of them might offer additional opportunities for customers to fine-tune their online account profiles. This could include their preferred pronouns, the kind of marketing content or newsletters they would like to receive, and whether they would prefer a text message or app notification for order status updates.
Even if they’ve never heard the term zero-party data, SMBs might have been gathering it for years via online quizzes, pop-ups to enter giveaways, or even as part of onboarding onto a new digital service.
Many apps also allow customers to save items for later, or to create a wishlist of future shopping expeditions. These are all indicators of purchase intent that create a great foundation for zero-party data strategies.
The benefits of zero-party data
Given the economic challenges and other headwinds facing SMBs in 2023, the quest for customer loyalty has never been more important. Zero-party data represents one of the best ways to craft a long-term loyalty strategy that works.
After all, zero-party data tends to be highly accurate given it’s coming directly from the primary source (the customer). Unlike third-party data or even second-party data that is purchased from a partner organization, zero-party data doesn’t come with a hard fee attached. Instead, you’re allocating budget towards feedback mechanisms to collect and platforms to analyze it, both of which have huge ROI.
Perhaps, most importantly, zero-party data allows companies to base their personalization strategies on customer demand. Using it is an act of providing value, and it will often be seen that way by customers who are grateful to see that they’ve been heard.
Marketers can deliver on the expectations customers give them through zero-day data by:
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Understanding motivations and needs: Customers may indicate that they’re not really shopping for themselves, but for a friend or family member. That means the most relevant promotions to send them shouldn’t align with the customer’s demographic information, but another persona entirely. Zero-party data could also inform when customers will be ready to consume marketing material as part of their buying journey.
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Act with empathy: Customers want to feel understood, especially when an experience hasn’t gone as smoothly as it should. Customers who send in e-mails with complaints, or who fill out post-purchase surveys, are providing rich zero-party data for companies to make things right and avoid similar glitches the next time.
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Empowering their team: Trying to please customers used to feel like a guessing game. When employees get something wrong, it can be almost as frustrating for them as the customer. Zero-party data gives them a better guide to providing the right blend of expertise and action, boosting customer satisfaction and making staff feel more motivated and fulfilled.
Regardless of how it is used, zero-party data shouldn’t be treated as a silo. Marketers will do better by making judicious decisions about how to mix it with first, second, and third-party data as part of a holistic approach to customer experience design.
A platform like Customer 360 was purpose-built for this kind of job, because it unifies disparate sources of data to provide a single source of customer truth. As that happens, Canadian SMBs will find themselves accelerating from zero to exponential levels of growth.
