A Marketer's Guide to Using First-Party Data to Drive Exceptional Customer Experiences
First-party data is information a company collects directly from its customers and owns. First-party data (also known as 1P data) is part of the mosaic of data marketers have at their disposal. It can complement, enhance, and reduce the need for other types of data. In this guide we’ll uncover why it can become a power tool for modern marketers.
What is it? First-party data is data about a company’s customers that is collected and owned by that company. Information about customers is compiled through software and systems that the company itself owns. The company can use this data (digital interactions, purchase history, behavior, preferences, etc.) to create ads, content, and experiences catering to an individual’s interests.
Example: The company can use first-party data including web or mobile app behavior, in-store or call center interactions, purchase history, and loyalty status to create a targeted ad for an individual customer.
What is it? Second-party data is first-party data from a trusted partner. This data can help a company achieve greater scale than relying on its own data alone, and because the data isn’t sold openly, it can provide greater value than third-party data, which is usually available to anyone who wants to buy it.
Example: A credit card company might get customer information from an airline, so it can target its marketing toward specific traveler needs and interests. Or a publisher might share its first-party audience data with an advertiser who wants to run ads on its site.
What is it? Unlike first-party data, third-party data usually comes not from the direct relationship between a customer and a company, but an outside source that has collected the data. Third-party data often comes from a variety of sources across the web, and this data is then aggregated, segmented, and sold to companies for their own advertising use.
Example: A ski lodge wants to advertise to skiers who live in Colorado, so it buys a list from a data company of internet users in Colorado who have shopped online for skis at some point. The ski lodge shows ads to those users.
For years, marketers have turned to third-party data sources, investing millions of dollars in data about consumers assumed to be interested in their product to enhance targeting strategies. That’s fine if prospecting is your goal. But how are you marketing to the customers you already know?
Most marketers know that it is less expensive — and more profitable — to retain customers than to find new ones. Repeat customers spend 33% more with a brand than new ones. And just one-fifth of existing customers account for 80% of future profits. What’s more, these people who have previously interacted and transacted with your brand have given you the most precious of marketing assets: first-party data.
However, many marketers lack the right technologies and data strategies to fully leverage its potential and turn to third-party resources to fill in the holes. While data from third-party sources can enhance acquisition strategies, it can’t explain a customer’s relationship with a brand and their path to purchase. Plus, there’s nothing unique to third-party data that can just as easily be sold to a competitor. And then there are the inherent issues to working with third-party data — quality, accuracy and recency, not to mention the expense.
In this age of consumer empowerment, creating the type of personalized and highly targeted experiences that drive brand loyalty and retention means being able to understand and respond to customer wants, needs and intent with 1:1 contextual relevancy. What better way than using the actual data that details every customer interaction with your brand?
First-party data is the foundation for understanding your customers because it’s based on actual interactions with your brand across the vast array of consumer touchpoints, both historical and in real time, rather than the behavior of lookalikes that occurred weeks or months ago. It’s the data that a person entrusts to you, in exchange for your superior product or service. And it’s the only data that offers the types of insights and control you need to recognize, relate and respond to your customers in more meaningful and valuable ways.
While using first-party data to market to known customers is not a new concept for retention strategies, the approach for doing so is. Thanks to the evolution of customer intelligence solutions, marketers can now integrate all of a brand’s offline and online first-party data to reach and engage actual customers wherever they are in their decision journey.
As marketers increasingly adopt customer intelligence as a strategic discipline, brands are expecting more from their first-party data, and are planning on increasing their use of first-party data in the years ahead.
Today’s consumers interact with brands across multiple devices and channels, both digital and offline. It’s a complex and fast-changing landscape, with new touchpoints constantly emerging. But the important thing isn’t the number of channels you use — it’s creating better brand experiences that delight customers and drive them back again and again.
The key benefit to all these touchpoints is that they allow brands to collect a wealth of first-party data about their customers. This proprietary data can be connected to individual profiles to resolve identity and drive a deeper understanding of how consumers behave, what they want and where they are in their buyer journeys. To make the most of this data, marketers need to think strategically about their digital interactions, as well as the offline warehouses where they store information about their customers.
The key to reaping the rewards of first-party data is getting the right data from the right sources. First-party data comes from a range of sources. Here are the likely places where you’ll find it:
Website: A company’s website can provide a wealth of data on site visitors, from names and email addresses to visitor behavior and transactions. Plus, there are additional behaviors that can be tracked (such as when users hover over text or images) for specific retargeting strategies.
Mobile apps: App users are some of a brand’s most enthusiastic supporters — after all, they made the effort to download the app. To ensure useful data is being extracted from a brand app, marketers need to define which user events are meaningful and be sure to log and measure them.
Email and SMS: Email offers data like open rates, click rates and bounce rates that date back to the beginnings of brand’s digital marketing efforts. Plus, the granular data on who is opening emails and whose interest is flagging allows marketers to segment audiences and run specific campaigns targeted to different levels of engagement. SMS data is similar: because text messaging is an intimate form of communication, customers who allow brands to engage with them via SMS show a high level of interest.
Point of sale and CRM: This offline data may be a brand’s greatest source for online targeting and activation of its best customers — particularly, the level of personalization it affords by knowing a shopper’s purchase history. This data is also very useful for measurement and analysis: brands can see what’s selling, what’s not and where.
