First-party data is information a business collects on its customers. Instead of relying on other organizations, they collect, organize, and segment all data. While it can seem like first-party data collection requires more time and resources, it’s often far more accurate, reliable, and valuable.
While data privacy regulations tighten and the world moves toward a cookieless future, first-party data will become even more important to marketing campaigns. Currently, 52% of marketers are prioritizing the collection of more first-party data from digital experiences due to regulations.
As brands shift to using first-party data, they’re building better relationships with customers, providing more value, and optimizing their marketing campaigns. Here’s how you can do the same.
Table of contents
- First-party data, second-party data, and third-party data: what’s the difference?
- Why is first-party data important?
- Sources of first-party data: How to collect first-party data
- How to use first-party data: 8 first-party data use cases
- First-party data pitfalls
First-party data, second-party data, and third-party data: what’s the difference?
These three data types can play a significant part in successful marketing campaigns. Each is collected differently and has its own benefits.
Let’s take a look at the key differences:
First-party data is information your company collects directly from your audience, including customers, social media followers, and site visitors.
First-party is considered the best form of data to use because it’s gathered from the people you have the most to learn from—your audience.
The data is more reliable than other types for predicting and forecasting your audience’s future behavioral trends.
Some examples of where brands can collect first-party data include:
- Customer feedback
- CRM data
- Social media accounts
- Subscription-based emails or products
- Website, app, or product behavior analytics
Marketers usually collect first-party data by adding a pixel to their website, social media profiles, or product. This pixel gathers information about behaviors and actions and then records it in your CRM.
First-party data is particularly useful for reaching your audience with more accurate marketing campaigns. It’s also helpful for understanding their needs and preferences more deeply for retargeting campaigns.
Brands may use first-party data to:
- Understand customer lifecycles. Collecting first-party data help you analyze the journey a customer takes from learning about your brand, making a purchase, and finally telling others about it.
- Improve the buying experience. Identify which areas of the buying experience require improvement. For example, analyzing first-party data collected from your site may show you that new customers would prefer a guest checkout over a resgistration processs.
- Develop new products and categories. Using first-party data from surveys and questionnaires, identify gaps in your offering and create new products and categories to match customer demand.
- Retarget customers. In addition to retargeting customers with ads, use first-party data collection to send out personalized emails, for example like cart abandoment reminders.
- Break into new markets. Based on data collected from your site visitors, social media following, and email subscribers, pinpoint other demographics and geographical locations likely to be interested in purchasing your products. Use this information to build out campaigns that target fresh audiences.
Second-party data is information that brands didn’t collect themselves. It’s essentially secondhand data.
Sometimes it’s exchanged between trusted business partners who agree to share insights if it’s mutually beneficial to both brands.
Here are some examples of how these partnerships could look in practice:
- An online coffee machine store talks to a brand that sells coffee capsules to work out a partnership or purchase data they collected from customers who have bought coffee in the past.
- A shoe store collects data from a publisher who creates fashion content aimed at its target audience. Using this data, it then targets these audiences in its campaign.
- An online scented candle store wants to expand from Canada into the US, so it purchases data from a marketplace to learn about its target audience’s behavior.
How do marketers use second-party data?
Marketers use second-party data to add depth to their first- and third-party data. It’s usually accurate and more precise than data that’s aggregated from other sources.
Here are a few ways marketers can use second-party data:
- Create buyer personas for new products and services
- Build lookalike audiences in their Facebook ads account
- Change prices and discounts based on how customers behave
- Create better audience segmentation to help boost sales
- Display ads to new audiences broaden reach and increase brand awareness
How is second-party data collected?
Marketers can purchase second-party data or partner with other businesses.
There are three main ways to collect second-party data:
- Businesses. Brands can partner with or purchase from other businesses in their niche. The right partnership should provide qualified data. This approach lacks scale since there are limited businesses you can approach.
- Publishers. Businesses can purchase data from publishers creating content in their niche. These outlets usually have a list of potential customers and audience behaviors that can influence your ad targeting.
- Marketplaces. These link businesses that want to buy data with those that want to sell it. They usually source data from multiple places and provide deals for scaling. Retailers must take care that marketplaces source data ethically from businesses that have their audience’s consent.
