First‑Party Data: How to Collect and Leverage 1PD

Understanding different types of data

In order to really understand first-party data, it helps to understand all of the different types of data. So, here’s a quick course.

Zero-party data

Zero-party data is derived directly from customers. What sets it apart is that customers willingly and intentionally provide this data. When customers willingly share their contact information with you, it falls under the category of zero-party data. Many argue that this type of data holds the highest level of data quality.

First-party data

First-party data is also derived directly from customers, although they may not intentionally provide that information. For instance, if a customer spends 10 minutes on your homepage and your analytics system tracks that activity, it qualifies as first-party data. The term "first-party" is used because the data collected originates directly from the customer, and you collected it yourself.

Second-party data

Second-party data refers to data that is sold or traded between businesses or parties. For instance, if you discover that your customer spent 10 minutes on a competitor's website, that would be considered second-party data. Although the customer generated that data, it wasn't specifically intended for your organization. In this case, you obtained the information indirectly or second-hand.

Third-party data

Third-party data refers to data where the direct relationship between the data collector and the customer is no longer present or transparent. This type of data often consists of large-scale information obtained from major companies. For example, if you acquire anonymized data that showcases average foot traffic patterns in shopping malls, it falls under the category of third-party data. Typically, this kind of information needs to be purchased from data providers.

Benefits of using first-party data

Now that you understand the concept, you might wonder why it's important to collect first-party data.

First and foremost, relying solely on zero-party data may not provide you with all the information you need. Therefore, first-party data serves as the most direct and dependable source of information available to you.

Accuracy and reliability

And that's where the primary value lies. Because you’re directly involved in the generation and collection of the data, you know it’s more accurate and reliable. Every time you add an intermediary to the data collection and distribution process, you decrease the reliability of that same data.

Relevance

Relevance is another significant aspect. Since first-party data is generated directly by the customer, you can be confident that it reflects their actual behavior. There is no need for guesswork when it comes to audience data, as you can avoid fitting people into demographics or making generalizations. By leveraging first-party data, you gain insights that are specifically relevant to your customers' behaviors and preferences.

Lower costs

Another advantage of first-party data is that you don't have to purchase it from external sources. This data is generated by the digital systems you already have in place to enable customers to access your resources. Therefore, you have direct ownership and control over the data without the need to rely on third-party providers.

Privacy and compliance

First-party data remains under your direct control at all times, so it’s a lot easier to guarantee privacy and maintain GDPR compliance. Data protection laws and data privacy regulations can be tricky, but if the data remains within your control without being shared or transferred externally, it simplifies the entire process.

Uniqueness

Each customer generates their own unique data through interactions with your systems. This distinctiveness means that no one else can replicate the exact same data, making your first-party data uniquely valuable. The uniqueness of this data enhances its significance and provides you with exclusive insights that cannot be obtained elsewhere.

Adaptability

With first-party data, you have the flexibility to utilize it with any data management platform and analyze it according to your specific needs. The crucial factor is that you possess the actual numbers and information in the first place. This empowers you to leverage various tools and techniques to derive valuable insights and make informed decisions based on the data at hand.

Predictive analysis

With good reports and analytics, you can use your first-party data to understand your customers and predict their behaviors. This can assist you in meeting customer demands, increasing sales, and identifying potential opportunities for upselling and cross-selling.

How to collect first-party data

Indeed, first-party data is valuable. But how exactly do you collect it? Here are some ways to make collecting first-party data simple and effortless.

Website analytics

One of the simplest ways to collect first-party data is by allowing your website to track user behavior during interactions. This approach provides valuable insights into conversion rates, engagement levels, time spent on the website, referral sources, and various other metrics.

Utilizing tools like Google Analytics offers excellent data visualization capabilities, allowing you to gain deeper insights and expand your data analysis further. You can enhance your data collection efforts by incorporating additional tools and features to complement the functionality provided by Google Analytics.

Customer surveys and feedback

If you want direct information, ask. Surveys and feedback tools provide an avenue for customers to express their thoughts and feelings directly to you. By utilizing these tools, you can gather valuable insights by asking specific questions and receiving feedback on various aspects of your products, services, or overall customer experience.

