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Sean Shea is a philanthropist, TEDx speaker and founder and CEO of ViB, a company that generates quality leads for B2B companies globally.
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As the world becomes increasingly interconnected, data breaches are on the rise. With 86% of U.S. consumers saying data privacy is a “growing concern,” according to a 2021 KPMG survey, a new approach is now required.
This is where I believe zero-party data comes in. This approach to data collection hands the control back to the consumer in a way that empowers them and honors their privacy, which, in turn, allows businesses to benefit from more accurate and trustworthy data.
As the founder of a company that helps businesses gather zero- and first-party data, I’ve gained valuable insight into what zero-party data is and what businesses should know when getting started.
Defining ‘Zero-Party Data’
Zero-party data is any information customers proactively share with businesses. This could include anything from personal preferences to what they plan to buy in the future.
What I believe differentiates zero-party data from other types of data is the transparency of its collection. This transparency can help establish customers’ trust and shows you value their direct and intentional relationship with your brand. Thanks to this transparency, I’ve found consumers are also less likely to be concerned about data privacy and more likely to share meaningful data.
Zero-Party Data Vs. Other Types Of Data
To see how zero-party data fits in with other types of data, here’s my simplest crash course on the other types of consumer data we use in marketing:
• First-party data: This data is collected directly from your interactions with customers. It provides valuable insights into customer behavior and preferences, though it can be narrow and is limited to interactions with your brand.
• Second-party data: This is essentially someone else’s first-party data that you’ve obtained access to.
• Third-party data: This data is aggregated from various sources and sold to businesses. I’ve found this data tends to be less accurate, and, from my perspective, it’s the primary reason for growing consumer distrust.
How Zero-Party Data Affects Consumers And Businesses
As I discussed in my previous Forbes article on third-party data, the major pivot that we see with zero-party data is it gives the consumer control of their data. This is data shared willingly, and it’s only information the consumer wants to share. That opens up the door to communicating with you as a business, allowing you to understand what they want and how you can personalize their experience.
From a business standpoint, the benefits of zero-party data can include:
• Accurate data: Data is only good if it’s accurate, and zero-party data, by nature, should be highly accurate because it’s provided by customers directly.
• Personalization: Zero-party data can help you understand your customers’ needs, which can help you segment your audience and create tailored experiences.
• Opportunities to increase sales: With trust built, businesses can better act on zero-party data to identify potential customers and potentially improve conversion rates.
• Regulatory compliance: Regulations are becoming increasingly strenuous, and I’ve observed many organizations are cracking down on third-party data.
• Improved products/services: When zero-party data is received by a business, it has the opportunity to implement feedback to create better products for the consumer and gain a competitive edge.
These are only some of the reasons I believe dismissing the idea of zero-party data as a passing trend could prove to be a costly oversight.
How To Build Zero-Party Data Channels
Boiled down, you have two primary options to build zero-party data channels: Develop them in-house or partner with external data providers.
Developing In-House Zero-Party Data Channels
In-house development involves creating a tailored system within your organization to collect zero-party data. Briefly, the key steps look something like this:
1. Identify the specific types of zero-party data to collect. This might include your customers’ contact information and areas of interest, for example. Think about what information you’ll need to help you convert those audiences into qualified leads and customers.
2. Consider data compliance. Obtain explicit consent, communicate data usage and implement robust security measures.
3. Establish data collection mechanisms. This might include surveys, preference centers or interactive experiences to actively collect zero-party data.
4. Continuously monitor industry trends and regulations. This can help ensure you’re compliant.
This approach has several advantages, including customization and control. You can create a system that perfectly aligns with your specific needs, data compliance regulations and existing data management tool stack. Keep in mind that development can be resource-intensive and requires financial investment and specialized knowledge. It may also take time to implement.
Partnering With Data Providers
The second option is to partner with external data providers that offer zero-party data collection services. These providers facilitate a direct relationship between consumers and your business. Consumers provide their data to the data providers, who then transfer it to you.
This approach can help foster a transparent and consent-based data exchange while also allowing you to tap into an external provider’s expertise, efficiency, compliance and network. It’s worth noting, however, that you’ll have more limitations in customization and integration with your existing systems.
When you’re researching data providers, you might find that some providers still tap into third-party sources, especially by scraping the web, to pull data points without any user consent. So here’s a tip: Explicitly ask for each provider’s data collection approach, so you can be sure you’re working with a provider you trust.
Looking Toward The Future
If you run a consumer-centric business, zero-party data matters. Leveraging zero-party data isn’t only about ensuring your business remains competitive but also establishing a foundation of trust. I believe using this data can help future-proof your business, as well as foster an environment where businesses and consumers alike can benefit and thrive.
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Copyright for syndicated content belongs to the linked Source : Forbes – https://www.forbes.com/sites/forbesbusinesscouncil/2024/03/15/how-businesses-can-get-started-with-zero-party-data