Third-party data is any information that’s collected by a business or organization that doesn’t have a direct connection with the visitor or customer.
The benefit of third-party data is that it’s usually easy to purchase large quantities of demographic information on your target audience. It’s often more difficult and expensive to get the same quantity of demographic data through other means of data collection.
Third-party data is usually aggregated, segmented, and sold to companies to help them optimize their marketing and retargeting strategies.
The main drawback of third-party data is it’s not collected from your customers and it’s available to your competitors. So it’s debatable how useful the data is.
Third-party data examples include:
- An online plant retailer wants to advertise to consumers who live in Seattle, so it buys a list from a data company of internet users in Seattle who have shopped online for flowers or plant pots at some point. The plant store then shows Facebook ads to those users.
- A dog toy brand wants to reach a broad audience of dog owners, so it buys a list of names and email addresses from an online dog owner subscription community of owners.
How do marketers use third-party data?
Third-party data is best used as an addition to first- and second-party data. It may seem easier to collect third-party data, but it’s best not to completely rely on it. Having longer data lists doesn’t make it more relevant to your business.
Instead, it’s better to identify trends and patterns in audience behavior. Then compare findings with your third-party data, specifically analyzing respondents who fit your buyer personas.
How is third-party data collected?
Researchers use questionnaires, interviews, surveys, and feedback forms to collect information from a large audience. Like for second-party data, this information is then aggregated and segmented. Businesses can then purchase this data for their own use.
Most third-party data research is conducted on random sample sizes. It includes anyone willing to complete the survey. Although this usually means more participants, it’s hard to say whether the information will be useful or relevant to your business.
Why is first-party data important?
Since first-party data research is conducted and owned by your business, it offers deeper insights into your audience.
As it’s usually information that a business directly collects from its customers, either through tracking behavior or the business’s site or by asking customers to self-report specific information, it’s usually the most accurate data available.
Christina Martinez, CEO of Traject, says that first-party data is important because it provides marketers with accurate insights about their customers.
It is one of the most valuable kinds of data a business can gather because it comes directly from the source. First-party data gives marketers tremendous insight into what customers care about, where they need help and how they perceive your business.”
Here are nine reasons why first-party data is essential for improving marketing campaigns:
It doesn’t rely on third-party data
It’s often unclear where researchers source third-party data from. They survey large pools of consumers, and they’re reliant on internet users who feel like completing questionnaires. There’s no guarantee about how accurate or relevant the data will be to your business.
Relying on third-party data limits your business to a broad base of consumers who may or may not be interested in your products or services.
@MarketingMax, the founder of Growth Hacks Weekly, suggests third-party data can be out of date while first-party data is like an accurate roadmap of your target audience’s interests and preferences.
“First-party data is the most accurate data. Period. End of story,” he says. “Think about it like this. If you’re going to battle but have a half-drawn map of your enemy territory from 20 years ago, your chances of success are small. But if you have a map drawn yesterday from an insider, you have the most accurate map, therefore the best chance of succeeding on your mission. In other words, first-party marketing data is the accurate map.”
Unlike third-party research, first-party data comes straight from your customers and target audience, so you know it’s accurate and relevant.
Higher return on investment
In 2020, Google partnered with Boston Consulting Group (BCG) to study how brands succeed with first-party data strategies. The report found that those businesses using first-party data for key marketing functions achieved up to a 2.9 times revenue uplift and a 1.5 times increase in cost savings.
Third-party data can be helpful for prospecting new customers. But what if you’re marketing to existing customers? Or to audiences with a track record of being interested in your brand?
It’s less expensive and more profitable to retain customers than to find new ones. Returning customers spend 67% more with a brand than new customers do. So it makes sense to market to those consumers most likely to purchase from your brand and spend more while they transact.
Plus these consumers who have already interacted with and purchased from your brand have given you their first-party data. It’s often easier, more effective, and less expensive to collect first-party data from your existing customer base.
Customers actively share first-party data with businesses. There are no murky usage terms, and consumers know what information you have about them. Since customers are increasingly concerned about who has their data and how they use it, this level of consent is important.
When consumers interact with your brand, they choose exactly how much personal information they want to share. This builds consumer trust, as they don’t need to worry you’ve got too much information about them.