Email newsletters

Email newsletters serve as an effective method for collecting email addresses. By offering valuable content or incentives, you can encourage customers to subscribe to your newsletters, thus providing you with a direct channel of communication. Additionally, tracking engagement with the emails you send allows you to gain insights into customer behavior, such as open rates, click-through rates, and overall email engagement.

eCommerce transactions

Tracking transactions provides key details on customer behavior and customer data, including purchase history, spending patterns, shipping information, and more. Analyzing this data helps you understand customer preferences and make informed decisions to improve the customer experience and optimize your product offerings.

Social media

Social media accounts allow customer interactions, and platforms provide insight tools to measure engagement. These tools offer metrics on follower count, likes, shares, comments, and more. Utilize these insights to optimize your social media presence and tailor your content to customer preferences.

Customer service interactions

When customers reach out to your customer service, take note. It reveals their concerns and experience firsthand. This direct communication is a valuable source of first-party data on their preferences and satisfaction, enabling you to make informed improvements.

Events and trade shows

Events generate in-person data, adding valuable dimensions to your customer data and offline data. They provide unique insights that complement digital interactions, enriching your first-party data and enhancing decision-making.

How to leverage first-party data

Once you have collected your data points, you may wonder how to effectively utilize them. The possibilities are vast and diverse, but below are some excellent starting ideas to get you on the right track.

Personalization

Personalization is a powerful tool in modern marketing. First-party data provides specific information about individual customers, enabling personalized experiences. By leveraging your CRM and marketing software, you can send tailored promotions to customers who will appreciate them the most.

Additionally, you can link customers to helpful resources like how-to videos based on their past interactions. Personalization fosters a unique and valuable relationship with each customer, building trust and loyalty, leading to increased customer preference for your products and services.

Audience segmentation

Rather than relying on generalized demographics, you can utilize your raw data to identify meaningful audience segments. For instance, if you sell sports equipment, you can group customers based on the different sports they are interested in. This approach allows you to engage customers with content and offers that align with their specific interests.

By creating audience segments from these groups rather than treating individuals in isolation, you can optimize efficiency in your marketing efforts, ensuring that you reach the right customers with relevant messaging and promotions.

Retargeting campaigns

Occasionally, customers may visit your website without making a purchase, which can be disheartening. However, leveraging your first-party data allows you to regroup and improve for future interactions.

By utilizing first-party data, you can personalize the experience for site visitors based on their specific interests, enticing them to return to your website. This targeted approach increases the likelihood of a conversion because you have identified something they genuinely liked, encouraging their return engagement.

Improve your product/service development

Collecting customer data helps you gain insights into their preferences and desires. It's possible that they may express interest in something your business currently doesn't offer.

The good news is that if you observe enough demand to validate it, you have the opportunity to expand your offerings. Whether it's sourcing a new product, developing a new service, or finding creative ways to meet the demand, you can cater to customer needs.

By doing so, you can integrate upsells or cross-sells into your marketing strategy, specifically targeting existing customer demand. This approach enhances customer satisfaction and provides new opportunities for business growth.

Optimizing the customer journey

When mapping and understanding the customer journey, it is crucial to identify factors that hinder sales. These may include difficulties in finding desired products, barriers to completing transactions, and various other obstacles.

First-party data can play a key role in informing your customer journey mapping. By leveraging this data, you can proactively address issues that arise and tackle them with determination. It is essential not to impede your customers when they are happily engaged in shopping for your products or services.

Customer retention

In situations where customer interactions are one-time purchases, how can you bring them back?

Instead of bombarding customers with irrelevant ads, leverage your first-party data to identify other areas of interest. Target these areas with follow-up offers or promotions to encourage their return.

Beyond marketing, when you use first-party data to enhance customer relations, offer new products/services, and demonstrate attentive listening, customers will take notice and respond. By prioritizing customer satisfaction through active listening, first-party data becomes a powerful tool for keeping customers happy and engaged.

Engage new audiences and retain existing customers with first-party data

First-party data is one of the most powerful tools at your disposal in terms of guiding company decisions and developing good marketing strategies. Then again, there’s a lot more to a success story than just tracking data. You'll need additional tools and resources.

Fortunately, Mailchimp offers a comprehensive suite of solutions. With Mailchimp, you can access a wide range of features and functionalities to enhance your marketing efforts and drive better results, from content creation tools to social media marketing tools.