How to use first-party and zero-party data to improve CX

Data drives your online business. You look at forecasting data to buy the right amount of inventory, you analyze site performance data to optimize your on-site experience, and you use all different data sources to understand your customers and give them the products and experience they want. Data is at the heart of ecommerce, but the way store owners acquire and use it is changing. 

Consumers don’t want to feel like they’re being tracked everywhere online. When they go to read an article and suddenly see an advert for a product they browsed on a different site, it makes them feel like the brand is following them. 79% of Americans are concerned about how companies collect and use their data, and 81% feel like they don’t have control over their data. 

With growing privacy concerns and the imminent phasing-out of third party cookies, what can merchants do to ensure they still have that valuable data they need to build the best experience for customers?

Why you need to start using owned data

We know customers want greater privacy, and more control over who uses their data. However, they also want more personalized experiences when shopping online. With so many options available to them, they want to feel like the brands they choose to shop with understand their preferences and can deliver an experience that takes these into consideration. 66% of consumers expect brands to understand their needs, and 59% who have experienced personalization say they feel it influences their purchasing decisions. 

Moreover, brands who don’t deliver on personalization will start to miss out on acquisition and retention. Customers don’t like to feel like they’re being tracked, but equally they don’t like to be bombarded with irrelevant content and products. 71% say they’re frustrated by impersonal shopping experiences, with that lack of personalization resulting in 66% to abandon a purchase.

So, how do you deliver on both? Owned data.

As it sounds, owned data is that which your business has gathered and owns outright. Compare this to third party data, which is gathered from a number of different sources then aggregated by another and is purchased by a variety of companies. If you use third party data, you don’t own it - you didn’t gather it. Two types of owned data which we typically look at are first party data, and zero party data.

What is First-party and Zero-party data?

First party data is that which you gather about your customers using your own platforms. This usually means your ecommerce platform, along with other “owned” platforms like email and SMS, loyalty programs, and so on. The kind of data you’ll usually gather includes browsing habits while on your site, order information, personal details, demographics, engagement rates and so on. The customer has passively provided this data, and there’s a reasonable expectation that you have access to it and will use it throughout their experience browsing your store.

Zero party data is that which your customers explicitly give to you and give permission to use. You might gather this using contact forms, surveys, quiz flows, reviews, feedback forms, ratings, etc. You’ll usually get more accurate demographic information than with gathering first party data, plus specific preferences, opinions, and more. The customer has actively given you this data, with the expectation that you’re using it to improve and personalize their experience.

Using both, you’ll be able to really tailor the experience your customers get when they browse and purchase. They know you have this data, and they’re happy for you to use it - 83% say they’d share data with a brand for a better experience, and 64% say they’re happy for brands to use purchasing data to improve personalization. By prioritizing a first-and-zero-party-first strategy, you get that rich data you need to build your customer experience, while also respecting the privacy of your customers. 

How to use first-party and zero-party data to improve CX

1 - Use email marketing & SMS more effectively

Where better to use owned data than your owned marketing platforms? Email and SMS are two of the most effective channels for you to engage your customers in a meaningful way, so personalizing the approach to both will make your strategy here even more effective. Using first and zero party data, you can not only tailor the type of emails and SMS your customers receive, but also the content and messaging that will speak directly to each individual customer. 

Here are a few ways you can use first and zero party data to improve your email and SMS marketing:

    • Use engagement data to only send the kind of email and SMS subscribers actually engage with. Do they usually open information about a sale, but never open newsletters? You can use that data to segment them so they receive newsletters less frequently or not at all.

    • Ask customers about email preferences as soon as they sign up. Do they want to know more about a specific category of product? What promotions interest them most? You can create a quick response form that allows them to customize the kind of content they get from your brand.

    • Send product information through SMS to check-in post-purchase. Did a customer buy a new product that may require a bit of extra advice? Send them a quick SMS asking how it’s going and if they need any additional help. 

2 - Deliver better, tailored product recommendations 

The more you know about your customers, the better the product recommendations you can offer. Especially if you have lots of products, very specific categories, or specialist products, customers will appreciate the extra touch of personalized service if you can recommend the products they’ll like the most. That may be recognizing that they only ever buy from one category, so only showing recommendations from that category. Or if they prefer specific styles or product types, which can often be the case with product verticals like beauty, health, and food and beverage. 

To offer these recommendations, you want to use a combination of browsing data, purchase history, and preferences. Your first party data will be able to tell you the products a customer has looked at, which they’ve already bought, and any patterns or habits. They may order a specific type of product frequently, so you can recommend complementary products or tell them about new products in that category. 

To gather that added value layer of zero party data, create a quiz flow as part of the customer onboarding experience that will ask them their likes, dislikes, and preferences. You can then use these to get really specific with product recommendations. Say you sell flavored coffee, and you have a customer who always buys salted caramel coffee. However in their quiz flow, they said they also like chocolate and berry flavors - you can then use that to suggest new products to try or even send them a sample. This will improve their experience, and that sample may be the ticket to retention.

3 - Improve your customer support experience

Customer support is a crucial part of the overall customer experience, and delivering excellent support is the key to retention for many customers. 58% of American consumers will switch companies due to poor customer service, but 89% are likely to do business again after a positive support experience. What first and zero party data will allow your team to do is to better understand each customer who contacts them, and deliver a more personalized experience that demonstrates care and attention.

First party data will allow you to see their personal details, what they ordered, dispatch information, previous order history, and previous interactions with your support team. Your support team will then have all the information they need to come to a swift resolution for the customer, rather than expecting the customer to provide all the information when you already have access to it. Zero party data will give your team access to any feedback they’ve left previously, such as rating previous support interactions and reviews. For example, if a customer gets in touch first party data will tell your team about their previous interactions, but zero party data will tell them how the customer felt about that interaction. This can help guide your support team in how to best engage with the customer, and reach the best resolution for that individual.

4 - Create a more engaging retention strategy

Every customer has their own unique needs and preferences when shopping with your store, so why offer every customer the same retention incentive? Having a retention strategy is important to the long-term success of any online store, and it can be seriously enriched with the use of first and zero party data. Understanding what makes different audience segments make a repeat purchase will allow you to finetune your strategy, and deliver a more personalized approach to retention. 

Let’s say for example you offer a 10% off discount code to every customer after 3 months have passed since their first order. That may work for some customers, but what about those who would prefer 15% off? Or free shipping? Or a free item? Instead of offering this blanket incentive, you can use your owned platforms to test different incentives on different customer segments. Your team can then analyze that data, and pinpoint the best incentive for each customer segment. Combine this with zero party data you have on those customers to offer tailored recommendations, and offer based incentives around their product preferences.

In a world where everyone wants more privacy, it can be tricky for merchants to know what to do to continue delivering the personalized experiences their customers are looking for. By leveraging owned data, merchants can create an engaging, personalized, and unique customer experience built for long-term retention, loyalty, and success.