Aleksandra Korczynska, CMO at GetResponse, says that letting people choose to share as much or little information with your brand helps strengthen relationships—both customers and brands know where they stand. Neither side has to worry about oversharing or infringing on privacy.
“The main benefit of first-party data is that your target audience shares this information with you,” she says.
You don’t have any concerns about permission to use this data, as people agree to receive communications from you straight away. This group of people is more likely to buy from the brand than those who you would target by PPC, for example.”
Boosts brand loyalty
While second- and third-party brands must get consent from consumers to share their data, people aren’t explicitly choosing to share their data with your brand. First-party data collects data from people who’ve given your brand their direct consent.
When consumers choose to share first-party data with you, it’s a key sign of brand loyalty. After all, if they weren’t planning on interacting with your brand again, why would they share their data?
Joanna Penn, managing director at Armadillo, says that first-party data helps develop existing customer relationships.
“Giving their first-party data to you means a customer has chosen to have a relationship with you and, as with any relationship, the more valuable it is, the more connected you are and the more information they are happy to provide. This relationship should be mutually valuable.”
Owning customer data
Investing in first-party data means your brand is independent of other data providers and sources. Unlike third-party data that’s usually available to anyone who wants to buy it, first-party data is unique to your business. It’s data you own and gather from consumers with their direct consent.
There’s also the added benefit that first-party data can’t be taken away from you like third-party data can.
Marketing consultant Claire Jarret explains that owning customer data reduces the risk of losing it.
“A huge benefit of first-party data is that it can be moved between your social media platforms. So for example, you can upload a list of qualifying email addresses to Facebook and use it as a custom audience to target them with your ads. You could also upload the same list to Google and target them using your ads. If one of your social media accounts is closed down—it doesn’t matter, as you can simply upload it to another,” she says.
“For example: you don’t own your Facebook followers or your Instagram followers—however much you wish you did. Owing first-part data removes this risk entirely. The only data that is reliable is first-party data. You will never lose it, and therefore it makes sense to invest into it.”
She adds that once you own this data, it’s then yours to move between marketing channels—something that not all second- or third-party data allows you to do.
Deeper and more meaningful customer insights
When used wisely, first-party data helps brands build direct relationships with their customers, generate value, and improve their marketing performance.
Daniel McCarthy, an assistant professor of marketing at Emory University’s Goizueta Business School, says first-party data can help improve your interactions with top customers.
“Businesses do better when they have more valuable customers, and first-party—especially the granular transactional data—is the go-to data source for assessing those valuations,” he says. “Third-party data is noisy and does not do a good job of separating out your good customers from your bad ones.”
First-party data lets you see real purchase history and customer behavior. It’s based on consumers as individuals and how they interact with your brand and not the world at large.
As a 2021 Merkle Customer Engagement Report on Data-Driven Conversations in the Cookieless World explains, marketers don’t need to second guess their customers’ preferences with first-party data. Plus, when customers recognize that their data may improve their experience, they’re even more likely to provide their data. In fact, 38% of consumers say they’re OK with any brand using their personal information to deliver relevant content and offers.
“Marketers don’t have to infer customer preferences or behavior through secondary behavior but are instead explicitly told, straight from the source. The best zero-party data is when the customers trust the brand and are willing to volunteer their data with the understanding that it will improve their experience,” reads the report.
Helps predict future purchasing behavior
Since first-party data is relevant and accurate, you can predict future purchasing behavior. For example, if you notice that one of your site visitors has browsed hiking boots and placed a pair in their shopping cart, you can predict they’re interesting in buying a pair.
Using that first-party data you can personalize ads for these boots and related products to encourage them to buy them.
Helps personalize content for more accurate targeting campaigns
First-party data lets you personalize content on a more granular level. Instead of targeting demographics that may be interested in your product, you target those that have a proven interest.
For example, first-party data lets you suggest recommended products based on a customer’s previous browsing or purchasing history.
Complies with consumer expectations and regulations
The rise of privacy regulations is a big driver of first-party data initiatives, with 52% of brands prioritizing the collection of more first-party data from digital experiences due to regulations.
And only a few months before, Brazil began issuing penalties to violators of the country’s General Data Protection Law. California’s Consumer Privacy Act put data transparency into state law immediately before the pandemic, and the European Union’s General Data Protection Regulation (GDPR) has cost some businesses dearly in fines since its institution in 2018.
Apple, Firefox, and Brave already automatically block third-party cookies. Google Chrome, representing over 60% of the search engine market share, announced in July 2021 that it will delay third-party cookie blocking until late 2023.
While consumers continue to demand personalized shopping experiences, they’re becoming more suspicious about how businesses use their data. According to research done by Adobe (image source below), using data disrespecting consumers’ data preferences will cause 68% of customers to stop purchasing.
Daniel McCarthy agrees that first-party data will only become more important as brands phase out third-party providers.
As data privacy becomes more and more of a hot button issue, third-party data will only get worse. First-party data is clean, is generally immune from data privacy repercussions, and provides a clear line of sight to how people are actually opening up their pocketbooks and spending their money.”
Sources of first-party data: How to collect first-party data
Our research shows that 42% of brands plan to offer their customers personalized product recommendations through tools like quizzes and custom mobile apps, and by using first-party or third-party behavioral data.
Brands should aim to collect first-party data using a variety of methods. Doing so will give you a more thorough dataset of customer habits and preferences.
Equally, it’s important to respect customers’ privacy and how they want their data to be used.
Joanna Penn, managing director at Armadillo, recommends a thoughtful approach that helps customers get some value too.
“First-party data can be collected in many ways, but the important thing to remember is that value exchange is important: only collect what you need, and be clear on what the customer benefit is from giving you their data, how you will use it responsibly, and how what you collect can be changed when they want to.”
Consider how you can make it easy and convenient for customers to share their data and insights with your brand. Doing so will help you gather more information to use.
Here are nine ways to collect first-party data:
Quizzes can help ecommerce brands get hold of unique customer information, like their skin care routine, which you could never get through cookies, and provide personalized product recommendations.
They’re based on value exchange—when a customer shares this type of information with you, they expect something in return.
Product finder quizzes are effective examples of this. When you’re shopping for a new moisturizer you may take a quiz on a brand’s website to find one suited to your skin type. You’re giving that brand information about your skin care routine and lifestyle with the expectation you’ll get something in return—in this case a personalized recommendation that will save you spending time browsing the site.
@MarketingMax suggests offering a reward to people who complete the quiz.
“Whether it’s a ‘product recommendation’ quiz or an ‘apply to win’ quiz … if you offer something in exchange for the data, people will be more focused on what you are offering than the fact they are giving you all their info,” he says.
“I always recommend that my ecommerce clients have a product recommendation quiz and at the end that says, ‘This is the perfect product for you, put your email below and we’ll give you 10% off,’ because it works like a charm!”
DTC brand Dollar Shave Club’s grooming quiz is one of the better product recommendation quizzes out there. It takes less than a minute to evaluate your grooming habits, recommend a subscription plan, and list out the products so you can scale them up or down as needed.
It explains why each product is recommended and its purpose. For the brand, the quiz likely increases customer AOV. But there are also benefits for the customer: they get free product recommendations without needing to provide a name, email address, or profile.
These quizzes are great for building customer trust too. Since they’re personalized, the customer can trust that they’ve found the right product for them. It’s comparable to a scaled back, digital version of the helpful woman at the beauty counter in the department store.
Customers who interact with your brand enough to want to join a loyalty program are some of your most engaged customers.
Initially, most brands collect first-party data during registration. Brands should keep this registration short and sweet—you don’t want impatient customers to lose interest. While you should receive the basics, like the customer’s name, email, and location, that’s not really enough valuable data.
The best way to encourage customers to share more data is to offer them perks or bonuses when they fully complete their profile.
For example, DTC menswear brand Mizzen + Main has a loyalty program that gives customers points for purchasing items, filling out quizzes, and completing their personal profiles.
The brand provides a table of rewards so customers can see what they can get in exchange for points.
Customer feedback in the form of surveys, questionnaires, and reviews shows you what your brand is doing well and where there’s room for improvement. This first-party data lets you collect ultra-relevant insights while showing customers you care about their experience.
Christina Martinez, CEO at Traject, explains that asking for this type of first-party data can help you build more authentic relationships with existing customers and encourage new ones to shop with you.
Both surveys and reviews give you an understanding of how satisfied customers are with your business—reviews, in particular, are a great way to gain trust with potential new customers.”
