Zero-party Data​: Buzzword or Blockbuster?

For marketers, conversions trump all. These experts guzzle espressos and ruffle pages of HBRs and WSJs, searching for the next big idea. They’ve found their prima donna. Zero-party data, it’s called.

Another hideous, vacuous, buzzword? Or a blockbuster? Join me as I explain my meditations, and answer questions like:

● What is zero-party data?

● Third-party versus second-party versus first-party data; what’s all that?

● Why should you take interest in zero-party data?

● My experiences, and experiments with zero-party data; what happened?

● How could you experiment with zero-party data?

Before that; a rant…

Hyper-Personalized Marketing-Your Daily Dose of Agony

An ordinary Tuesday; an ordinary email.

Dear Hitesh Blah blah blah. I was looking for angel investors keen on upcoming tech, and believe you and my company are the perfect fit. BTW, how’s Neuronimbus doing in these times? I’m visiting Delhi next week; care for a coffee?

It’s a personalized cold email-the sender knows something about me: investor, CEO, Delhite, coffee-lover.

‘Guaranteed to convert’ — surely, the marketing prodigy behind this campaign would have proclaimed.

I did what you’d have done. Report spam, and delete.

From third to zero-party data: the basics

Likely you’ve not heard of zero-party data. So, it’s alright if you ask: What’s the sudden need for this?

Before that, some definitions in plain English

● First-party data: The info you collect from your customers in the normal course of business between them and you. Customers will reveal only as much information as crucial for the transactions.

● Second-party data: This is somebody else’s first-party data. It’s the info they collected from their customer during their business, and then shared with you, under contractual agreements.

● Third-party data: Information you (or your agent) collect from public and non-public sources. This info may not have been explicitly revealed by customers, and they may be unaware of the intended usage of their information.

● Zero-party data: Its data that your visitors and customers voluntarily and directly share with you. This can include purchase intentions, personal context and preferences of how they want you to communicate with them.

Why is zero-party data crucial for marketing?

● Because third-party data doesn’t work, second-party data is underhanded, and first-party data is expensive.

● Because third-party data is reaching its end of life as consumers become more and aware of their rights, privacy.

● Because zero-party data shifts the focus from quantity of data to quality of results, because its consumer consented

How long will you rely on third-party data from aggregators, when Google is about to dispatch them to the mortuary?

How long can you tolerate the dismally low conversion rates of second-party data?

How long can you pay $199/month subscriptions for personalization tools that were designed for giants who can curate elaborate first-person data, but shoved down the throats of small-business owners?

Unless you’ve magically allocated your data-collection budgets profitably across these 3 categories, you’re:

● tempting a lawsuit under GDPR or CCPA

● risking the loss of reputation

● sniffing smoke out of burning piles of cash

Even if your 3rd party data is relevant, chances are that other businesses will buy this data, and bombard similar offers on your customers. Where’s the advantage?

The psychological edge of zero-party data marketing

Don’t hate me for bringing in Ben Franklin into this.

In plain words, the Ben Franklin effect is: Cognitive dissonance is undesirable; which means that a person is likely to comply with subsequent requests if they’ve already agreed once.

This timeless insight of human psychology, and zero-party data marketing, are hand in glove.

You convince a shopper to reveal their likes willingly, and it’s likely they’ll favor you with a swipe of their credit card the next time you send a relevant offer based on this verified liking.

My experiments with zero party data marketing

In June 2020, a client-Marketing VP of a company that e-retails budget-category personal-use cameras-told me in so many words: “We’re miserable with our upsell and cross-sells; nobody clicks on our email CTAs, and we’d save $5,000+ every month if we abandoned our personalized marketing. We’d rather offer $100 coupons for consumer interviews.

And we did that, minus the obvious $100 bribe.

Our campaign was this. After every purchase, receive an email inviting them to a 3-question quiz. By participating, customers got an additional 6-months warranty. And this became our recipe: intelligent questions, generous rewards, and a concerted effort to translate the answers into marketing opportunities.

We did the same for another of our clients-a maker of child hygiene-care products-with the same results. Their conversion rates on the campaigns to that new zero party data was way higher than any other data set they had used.

Life’s good-even as a consumer-on the right side of zero-party data marketing

This happened:

Act 1: I’m a regular listener of Classic FM.

Act 2: Classic FM sends me this irresistible quiz, and I reveal my preferences.

My answer: Chopin’s Nocturnes

Act 3: I’ve not logged in for a week. This happens, when I’m listening a lot more to BBC Radio 3, which plays similar tunes.

Act 4: One Friday evening, in my FB feed, waiting for me, is this curated playlist of Chopin’s Nocturnes from Classic FM.

Act 5: I’m hooked in again.

Marketing wants more from third, second, and first-party data

Data-based personalization is the means to an end-buy, subscribe, share, whatever. What matters is.. results. Towering open rates are futile without lofty conversion rates.

The point is: everyone-you, your boss, your staff, their tribe, and their IG followers-scrolls past marketing messages such as:

“Which came first: your gym routine, or these joggers?”

“WOW; you joined the gym. Level up your athleisure wardrobe now.”

“The joggers you browsed are running out of stock; order yours NOW”

In effect, you’re building immunity to marketing that relies on- respectively-third, second, and even first-party data.

Zero-party data based marketing is the thinking marketer’s response. And this time, the customer is, rightfully, the boss.

Originally published at https://www.linkedin.com.

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A digital evangelist, entrepreneur, mentor, digital tranformation expert. Two decades of providing digital solutions to brands around the world.

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Hitesh Dhawan

Hitesh Dhawan

A digital evangelist, entrepreneur, mentor, digital tranformation expert. Two decades of providing digital solutions to brands around the world.

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