Customer first-party data
Traditionally, companies would curate personalized experiences through third-party data. However, that is changing. With privacy concerns and major browsers blocking third-party cookies, retailers will, in the near future, not be able to collect and harness third-party data.
Broadly, there are three types of customer data in play.
First-party data: This is the data captured by a brand/retailer directly from the consumer with explicit consent via channels they own or can influence. For example, websites, apps, surveys, CRM, feedback, offline activations.
Second-party data: First-party data of other platforms, or walled gardens, which the brand/retailer is directly working with. For example, data from platforms like Facebook and Google.
Third-party data: This is data that is owned by various apps in content, publishing, social network, etc., where the brand/retail is not directly working with but leveraging ad networks and intermediaries, such as Google.
Of these, first-party data has a big role to play as retail brands can use it to offer personalized offers and services. According to research by a major tech company, worldwide, 36% of marketing professionals expect customer purchase history to be their most valuable source of data once third-party cookies are gone. Also, companies find first-party data gathered through sources such as chats and emails more reliable to better understand customer preferences and analyze behaviors to deliver improved customer experiences. In addition to that, customer data will also help brands create innovative advertising campaigns by stitching together data in a compelling and interesting way.
With more data and predictive analytics coming into the picture, brands also need to change their marketing models. Rather than relying solely on marketing agencies, brands now have deeper engagements with technology partners and are using analytics to learn more about customer preferences to create more intensely customer-centric strategies. Brands are taking a closer look at their customers and redesigning marketing strategies that are a closer fit.
However, acquiring customer first-party data is by itself not enough. Turning that into meaningful business results is the key to brand success. Typically, value from consumer data can be translated into the following benefits:
- Efficiency in acquiring consumer data at scale, which will reduce customer acquisition costs
- Improvement in conversion and value of order via personalization of experiences
- Driving efficiency in broader marketing spends
- Access to real-time consumer insights and preferences
While retailers also must comply with data privacy regulations, and should manage their data policy accordingly, many brands have built entire business models using deeper analytics solutions on qualitative and quantitative consumer data. With digitization of the physical shopping experience and integration of new retail and data capture technologies, retail 4.0 is now a reality. The transformation of retail is benefitting the end consumer, who now has greater control over the retail experience.
Watch out for the first two trends in the first article