Customers are often willing to offer their honest opinion if they believe the brand will take their feedback on board and make improvements. Gathering survey results is a win-win for your brand—you gain a deeper understanding of how consumers are currently interacting with your business and how they’d like to transact in the future.
App users are some of a brand’s most keen customers, since they made the extra effort to download the app. Marketers can collect first-party data on app usage and behavior to gain a deeper understanding of how their brand’s audience interacts with the brand via the app.
For example, using app analytics tools, marketers could see whether people use the app to browse and later purchase products. Or alternatively, if they use the app for inspiration, education, or another activity.
DTC sportswear brand Nike has an app to encourage its audience to access exclusive community benefits, browse and shop products more easily, and help them reach their lifestyle and sports goals. The brand also has training and running apps to help its audience get active.
By studying the app’s analytics, Nike could gain a deeper understanding of its customers’ behavior. Are they coming to Nike to reach their sports goals? Or are they shopping with the brand to buy stylish athleisure garments? Knowing this, the retailer can tailor its marketing campaigns to each segment.
With the use of some website analytics tools, you can track user behavior like when visitors hover over specific images or text.
Identify which web pages they visit most and what they’re using your site search bar to look for. Tracking web behavior is also essential for optimizing your site.
Christina Martinez, CEO at Traject, says that as well as understanding visitors, tracking user behavior is key to boosting conversions.
“Use website analytics software to track user behavior on any web property you own. Tracking online behavior will give retail businesses insight into what kinds of products customers gravitate toward. Most importantly, businesses will be able to uncover ways to optimize the online checkout process to generate more revenue through online sales channels.”
Using website analytics tools, underwear brand Heist sends out personalized abandoned basket reminders to encourage visitors to convert. This personalization tactic is specially effective with the use of images, instantly reminding customers about the objects in their shopping cart.
Text messaging is an intimate form of communication. Phone numbers are identity markers, which is helpful to brands as they build out consumer profiles.
Plus, since phone numbers are so closely connected to our identities, people are more selective about which brands they share their number with, as compared to email.
Customers who let brands interact with them via SMS show a high level of interest. Following SMS marketing campaigns, measure how and why customers engage with your brand.
For example, if you’re encouraging subscribers to purchase by sending them offers and perks, analyze who is converting and why. Once they purchase a product, you’ll have a better idea of their preferences helping you tailor future communications.
Cross-promote other marketing channels like rewards programs and social media to see which customers are most receptive to engaging with your brand.
To get customers’ phone numbers in the first place, remember to find a way of exchanging value for the data.
DTC cookware brand Great Jones gives customers value by offering free recipe suggestions in exchange for their number. It promises to help customers solve the age-old problem of what to cook for dinner.
Email campaigns provide data like open rates, click rates, and bounce rates. Digging deeper into the finer data on who is opening your emails, who is clicking through, or whose interest is waning.
Personalized DTC hair care brand Prose segments its emails according to its subscribers’ hair type so it can promote relevant products.
Following the email campaign, Prose could then evaluate which subscribers are most engaged and follow up with purchase reminders. For less engaged subscribers, the brand could try and gather more first-party data to better understand their preferences.
Don’t forget about your offline data—your CRM or POS system can sometimes be a brand’s best source of first-party data. In particular, it’s useful for targeting your best customers. By knowing a shopper’s purchase history, you can provide more personalized experiences and product recommendations.
This first-party data is also helpful for analyzing what’s selling and where.
For this first-party data collection method to be efficient, it’s vital to centralize your POS data and website data in one place. That way when it comes to analzying patterns and trends you can clearly see everything at once.
The best ecommerce platforms let you connect your CRM and ERP to your workflows. Shopify Plus allows you to plug in all the tools and systems you already use so you can view performance analytics and manage automation flows across your business.
Customer service interactions
Brands often invest in automation, customer service systems, and team member training. But they forget that customer service interactions are valuable sources of first-party data. Customers usually contact support to track orders, start an account, or complain about a problem.
This data is valuable for better understanding customer needs, priorities, and preferences. It can help define customer profiles and identify where to focus your campaigns.
How to use first-party data: 8 first-party data use cases
Despite the clear benefits of first-party data, most brands aren’t yet using it to its full potential.
