Brands are facing a customer data conundrum. While 49% of consumers say they’re frustrated by receiving irrelevant content and offers from brands, 45% say they aren’t comfortable sharing their personal data in exchange for more personalized experiences.
It’s clear that consumers want to feel heard and are looking to get value from brand interactions. But they aren’t always ready to share their personal data and information with them. So how can the two coexist?
The answer lies in brands using zero-party data — information that consumers explicitly share in exchange for something of value. Eighty-six percent of consumers say they’ll trade personal and preference data with a brand in exchange for early or exclusive access to something, while 55% say they’ll do so to feel part of a brand’s community.
In today’s era of evolving privacy regulations — at least 38 U.S. states introduced more than 160 consumer privacy-related bills in 2021 — retailers would be remiss to not use zero-party data to engage their customers. Since consumers share zero-party data with brands directly, brands that collect and use it avoid potential privacy violations — and can learn exactly how to satisfy their customers.
Zero-Party vs. First-Party Data
The first step to understanding zero-party data is to distinguish it from first-party data. The big difference between the two is how they’re collected.
First-party data is information that brands collect from consumers, with their consent, through their own channels and properties, such as their website, email, SMS and loyalty programs. This can include behaviors they’ve taken, such as browsing a certain product category and purchase history. While it’s an important part of a brand’s personalization strategy, it relies on inference — and doesn’t fully encapsulate a customer’s needs and preferences.
On the other hand, zero-party data is personal information that consumers willingly give brands. Asking consumers questions about their likes and dislikes directly — through quizzes, surveys, forms, two-way text messaging conversations and more — is a natural way to collect zero-party data. Although consumers have historically been hesitant to share their information and preferences with brands, they’re open to doing so if they know they’ll get something valuable in return, such as a product recommendation or an exclusive offer.
Brands must be completely transparent with customers during this value exchange to maintain consumer trust and avoid potential privacy violations. This means being crystal clear about why they’re collecting said data in the first place, as well as what they’ll use it for down the road — and ensuring they only use it for those purposes.
But just to be clear: Zero-party data isn’t a replacement for first-party data. First-party data gives brands a foundation for their personalization strategies, while zero-party data opens them up to new opportunities to deliver even more relevant experiences. When used together, retailers put themselves in a great position to get accurate customer information, fully engage their customers and, ultimately, increase customer loyalty.
Zero-Party Data and the Rise of Conversational Commerce
Directly asking consumers about their preferences helps brands better understand their customers — and comes with a major payoff: 91% of consumers say they’re likely to make a repeat purchase from brands that meet their needs. And with rising acquisition costs, retaining customers long-term is priceless.
As brands look to increase their personalization efforts, they have an opportunity to rethink their marketing channels. With consumer demands for convenience continuing to grow, having real-time conversations with customers has become an effective marketing tool to increase personalization.
Traditionally, brands have used website-based chatbots to have these types of conversations with customers. But chatbots often rely on third-party data to get the context they need to answer consumers’ questions. Without a full picture of consumers’ needs and preferences, chatbots can’t deliver the level of personalization and convenience that consumers expect.
This is why conversational commerce — people-driven experiences that support the customer buying experience — is taking charge. Nearly three-quarters (74.8%) of consumers say that getting a direct response from a person is one of their top three expectations when conversing with brands, while more than 64% say the same for the ability to have two-way communications with said brand.
And conversational commerce goes hand in hand with collecting and using zero-party data. When two people have a conversation, each expects what they hear back to be relevant to them. When consumers talk with retailers, they expect that same level of personalization.
To consumers, the tradeoff is clear: they’re happy to provide their data to brands if they can get something of value in return. Zero-party data is the bridge between consumer satisfaction and brand loyalty.
Zero-party data represents an opportunity for brands to get the information they need to have personalized conversations with customers. Retailers can start conversations based on zero- and first-party data (including purchase history, loyalty status, on-site behavior, preference selection and conversational responses) as well, and introduce human-powered capabilities to enhance said conversations in real time. These interactions are key to turning casual shoppers into repeat customers.
Sara Varni is the CMO of Attentive, leading Strategic Global Marketing to further build the Attentive brand to reinvent business-to-consumer communication and commerce in the mobile age. With deep experience in the marketing and ecommerce industry, Varni has a strong background in scaling marketing teams in a fast-growth environment and driving demand for expanding markets and products. Most recently she was CMO at Twilio, responsible for growing the community of developers and bringing the company into the enterprise market. Previously she led go-to-market strategy and positioning at Salesforce for over 10 years in various roles, including SVP of Product Marketing for its leading sales platform, Sales Cloud.