- Third-party data is being phased out by big tech, making first-party data indispensable
- First-party data is willingly provided by users, helping you build a consumer profile
- Internet users are cautious about providing their data but will do if rewarded
- Tracking pixels, CRM platforms, surveys, and encouraging interaction and registrations are all effective ways to capture first-party data
- First-party data must be used responsibly, repaying the trust placed in a business by consumers
When doing business online, data is arguably the greatest currency of all. By obtaining reliable data about your target audience, an effective and bespoke marketing plan can be devised. This will convince customers that you understand their unique needs, desires, and pain points.
Alas, not all data is created equal. As the influence of the internet grows, and the fallout of the Cambridge Analytica scandal continues to reverberate, consumer privacy is more important than ever. Any online business needs to build a consumer profile in an ethical, reliable manner. This makes the collection of first-party data critical.
What is first-party data?
First-party data is consumer information collated directly by your business, based on user behavior. This data can be used to build a profile of your target audience, tailoring your marketing and user experience accordingly.
What is the difference between first-party, second-party, and third-party data?
As discussed, first-party data is user information collated directly from your website. We will discuss how you can obtain first-party data shortly. Let’s clarify the difference between this approach and second- or third-party data, though.
Second-party data is essentially the first-party data collated by another business. This may be shared between two websites for an agreed common good. However, second-party data remains private. It will not be made available to the public and cannot be purchased.
Third-party data is that which you purchase, usually from a data management platform (DMP) or consumer data platform (CDP). These platforms harvest data from users based on their online habits. These are known as tracking cookies. It is important to note that third-party data is not gained through any personal relationship with consumers.
The use of third-party data is slowly being phased out. Internet users are growingly increasingly security-conscious and are looking to shape online privacy policies. Google has announced that they will be removing third-party cookies from 2022, while the Firefox and Safari browsers have all already done so. With Google Chrome accounting for some 65 percent of global web browser traffic, the impact of this will be keenly felt.
In essence, third-party data is a dying art, and second-party data ultimately belongs to somebody else. This means that first-party data collation should be a priority for any online business, now and in the future.
How does first-party data help a business?
As intimated previously, first-party data is used to build a consumer profile. Think of this as market research straight from the horse’s mouth. By monitoring how users interact with your web presence, you can offer them more of what they want – and less of what will not interest, or even alienate, them. After all, there is little to gain by marketing a steakhouse restaurant to somebody that exclusively shows interest in a vegan lifestyle.
Perhaps the most effective example of marketing through first-party data is Amazon. We’ve likely all purchased something from Jeff Bezos’ empire at one time or other. Even if a conversion was not completed, you may have browsed the products on offer. Amazon uses this data to build personalized recommendations on your next visit.
It’s not just a tool for direct interaction on a website, though. First-party data is also invaluable for advertising. By learning about the habits of a user, tailored marketing can reach them on social media. This is a powerful form of inbound marketing that piques consumer interest.
Consumers that have previously been exclusively interested in red circles may be tempted to experiment with a blue triangle, but they are likelier to stick to type. By embracing first-party data, you can meet customer needs before they ask. This is a cornerstone of success, especially in the competitive world of online commerce. After all, 63 percent of customers now expect at least some measure of personalization from any service provider.
Creative ways to capture first-party data
Capturing first-party data is a delicate art. With consumers wary about how much the tech industry knows about them, this data may not be provided freely. You’ll need to offer something in return. 90 percent of consumers will willingly offer first-party data if you make it worth their while.
Most importantly, you’ll need to be transparent about how first-party data is captured and used. Consumers are wary by default, and you’ll need to earn their trust. An open acknowledgment of the data you collect, and how it will be used, is the first step to achieving this faith.
Seven great opportunities to capture first-party data
Let’s discuss some ways to help your business obtain first-party data that will help elevate your business to the next level.
1. Add tracking pixels to a website
Tracking pixels are tiny – usually no bigger than 1 x 1 – pixels that users rarely notice. These are installed in websites through coding and collate first-party data about user habits.
This could include what pages are viewed, the adverts that garner interest, and personal information such as whether the user browses through a mobile or desktop appliance.
This all sounds like cookies, but there is a crucial difference. Cookies can be disabled or cleared, as they are saved within the browser of the server. A tracking pixel is native to your website, so it will capture data from every visit, regardless of what settings the user enables.
2. Use a CRM platform
Customer relationship management (CRM) software is growing increasingly popular with online businesses. Chatbots are perhaps the best example of this. Chatbots are not for everybody – many consumers still prefer to interact with a human – but 90 percent of businesses claim that chatbots have enhanced the speed and efficiency of problem resolution.
What’s more, chatbots effortlessly capture first-party data. If a user has an issue or concern, they may grow weary of waiting on hold on the phone for 15 minutes and hang up. That lead is now potentially lost forever, and you’ll never know what they were looking for. Even if a chatbot cannot encourage a user to convert, you’ll have an idea of what they were interested in. This will aid in targeted marketing and user personalization in the future.
