What is zero party data? (and how it can improve your CX)

Privacy is one of the biggest concerns for internet users today. 79% of Americans are concerned about companies infringing on their privacy online, and 81% feel they have very little control over how their data is gathered and used. You only have to look at the huge growth in the usage of VPNs (Virtual Private Networks), Google’s planned phase out of third party cookies, and big iOS privacy updates, the message is clear - users want to take control of their data. 

And yet, personalization is one of the most important factors in customer experience. 80% of frequent customers only shop with brands who personalize the experience, and 91% are more likely to shop with brands that tailor recommendations. However in order to personalize an experience…you need data on that customer. 

So, in a world where users want both privacy and personalization, how can merchants deliver on those expectations? Let’s talk about “zero party data”.

What is zero-party data?

Zero Party Data is personal information which your customers actively and knowingly give to your business. That data may be collected through quizzes and questionnaires, feedback, reviews, forms, and so on. The kind of information includes demographics, shopping preferences, tastes and habits, personal info, and so on.

To really understand the difference between zero party data and other types of data collection, let’s take a look at what else is typically used by ecommerce businesses:

Zero party data - As we’ve already discussed, it’s data your customers give to you knowingly. They know you’ve got this data as they provided it to you.

First party data - This is data you usually gather through your ecommerce platform about your customers. That includes their orders and what they order, browsing habits, downloads, and even things like abandoned cart contents.  It may also be gathered from other platforms, for example email and SMS engagement. It’s data your customers are aware you likely gather, and it’s a direct relationship.

Second party data - This is first party data from another brand which you pay for access and permission to use. This is where data sharing starts to get concerning for customers - you don’t own that relationship, and the data didn’t come from your own sources.

Third party data - Lastly, this is where first party data is gathered from a number of different sources and collected. Unlike with second party data, you’re buying access to third party data from an aggregator not the original source. The data might be the sites someone visits, content they interact with, and so on. 

Third party data is the most concerning type of data for online users. No one likes to think their data is being aggregated and sold on to whoever is willing to buy it. That’s what leads to inauthentic experiences, and customers feeling like they’re being spied on. Ever heard those anecdotes of someone speaking about a product only to mysteriously see adverts online later that day? These are the kind of experiences you want to avoid!

The further away you get from zero party data, the more a customer feels their data is being misused and the less connected they are to your brand. 

Now let’s talk about how to use zero party data to optimize your customer experience.

How zero-party data improves your customer experience

The difference between zero party and first party data in customer experience is that zero party is going to allow you to offer truly meaningful personalization throughout the customer journey. It isn’t just based on what products they ordered or looked at, it’s about their true preferences and opinions.

However to start using zero party data, you first have to collect it. This can be done in a number of ways that will blend seamlessly into the rest of your customer experience and even enhance it. 

  • Create a quiz-flow
    One sure-fire way to understand individual customers is through a quiz-flow. Ask them their product preferences, habits, and more, to gain rich zero party data you can then use to customize their experience. For example if you sell skincare products, the quiz may ask their skin concerns and the kind of scents they prefer. You can then show them product recommendations based on quiz answers, and have data to use throughout their experience.

  • Ask for feedback after every order
    Just because you recommend a product, doesn’t mean the customer is always 100% happy with it. After every order, ask for their feedback on the products in their order. Be sure to let them know that you’re gathering this feedback so you can better tailor the products you recommend and content you send them.

  • Allow customers to tailor their preferences through an account
    Customers will only create an account with your store if they see it has benefits beyond just auto-filling details. One big benefit you can offer is the ability to tailor their preferences across different areas - product recommendations, content, email and SMS communication, etc.

  • Ask email and SMS preferences up-front
    As soon as a customer signs up to receive email and SMS, do as much as you can to understand the kind of content they want to receive. Do they want to sign up for both email and SMS, or just email? Do they want to receive all content or just offers/promotions? Do they want to know just about recommended products, or all your products?

  • Add optional pop-ups to your site that gather info
    If you want to better understand what product categories your customers want to know more about, just ask them! For example if you sell apparel for running, yoga, and swimming, you could add a site pop-up that asks which activity they’re shopping for then show them products related to that activity.  

Once collected, you can leverage this data to improve personalization across different areas of your store:

  • Email and SMS
    Send customers the kind of content they actually want to engage with. Through quiz-flows you can better understand what products they want to know about as they’re released, versus those that are irrelevant. And through asking email and SMS preferences up-front, you’ll know which platform they prefer to receive information.

  • Product recommendations
    It’s a waste of time to try and promote a product to a customer when they have little to no interest in purchasing it. Use your zero party data to only show product recommendations they will actually be interested in. To use a previous example, if they tell you they’re shopping for swimming apparel, you can prioritize swimming products while still making it clear and easy how to view your other apparel.
  • Subscription boxes/recurring payments
    Customer preferences and needs change all the time. Checking in with customers using quizzes and feedback requests allows you to use that data to suggest changes to their subscription plan. If they provide slightly negative feedback on a particular product, use that to suggest alternative products based on other customers with similar preferences. 

It’s important that you also consider this data within the wider context of your store and the data you have access to. Zero party data along with first party data is ultimately the best understanding you can get of your customers, and this in turn will allow you to build a better experience for future customers. First party can tell you about a customer’s habits on your store, and zero party data will tell you their precise preferences. The two combined is a powerful strategy that will deliver that meaningful personalization your customers will love, without compromising their privacy.

The expectation from customers these days is that brands will both provide personalized experiences, and protect their privacy. And they’re more than willing to help brands do that - 83% are likely to share their data with brands if it creates a more personalized experience. If you’re clear in your intentions of gathering data, and use it to deliver a great experience, customers will not only be happy to share their data with you but will become loyal to your brand for years to come.