In an increasingly digital age, data is the currency that drives business decisions and shapes customer experiences. Among the various datasets available to your business, first-party data (also known as 1pd or 1p data) stands out for its accuracy, relevance, and control over its use.
With third-party cookies being phased out by browsers due to privacy concerns, marketers are placing greater emphasis on collecting and leveraging data directly from their customers. In fact, 92% of marketers now say that first-party data is critical to their growth.
In this guide, we’ll define first-party data and provide four tips for how to make the most of it. Whether you’re a marketing professional or simply curious about the power of customer insights, this information will help you navigate the complex landscape of first-party data.
Understanding First-Party Data
What is First-Party Data?
First-party data refers to the information that customers share through their interactions with your owned properties, such as your website, app, or physical store. Since it originates from your direct relationship with users, first-party data is considered reliable and trustworthy.
Examples of First-Party Data
First-party data can include:
- Demographic information, such as age, gender, and location
- Communication preferences
- Contact information
- Social media engagement
- Website activity, including clicks, downloads, and searches
- Purchase history
- Preferences and behaviors
Imagine you own a moving company and a customer visits your online store to purchase packing materials for their upcoming relocation. During this process, the system collects information about the number of belongings being moved. This is considered first-party data.
Differentiating First-Party Data From Other Data Sources
As previously mentioned, first-party data originates from your direct relationships and interactions with customers. For access to information beyond what you’ve collected in-house, you can seek out second, third, or zero-party sources:
- Second-party data is essentially another organization’s first-party data that is shared with your business through a collaboration or partnership. It can help you better understand your audience and find new audiences to target.
- Third-party data can be purchased from an external provider. It is typically aggregated from various sources and can therefore be used to reach a broader audience. When combined with first-party data, it can also improve targeting.
- Zero-party data is information customers voluntarily and intentionally share with your business, often through surveys, preference centers, and in-person interactions. Apply their honest feedback toward bettering your business and improving your reputation.
To minimize the legal risks associated with collecting, sharing, and using data from various sources, your business should be aware of and adhere to data protection guidance from the Federal Trade Commission (FTC) as well as applicable regional regulations like the Colorado Privacy Act (CPA) and California Consumer Privacy Act (CCPA).
For increased transparency, share privacy policies across your platforms explaining what kind of data you collect and how you plan to use it regarding these regulations.
How to Collect First-Party Data
The first-party data collection process will vary according to the platforms and solutions your business uses to connect with customers. However, first-party data is most commonly generated through:
- Website interactions: Integrating lead capture gateways, such as sign-up forms or subscription prompts, throughout your site allows you to collect contact information and user consent for marketing communication. You can also use pixels or cookies to track website analytics, session recordings, and behavior patterns.
- Email and SMS marketing: When users subscribe to an email or SMS list, they provide their contact information willingly. This information, along with their engagement with the sent emails or SMS messages, constitutes first-party data.
- Mobile applications: Apps gather data on usage patterns, features accessed, and user preferences. Additionally, user accounts created within apps and the data users provide during registration contribute to the first-party data pool.
- Social media: Monitor user interactions, including likes, shares, comments, and post clicks, across social media to better understand preferences and trends.
- Point of Sale (POS) systems: Track purchase history, preferences, and contact information during in-store and online transactions.
Consider investing in a robust Customer Relationship Management (CRM) system or Customer Data Platform (CDP) to automatically track and store this information. Consolidating data into a single, unified repository reduces data fragmentation, making it easier to analyze and derive valuable insights.
The Value Proposition of First-Party Data
The value of first-party data lies in its authenticity, relevance, and potential for improving business outcomes. Tapping into these direct customer insights allows for:
- Informed decision-making: When users provide consent to share their data, they are more likely to provide accurate and reliable information. This leads to higher-quality data that can be used for better decision-making.
- Agility: With direct access to customer insights, you can identify emerging trends or shifts in preferences and quickly adjust your strategies. This agility will give your business a competitive edge.
- Enhanced customization: Create tailored marketing campaigns and retargeting strategies based on real user insights to improve engagement.
- Long-term customer relationships: By nurturing relationships through personalized interactions, businesses can establish long-lasting connections with customers, leading to repeat business and positive word-of-mouth referrals.