Beacons: The next step for retailers, beacons yield new kinds of in-store and location-based customer data. Beacons offer enormous data potential, as they capture detailed aspects about a consumer’s behavior.
Call centers: Sometimes the most important customer interactions happen at call centers. They are often where new accounts are initiated and where problems surface. While a brand may have invested in automation, systems and training to improve selling and service, the rich data being produced should not be overlooked.
For many marketers, customer insights are currently limited to one channel at a time. By integrating customer data from all touchpoints, marketers can understand the entire buyer journey, not just one part of it, and improve overall marketing performance. Here are a few ways how:
To achieve true addressability and targeting efficiency, marketers need to shift away from cookie-based tactics toward strategies that leverage a brand’s own first-party data to identify real people across devices and channels. First-party data helps marketers enhance accuracy and relevancy, reduce ad waste and, ultimately, drive ROI.
By integrating and accessing first-party data from one customer identity asset, marketers can map the buyer journey, discovering the different steps that consumers take on their path to conversion as well as the order in which they take them. This, in turn, helps marketers deploy the right message at the right time and place, informing strategies to pull customers back on the road to conversion.
Each customer is represented by multiple individual, anonymous profiles as they engage with a brand offline and online across the web, mobile apps, email, brick-and-mortar stores, call centers and other touchpoints. Merging these profiles into a single customer view allows marketers to understand what inspires customers to take action across different channels, devices and platforms.
By connecting data from all channels, brands can see how a customer moved from an email to a website to a mobile app before completing the purchase in store. With a complete view of this process and its many variants, marketers can segment and optimize for different audiences and guide behaviors that lead to conversion
Insights from first-party data can be employed to influence media allocations and budgets. Understanding how each point in the customer journey affects conversion provides a more accurate way to analyze attribution and discover how budget shifts affect online engagement and in-store sales.
First-party data delivers the most accurate intelligence and inspires new ways to tailor messaging and shape the customer experience. Based on what a brand knows about its customers and their behaviors across touchpoints, marketers can design unique brand experiences customized to specific interests, preferences, location, purchase history and more.
While the case for using first-party data may seem clear, here are some of the common obstacles facing marketers who want to make better use of their customer data:
You can’t resolve your data issues in a single afternoon. You have to create a strategy first, and that means knowing what sources you have, what you’re collecting, and mapping it across the customer journey as you understand it. Your strategy will guide the process, and it has to be customized for the touchpoints that are relevant to your brand.
Integration is hard. A lot of your customer engagement data lives in the fragmented silos of your third-party technology partners. Even though these partners have gathered the data on your behalf, getting it all together in one place can be difficult. But it’s yours, and you need it to make things happen. Pulling your data out from these silos and into one place will help you understand the big picture of the data you have, and the outlines of your customer profiles will begin to take shape. To pull all of your channel data together, you’ll need purpose-built tools.
Due to the range of channels in which your customers engage with your brand, your customer data exists in multiple profiles across your various platforms. To unlock the potential of first-party data, these multiple profiles need to be merged into a single view of each customer. This single customer view makes it easier to send the right message at the right time, without wasting marketing dollars or overwhelming the customer.
The value of data decays quickly. A first-party network must be able to distribute data to your internal and external media execution partners in order to take advantage of what you know about each customer, before the window of opportunity closes.
The path to getting more from your first-party data is clear. But being able to collect and react to first-party data about your customers wherever they are on their consumer journey is also a significant undertaking. Here are four key steps for taking your first-party data to the next level.
First-party data is the foundation for a larger, omnichannel marketing strategy that can help brands achieve lower-funnel objectives, such as customer loyalty, retention and upselling. Define your marketing and customer experience goals and objectives, the tactics and analytics required to execute on the strategy, and create a roadmap for how your cross-channel marketing capabilities will develop over time. Break down the long-term effort into smaller projects that show incremental ROI at each stage.
Audit your data sources to identify what data is being generated and how it’s being measured. Cross-reference your data sources and data points with the data requirements of the marketing and analytics use cases you plan to execute and make sure you collect the data that’s important to your objectives.
First-party data is critical for creating personal and meaningful customer experiences in any given context. Integrate offline and online data into a company-wide identity asset to drive customer-centric programs that align marketing, product and service.
Continually evaluate your first-party data capabilities, monitor progress and integrate what you’ve learned at each step along the way. Identify key success metrics for your solution, both in terms of operational capability and support for cross-channel marketing initiatives. Track data volumes, sources, processing speed, profile depth and which data is activated for analytics and measurement.
Third-party data isn’t enough anymore. Brands are realizing the limitless potential of first-party data for driving marketing success. Most forward-thinking marketers plan to increase their use of first-party data, and they consider it the lynchpin of their data-driven marketing strategy for the future.
By leveraging all of a brand’s first-party data to resolve customer identity, marketers can build a data asset that serves as the foundation for all consumer engagements — across the web, mobile apps, stores, email, digital ads, call centers and beyond. Equipped with intelligence, marketers can amplify reach across channels, build customer relationships, improve retention rates and increase brand revenues.
Sure, staying on course with today’s consumers is challenging as they hop from one channel or device to the next. But with the right technology and a customer intelligence strategy rooted in first-party data, you’ll discover the most direct route begins and ends with the data you already own.