3. Reward users for sharing their data with you
As mentioned previously, customers want to be rewarded for their exchange of data. Ideally, this will be an immediate, tangible reward such as a discount. At the very least, provide evidence that you are personalizing your service to unique consumer needs.
Not every business will be able to offer immediate fiscal motivation to every user. There are other ways to reward consumers, though. Monthly giveaways are a good example, especially when advertised and managed through social media. Encourage people to like and share a post, promising to provide an incentive to one lucky winner at the end of the month.
This is easily dismissed as a cynical marketing ploy, so you’ll need to follow through on your promise. More importantly, you’ll need to make it clear that you have done so. If consumers believe that they are in with a shot of something for nothing, though, they are likelier to consider the use of their data a fair exchange.
4. Encourage interaction
Buzzfeed may not the first place many look for hard-hitting journalism, but it enjoyed stellar traffic for many years. Why? Because it encouraged interaction through goofy online quizzes that offered easy ways to harvest consumer data.
This isn’t necessarily a model for every website to follow. You need to protect your brand reputation. Inviting people to learn which pizza topping defines them best may do more harm than good. Similar exercises surrounding your business may encourage interaction though. A quiz about your business sector, promising a reward for completion, will attract interest.
Any competent SEO services agency will tell you that quizzes and other interactive elements on a page can also have the bonus of helping with SEO. This is because an important metric for Google when evaluating the quality of your website is “time spent on page”. If Google can see that your visitors are spending several minutes looking at a page, then this is a positive signal that the page is engaging and interesting to visitors.
Another strategy could be unlockable social media posts. Consumers will be intrigued about what you are offering behind a shield. Paywalls are likely to deter, but promising content-centric rewards if people share their data can be effective – if the result is worth the sacrifice.
5. Conduct surveys
The march of technology ensures that all consumers now have a voice. They expect this to be heard. Never lose sight of the fact that consumers hold the power in the 21st Century. Negative reviews of products and services can cost a business up to 80 percent of potential conversions.
The simplest way to achieve this is by issuing surveys to your existing customers, and even potential leads. Do not expect a 100% return rate, especially if you do not offer a reward for the time of consumers. Some will leap at the chance to express their opinions though, providing you with valuable first-party insights.
6. Encourage registration
If you run an ecommerce website, conversions are the most important bottom line of all. This means that many businesses will, understandably, offer services that increase the likelihood of making a sale. This could include guest checkout, a policy preferred by half of all online consumers.
The issue with guest checkout is that it captures less data than signing a customer up. Many consumers choose guest checkout as it’s faster, provides more privacy (especially when paying with an e-wallet rather than a credit card), and – theoretically – protects their inbox from unwanted marketing communication.
As we have established though, many consumers will provide data if you offer something in return. The most popular example of this is a discount on the first purchase. Couple this with a promise of personalized offers and an enhanced shopping experience and you’re likelier to see more sign-ups.
Just be careful about what data you are asking for. Be sure to explain why information is important. Unless a credit check is necessary, for example, many customers may be reluctant to share their date of birth. If you promise to offer exclusive offers around their birthday, however, your argument will be much more persuasive.
7. Host events
Younger consumers value experience over results. The days of gaining unstinting loyalty through providing goods or services at an affordable price are over. The rise of social media, and its omnipresence in the lives of Millennials and Generation Z, means that a personal connection is required.
Live events can provide this. Host an AMA, whereby a senior figure of your business answers questions about your practices. This can also be a great way to reassure consumers that you operate in a sustainable, socially conscious manner – something hugely important to many modern consumers. A live product launch can be another way to attract users.
How does this benefit first-party data? Attending the event will require registration. Even if the number of sign-ups is not mirrored by the eventual attendees, you have gained valuable data. You will also capture insights from those that do attend the event, especially if you encourage interaction.
Mistakes to avoid when capturing first-party data
As we have been at pains to point out, consumer data is a sensitive subject. First-party data is invaluable, but it must be obtained without betraying the trust of consumers. Here are some key pitfalls to avoid in your data collection strategy.
- Do not ask for something for nothing. Data sharing needs to be a quid pro quo exchange
- Avoid getting too personal – only seek data that is relevant to your business model
- Be clear about how the data will be used, offering consumers the opportunity to opt-out if this is their preference
- Shout from the rooftops about your privacy policies. Users can never be made to feel too safe
- Use the data responsibly, offering value to consumers and not abusing the information you have gained. Trust is hard to gain and easy to lose. As Google discovered, unethical use of data that breaches trust can also be very costly
Is your website making the best use of first-party data? Do you have any additional creative suggestions of how this information can be ethically sourced? These are the questions that will define the success of your business going forward. Be sure to hop onto the first-party data train now. It has already left the station and is rapidly picking up speed.
Joe Dawson is Director of strategic growth agency Creative.onl, based in the UK. He can be found on Twitter @jdwn.