Along with improving marketing performance and providing insights into the full buying journey, there are many other use cases for first party-data. Once you’ve invested time, budget, and resources into collecting valuable first-party data, make it work hard for your brand.
Here are eight ways to use first-party data:
Optimize campaign targeting
A campaign that speaks to everyone, speaks to no one. Brands need to strike the balance between targeting campaigns to the right audience without infringing on privacy.
As privacy concerns increase, brands must shift away from relying on third-party cookies to influence their targeting. To better target their audience at the right time, brands should focus on strategies that harness their own first-party data. Doing so helps you identify real people across marketing channels and devices.
@MarketingMax, of Growth Hacks Weekly, explains that reliable first-party data makes it easier to build effective campaigns that reach your target audience.
“The more data you have on your target customers, the easier it is for Facebook ads to find them in a custom audience, which can be super effective,” he says.
You can also customize emails to them leading to higher open rates, click rates, and of course, conversion rates. Think happy birthday emails or if you know someone is a football fan you can send them a discount code around the super bowl…the list goes on and on.”
Manly Bands, a line of rings that uses high-quality, non-traditional materials like dino bone, meteorite, and deer antler, asks for the wedding date when customers purchase one of their rings. That way, the company can send a personalized congratulations email every year.
Accurate targeting means more of your ideal audience sees and interacts with your brand’s campaigns, generating higher revenue and ROI.
Shopping cart abandonment currently sits at around 70%, causing ecommerce stores to lose an estimated $18 billion in sales revenue. If retailers could reclaim even a fraction of that figure, it would represent a huge revenue boost.
But first-party data can help you bridge the gap and encourage consumers to re-engage with your offering.
Christina Martinez, CEO at Traject, explains that first-party data shows you who is on the fence and may need a reminder or an incentive to re-engage.
“Use the data you’ve collected about user behavior on your site to re-engage customers,” she says. “For example, if customers viewed a set of products but did not check out, consider reminding them to return to your site to complete the purchase or offer them a discount code.”
Clothing brand Alex Mill uses data to identify a consumer’s recently abandoned items. It then sends a targeted email as an opportunity to remind the shopper of the items in their cart. It also provides an incentive to encourage consumers who are on the fence to convert.
Use first-party review data to increase trust
First-party data in the form of customer reviews is a valuable source of social proof.
Since nearly 70% of online shoppers typically read between one and six customer reviews before making a purchasing decision, it’s worth collecting them and using them to attract new shoppers.
Martinez agrees that featuring first-party reviews is a great way of developing relationships with new customers.
“Another powerful way to use first-party review data is to turn a great review into a customer testimonial for your marketing materials,” she says. “Many retailers use testimonials on their websites and in social media marketing campaigns. A direct testimonial is one of the most effective ways to start building a relationship with someone who has not yet purchased from your business.”
Improve campaign relevance
First-party data is the most accurate and up-to-date information you have on your customers. Use these insights to personalize your messaging and shape the customer experience to match their preferences.
Based on the data you have on customer behavior, you can create relevant brand experiences tailored to preferences, interests, purchase history, and location.
Outline the customer journey
To pull customers back onto the road to purchase, you’ll need to know the ins and outs of your customer journey.
By analyzing and integrating first-party data from all your sources, you can identify the different steps shoppers take before buying your products.
This will help you send out tailored messages at the right time to encourage customers to engage with your brand. You can then make changes to your existing customer journey strategy based on how they engage. This validation is an ongoing process and should be revisited often as more FPD is collected.
First-party data highlights which elements of your marketing campaigns and messaging are most successful in achieving conversion.
Based on these insights, you can better analyze attribution and evaluate how budget changes impact online interactions and physical store sales.
Improved omnichannel measurement
Nearly all retail brands embrace omnichannel marketing strategies. But with multiple touchpoints to evaluate, it can be challenging to join up the dots. How do you evaluate each channel’s influence on your customer’s journey to purchase?
By connecting your first-party data from all channels, you can see how a customer moved from a Facebook ad to your website before buying the product in-store.
With a full view of the omnichannel strategy, you can segment and optimize campaigns for different audiences and guide behaviors that result in conversion.
