Why zero party data is the new secret weapon for brands

Customers love personalized promotions — but are increasingly scared of sharing data with third parties. A recent consumer privacy survey by Cisco demonstrates that nearly half of the respondents have switched companies or providers over their data policies or data sharing practices. 

A Google survey found similar results, showing that 48 percent of people worldwide halted their interaction with a company due to privacy concerns from 2019 to 2020.

With this ‘ick’ factor as a real risk, how do you enable consumers to share their data willingly and voluntarily?

Zero party data.  

And an effective way to get zero party data is using loyalty programs. 

Successful brands like Ulta Beauty turn zero party data derived from their loyalty programs into a key success factor – in Ulta’s case 95% of sales are to loyalty members, giving them a competitive edge. 

In this blog post, we will see what zero party data is, how it’s different from other types of customer data, and how loyalty programs help businesses capture valuable zero party data.

Zero party data is defined as the information that a customer intentionally and proactively shares with a business. 

You can use website forms, polls, and surveys, to collect zero party data. Most companies, however, try to incentivize the process, offering a reward like a discount code in return for the data they receive from their customers. 

One of the most popular pieces of zero party data among businesses is a valid customer email address which can be used for email marketing purposes. To ensure that you get quality zero party data (here, a valid email address), you can use something like a double opt-in. 

In this method, you rely on the user clicking a confirmation link in their email, to confirm that they are a real person and wish to receive marketing communications. To help improve your conversion rates, you can send an email containing an offer with a coupon code that gets redeemed when your customer confirms their email, or offer loyalty points for confirming their email. Using this method, you verify the validity of your data and at the same time promote your offering.

Such validation checks help you acquire accurate and reliable information that increases your customer engagement and reduces your customer acquisition costs.

Zaro party data is sometimes used as a synonym for ‘first party data.’ However, they’re not technically the same. 

Zero party data is the info that customers voluntarily share with a business. First party data is the behavioral info that brands track and collect as customers interact with their app, website, or social media platforms. Businesses usually use on-site tracking or product analytics to help them determine what engages website/app visitors the most. Such first party data gives them the ability to provide tailored experiences to customers.

The most important difference between zero party and first party data is that the former is more accurate because customers themselves explicitly express their preferences. This means every piece of zero party data is already a customer insight. First party data, however, needs to be analyzed to deliver customer insights. 

Think about it this way — if someone is browsing for a vacuum cleaner, you can serve them more recommendations for vacuum cleaners. But vacuum cleaners are not everyday purchases, you only buy one every few years. 

Without the correct analysis, you could be serving ads for vacuum cleaners to someone who just bought a vacuum cleaner and won’t be ready to buy again for 36 months. But if you ask them in a survey, “do you have pets?” or “how big is your house?” you can suggest ancillary or complementary products that will be useful and appreciated by your user. 

What zero party and first party data have in common is that they are less likely to raise privacy concerns among users. Unlike these two types of data, third party data gives customers minimal control over their personal data. Third party data is the information that your business gets from outside sources.

EU’s General Data Protection Regulation (GDPR) as well as other initiatives such as Apple’s iOS privacy updates have nudged marketers toward minimizing their reliance on third party data. 

For example, imagine you want to promote your new product, running shoes, to three customers (A, B, and C) using zero party, first party, and third party data collection methods respectively.

As this example shows, Customer A has full control over the data they share with you. Customer C, however, may be surprised or even angry to find out that their browning history has been tracked.

Although the use of third party data won’t stop overnight, many businesses have already started to realize the positive impact of zero party data on creating sustainable interactions with consumers. That’s why Forbes refers to zero party data as The New Oil. 

Zero party data is gaining popularity among businesses because:

Businesses are finding that the best way to get consumer data is to simply ask for it. The method you use to ask for it, however, defines your success rate. Some of the common ways to collect zero party data are:

All these methods are very effective in helping you collect zero party customer data. There’s yet a more comprehensive way to collect and leverage zero party data to build lasting relationships with your customers – loyalty programs.

If you have a loyalty program, you’re sitting on a gold mine of zero party data. You can use your loyalty scheme as a platform to get customers’ data in exchange for the value you create for them.

According to Statista, the global loyalty market is worth nearly 6 billion U.S. dollars in 2022, projected to surpass 24 billion U.S. dollars by the end of 2029.

Businesses have realized the importance of this thriving market, adding effective loyalty programs to their promotion marketing efforts. 

In today’s inflationary environment, loyalty programs find more importance because consumers are more likely to share insights with brands in exchange for valuable incentives and rewards that alleviate the pain of rising prices.

Loyalty programs are valuable tools for collecting zero party data because they incentivize customers’ actions during every step of their journey:

Zero party data is the new secret weapon for brands because it helps them build meaningful relationships with customers based on trust and respect for privacy. 

Loyalty programs are golden tools for collecting zero party data because: