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It’s personal – making the most of zero-party data

Customers are all too aware that more of their data is being gathered in more inventive ways than ever before. But when asked for and used in the right way, data can enhance brands’ relationships with them in a wealth of ways

"In the wake of high-profile data breaches, companies must find a balance between consumer demand for increased privacy, and an expectation for tailormade experiences."

Amanda Hicks
Partner in Charge, Customer, Brand and Marketing Advisory, KPMG in Australia

Digital marketing advertising spend is on the rise1, and it’s increasingly being driven by a desire to offer the most personalized customer journeys possible.

Experts anticipate that despite a deceleration in spending in the advertising sector, digital budgets will remain healthy2. Global media forecast predicts a slowdown in overall global ad spend, but forecasts that digital investment will remain buoyant – capturing 50% of budgets by 2020 (up from 25% in 2014)3. This buoyancy can partly be attributed to digital advertising’s unique power to target individuals with tailored content.

We’ve all become used to companies requesting our data in exchange for a wide range of services, from booking a restaurant to entering a competition. But in the wake of high-profile data breaches, companies must find a balance between consumer demand for increased privacy, and an expectation for tailormade experiences and product recommendations.

There’s no hiding the fact that more data is being collected on all of us than ever before. Consumers are being made increasingly aware that their data is considered a valuable commodity by the organizations they deal with. For example, airline frequent flyer programs – with their quality databases containing reams of information on their members – could be considered as valuable as the airlines themselves.

Meanwhile, GDPR and other regulatory notices on almost every website we visit make us aware at every turn that our actions are being watched and our choices being noted. In this landscape, there is undoubtedly an expectation from consumers for some return on their precious data investment, in the form of their preferences and credentials being accounted for in the future.

The focus for brands therefore needs to be on building trust to the point where customers intentionally share their information – and then on using it in the most effective way.

The personal experience

Zero-party data is the name given to data given voluntarily and fully consciously by customers to an organization – excluding cookies and ‘bought in’ third party data. Due to the transparent methods used, this data tends to create a more open relationship between a business and the customer.

A further advantage comes from the fact zero-party data is controlled wholly by the marketer. There’s no need to pay for access or concerns over unreliable or unsecure sources.

Many organizations are using these relationships to build their entire business model. Personal styling website Stitchfix uses customer requirements on budget, sizing and style to build recommendations for clothing – which is then sent directly to them to try on at home. Meanwhile, haircare specialist Function of Beauty uses a hair quiz to find out exactly what its customers are looking for in their shampoo and conditioner, and then ships a personalized formula to their door.

These brands provide great examples of how zero-party data enables truly unique customer experiences. But beyond this new breed of data-dependent business, customers now expect a more seamless experience from any organization that gathers data for any purpose, with the assumption that their submitted preferences will save them future time and effort.

Seamless data usage and sharing across a company can therefore build customer loyalty through convenience and personalization, meaning brands that make this a priority stand to reap the benefits. Indeed, 64% of marketers4 admit bad data stops them from providing a personalized experience to consumers.

Widespread opportunities

Companies in the tech space are also set to capitalize on the rise in demand for this type of data. Mobile-only bank Monzo uses information collected from in-app messaging and community forums to better understand how different people manage their finances, and in turn, develop features to positively impact users’ relationship with money.

Zero-party data gives brands the opportunity to build relationships they could only dream of gaining from traditional data collection methods, and its impact could be felt across your customer base if you’re able to leverage it in the right way.

The key for businesses is to find the right way to persuade customers to share enough of their data to build an emotional and lasting connection.

There are three clear ways to coax them in. The first is to offer an immediate benefit to consumers, in return for permission to use their data. For example, access to an online gift or piece of tailored content, or a small number of loyalty or rewards points.

Another is to ensure organizations only ask for relevant data. It’s clear why an online clothing company would want to know their customers’ measurements and style preferences. But the advantages to consumers of giving out information on their occupation or family situation are less obvious.

Finally, companies should use engaging techniques to obtain data – quizzes and surveys at the correct point in time of the customer journey (while browsing or at the checkout) are much more likely to get a positive response.