Most consumers aren't always willing to share their information with businesses, so marketers try to collect more data to understand their audiences better.
With data deprecation -- like Google's retirement of third-party cookies -- marketers' data sources are dwindling. Yet, one data source has and will continue to remain supreme: customers. When marketing teams receive customer data, they can more accurately understand their audience's needs without infringing on people's privacy. Enter zero-party data, a term coined by Forrester Research for data provided directly from customers.
"What really distinguishes zero-party data is that it is voluntary," said Stephanie Liu, an analyst at Forrester. "This is data that a customer is choosing to share because they liked the brand or they liked the product, and they're getting something in return."
This type of data is unique compared to first-party and third-party cookies, which get data from the company websites or third parties. At Liu's CX North America 2022 session, she dove further into real-world zero-party data examples.
1. Yelp highlights customer preferences
Personalization has become a more common marketing practice over time, as it benefits CX and helps customers feel that an organization understands them. Yet, personalization only works if CX teams collect customer data, which risks making customers feel uncomfortable if they haven't willingly provided the information.
Zero-party data can make personalization more effective and doesn't risk crossing a line with customers because they only provide the information they want to give. For example, Yelp's app enables customers to create a preference center, Liu said. Users can enter dietary, lifestyle and accessibility preferences, among others.
"Yelp clearly did its research on how customers choose restaurants. It will not treat your preferences as filters. It will not hide restaurants that don't meet all of your needs. Instead, in the search results, it tells you which preferences each restaurant meets," Liu said.
To personalize recommendations, Yelp uses zero-party data to highlight restaurants' attributes that align with customer preferences so customers can come to their own conclusions.
2. Mecca prioritizes relevancy over repetition
Repetitive emails are often a marketing team's greatest asset and customers' biggest grievance with companies.
Stephanie LiuAnalyst, Forrester Research
Mecca, an Australian beauty retailer, found a way to avoid those repetitive emails with zero-party data. In her session, Liu described Mecca's Mother's Day gift finder quiz. At the end of the quiz, it asks what type of shopper the customer is -- ranging from a beauty novice to a beauty lover.
"It helps Mecca segment you to understand the best way to communicate with you to be relevant and helpful but not annoying. For example, if you know next to nothing about beauty … maybe you only need a twice-a-year email," Liu said. "Versus someone who loves beauty but is usually shopping for themselves -- that's going to be a very, very different cadence."
When customers tell the business the type of shopper they are, marketing teams can adjust email frequency accordingly. They can send relevant emails with announcements or sales based on customers' interest in the products. This approach can also help ensure positive CX.
3. Mockingbird collects information over time
Marketing teams sometimes must play the long game to get accurate data and avoid annoying consumers.
Liu said she experienced this zero-party data example when she shopped for strollers from Mockingbird. After she entered her email address, the company asked for her baby's due date. Mockingbird's email frequency and content changed as the due date approached. Early on, emails were less frequent and mostly showcased positive customer reviews, Liu said. Later in the pregnancy, emails became more frequent, as the company knew she needed to decide soon and highlighted strollers' specific features and benefits.
"This is not something they could easily infer … You cannot go to a data broker and buy a data set that says women who were expecting and due in six months," Liu said. "They just asked … 'How should we communicate to you in a way that is most relevant for where you are in your journey?'"
This method shows an understanding of customers individually, while the company gets relevant, timely information to help personalize emails and offer product recommendations.
4. Sephora explains personalized recommendations
The beauty industry is a hub of zero-party data, as customers tend to shop for products that match their skin tones, skincare concerns and personal preferences. If beauty brands have loyalty programs like Sephora's, they can take that data further.
Sephora's loyalty program has users fill out a beauty profile with information on their skin, hair, eyes and concerns or types of products they are interested in. With that data, Sephora can send personalized product recommendations to each customer. Yet, it also goes a step further and explains why those products would work for customers based on their beauty profiles.
"When they make product recommendations in their emails, they tell you why. 'Here's an eyeshadow for your green eyes only. Here's a foundation for your light complexion, a moisturizer for your oily skin,'" Liu said. "It's very transparent. 'Here's what you've told us. Here's how we're using it.'"
This transparency can build trust between customers and brands. Additionally, it gently lets customers know to update their information if it becomes outdated or inaccurate over time.
Overall, zero-party data can help marketing teams highlight customer preferences and provide and explain relevant recommendations. As a long-term strategy, zero-party data can help marketers learn more about customers over time and build trust.
Zero-party data strategies also take time to build. Getting this information from customers won't happen overnight, and some customers may be unwilling to share. Marketing teams must understand which customers are willing to share their data and how to reward them.
"Identify the data points you need to drive those business outcomes and frame up how knowing your customer better will benefit them. It can't just be about the benefit to you. There needs to be that reciprocity … that value exchange to thank them for sharing that data and to encourage them to share more data in the future," Liu said.