Create accurate customer profiles
Every customer is represented by several anonymous online profiles. These profiles gather data as a customer engages with a brand offline and digitally across:
- The brand’s website
- Social media
- Email campaigns
- Customer support chat
- Physical stores
Instead of isolating these data points, merge and aggregate them to build complete customer profiles. When you merge these profiles into a single customer view, it’s easier to understand what motivates customers to take action across different channels and devices.
First-party data pitfalls
Before you dive into collecting first-party data, consider the pitfalls so you stand the best chance of gathering useful data and turning it into successful marketing campaigns.
Here are the top four first-party pitfalls marketers fall into:
Gathering surface-level data
The whole aim of collecting first-party data is to collect deeper insights into your audience you wouldn’t know otherwise. So don’t just stop at their name and address.
@MarketingMax says that brands need to prioritize asking the right questions.
“I think most brands think first-party data is just name and email,” he says. “In the right context, you can ask for anything! Shirt size, how many siblings they have, birthdays, if they speak other languages, hobbies, how many followers they might have on any given platform.
“The more data you have on a customer or potential customer, the easier it is to build brand affinity and really connect with your audience to drive more revenue.”
Lack of a plan
Gathering and then using first-party data requires a plan. Without it, marketers may find they have piles of data they don’t know what to do with. Your data management plan needs to cover everything from which data to collect along with how to analyze and activate it.
Start by setting goals around customer experience and ad campaign revenue.
For example, let’s say you want to improve average order value and make it easier for customers to find the products they’re looking for. Based on this goal, you could invest in quizzes and website data trackers that identify customer preferences. Then you could use the first-party data to suggest relevant product bundles to customers—improving their search experience on your site and encouraging them to purchase more.
Identifying goals sets up your brand to collect relevant customer data without overwhelming them. A solid plan allows you to make the most of your data points.
Not using the data properly
Collecting first-party data is the easy part—but how are you meant to maximize its use? This step can be more challenging for brands.
Joanna Penn, of Armadillo, explains that not correctly using the data your brand worked so hard to collect is a missed chance to connect with customers.
“The main problem is retailers collecting a wealth of data on an individual and then not using it to personalize their experience; it’s a wasted opportunity to show me you know and value me as a customer,” she says.
“First-party data collected and applied correctly can help your brand stand out amongst the mega brands. No matter if you are a smaller independent, once you have that customer and their permission you can have a proper 1-2-1 relationship, extending your brand’s personality through communications and conversation.”
Once you’ve collected, you’ve got to strike when the iron is hot—when your data is fresh and most relevant. Instead of letting it sit on a database for months before deciding what to do with it, use it to influence your customer experience and advertising strategies right away. If in doubt about using data, remember that 44% of consumers say they’re OK with brands they like using their personal information to deliver relevant content and offers.
Using first-party data off the bat will show customers you pay attention to their preferences and habits.
Not building trust with customers
People want clarity on how their personal data is used by brands. Brands need to win consumers’ trust by demonstrating they’re responsible with data. You also need to show customers they’ll get more value from your brand by sharing information.
When building trust it’s vital to respect people’s privacy. Adhere to data privacy laws and consider what data you actually need for your marketing efforts. There’s no point asking someone’s shoe size if you sell hair products. Going overboard in your data requests may have the adverse effect of coming across as creepy.
Aleksandra Korczynska, CMO at GetResponse, says that asking for too much from shoppers may cause them to leave: “The main mistake is asking for too much data from your customer. That’s one of the popular reasons for card abandonments.”
While you’re planning your first-party data strategy, ask yourself, “Have we made it clear to customers what the benefits of sharing their data with us are?”
Proper consent management is also vital—not only because it’s the law, but also to build customers’ trust that you have their best interests in mind. Online stores must prioritize including consent forms on their website or app.
Build consumer trust by implementing solid data governance policies. By managing data effectively and following policies designed to keep it safe, you can prevent breaches, while enhancing data accuracy and usability.
Find your next best customer with Shopify Audiences
Consumers expect personalization from brands. But while they want brands to know them and treat them as an individual, they’re more privacy conscious than ever. In the near cookieless future, brands who stand out will be those who know how to leverage first-party data to personalize customer experience.
To help you identify high-intent buyers, improve paid ad performance, and lower conversion costs, try using Shopify Audiences. The shared audience network can help you generate potential customers in just a few clicks.