Keep in mind that while collecting first-party data is essential, these benefits only emerge when the information is analyzed, interpreted, and acted upon.
4 Strategies for Leveraging First-Party Data
1. Conduct a Data Quality Assessment
A data quality assessment ensures that the information your business is using for analysis, targeting, and personalization is accurate and up-to-date.
To begin, conduct a thorough audit of your collected data and make note of any anomalies or errors. Then, employ the following data hygiene best practices:
- Standardize data entry. Establish guidelines for data entry and implement automated checks to validate data entered against these standards. For instance, in a POS, you could ensure that all currency symbols are formatted using “USD” to reduce confusion when analyzing transaction data.
- Cleanse data. Use data cleansing tools (or data hygiene providers like Deep Sync!) to remove duplicated data, correct inaccurate entries, and handle missing values. That way, if a customer accidentally submits their email address without the “@” symbol, you can rectify the issue and be confident that you’re reaching out to a real address.
- Validate data. Verify the accuracy of your data against a third-party data provider like Deep Sync. Because your customers are constantly changing—by moving, getting married or divorced, or getting new phone numbers and email addresses—routine updates are needed so you can continue to engage with them. In fact, the rate of data decay on a consumer dataset is 25-30% per year, and even higher for businesses.
Data hygiene is an ongoing process, meaning you’ll need to regularly monitor your first-party data for duplicates, inconsistencies, and errors. While this may seem overwhelming, it will ultimately lead to more effective decision-making. (Lucky for you, you can partner with Deep Sync for your routine data hygiene needs!)
2. Segment Customers
In the interest of delivering better, more personalized experiences to customers, segmentation is crucial. Segmentation, a key component of audience targeting, refers to the process of dividing customers into distinct groups based on insights gleaned from your customer data.
With well-defined segments, you can tailor outreach to specific groups within your target audience and deliver content that resonates with their unique interests, preferences, and behaviors. For example, a clothing retailer may choose to segment customers according to demographic data, such as age, gender, location, income, and occupation. Then, they may target young, fashion-forward customers with trendy designs and offer classic styles to an older, more conservative segment.
To uncover your ideal customer segments, use an automated profiling service like Deep Sync One’s Customer Insights. Simply upload your first-party data to compare it against Deep Sync’s national consumer database. In a matter of minutes, you will receive an actionable report that ranks the demographic elements in your customer file based on our findings and audience recommendations that can be applied to future campaigns.
3. Use Predictive Analytics
In addition to using first-party data to personalize outreach, you can use it to predict future outcomes. Predictive analytics applies statistical algorithms to historical data to forecast customer behavior and improve campaign performance metrics, such as:
- Churn: Analyze engagement metrics or customer feedback to identify customers who are at risk of churning (canceling or discontinuing their relationship with your brand) and send them materials that incentivize their ongoing support.
- Cross-selling and upselling: Identify cross-selling and upselling opportunities based on a customer’s purchase history. Then, recommend relevant products or upgrades to drive revenue growth.
- Customer Lifetime Value (CLV): Review past purchase behavior and engagement history to predict the future value of individual customers. This will help you decide which customers to prioritize for retention and upselling strategies.
- Revenue: Use historical sales data to identify seasonal trends, evaluate the impact of marketing initiatives on revenue, and allocate your resources more effectively.
You can use several different types of predictive models to generate this information, including regression analysis, decision trees, clone models, and combination models. Ensure that the model aligns with your specific marketing goals before getting started.
4. Optimize Campaigns and Experiences
Once your first-party data is cleaned, organized, and analyzed, you can apply it toward optimizing customer experiences via:
- Omnichannel marketing: Customize the timing of communications based on user behaviors and preferences, ensuring messages reach users when they are most engaged and on their preferred channels.
- Retargeting: Deliver retargeting ads that display the exact products users viewed or abandoned in their online shopping carts, encouraging them to return and complete the purchase.
- Lead generation: Customize lead magnets, landing pages, and calls to action to address specific pain points or interests of each customer.
By effectively harnessing first-party data in these ways, you can increase engagement, improve customer satisfaction, and ultimately drive better results for your business.
Now you can begin collecting first-party data and applying it to your marketing ventures. Remember to be transparent about your data usage and security measures. When customers understand how their data is used and know that they have control over the process, they are more likely to engage with your brand and share more information.