Did you know that the average American consumer is willing to sell their personal data for approximately $1400? In some cases, their data might be worth substantially more than this.
The key factor to consider, though, is how you can get them to voluntarily give you their data. Collecting data is essential when it comes to increasing your total number of customer purchases.
Let’s take a look at everything you need to know about zero party data and why it is so important.
So, What Is Zero Party Data?
This term refers to the data that consumers voluntarily provide to businesses.
This could be in the form of an email address, social media profile, or even preferences and interests. This data is incredibly valuable because it can be used to segment your audience, personalize marketing messages, and improve the overall customer experience.
How Do Companies Collect This Data?
Surveys, sign-ups, and other forms of customer engagement are excellent ways to collect zero party data. These methods allow you to directly ask consumers for their personal information and give them the incentive to provide it.
Cookies are small pieces of code that are placed on a consumer’s device when they visit your website. This code allows you to track their behavior and collect information about their interests.
Finally, you can also indirectly collect zero party data by observing consumer behavior. This could be done through the use of social media listening tools or by analyzing website traffic patterns.
What Are Common Mistakes Businesses Make During Data Collection?
In order to develop an effective data collection strategy, it’s essential that you avoid common pitfalls that many businesses encounter. This will help ensure that you are able to achieve your desired results.
Let’s take a look at some of the most notable.
1. Companies Often Breach Privacy
It’s important to make sure that you’re clear about what data you’re collecting and why. Consumers are becoming increasingly aware of how their data is being used, and they don’t want to share it with just anyone.
If you’re not upfront about your intentions, you’re likely to breach their trust, which could lead to them taking their business elsewhere. In many cases, bridging privacy can have a large number of complications for your business.
One of the most notable is the fact that your customers will likely stop doing business with you and choose a competitor instead.
2. They Collect Too Much Data
When it comes to data collection, less is often more.
Trying to collect everything can be overwhelming, and it’s likely that much of the data won’t be used. Focus on collecting the most important information that will help you achieve your goals.
This will make it easier to manage and use the data effectively. To help streamline your data collection, you should have a clear definition of what you want to learn about your audience.
This will help ensure that you stay on the right track and only procure information that is actually relevant.
3. They Don’t Use the Data They Collect
Data is only valuable if you actually use it.
There’s no point in collecting information if you’re not going to do anything with it. Not only will this make it harder to sift through the rest of the data, but it will also make your data collection process take longer. Make sure that you have a plan for how you’ll use the data you collect.
This will help you make the most of it and achieve your desired results.
4. They Don’t Protect the Data They Collect
The cybercrime industry is estimated over $10 trillion by the end of 2025. Data breaches are becoming more and more common, which means that it’s essential that you take steps to protect the data you collect.
This includes encrypting it, storing it securely, and only sharing it with those who need it. Failing to do this could put your business at risk of a damaging data breach.
As we saw during the 2017 Equifax data breach, this could have catastrophic consequences. It could cause substantial damage to your brand reputation and even require you to deal with legal issues.
What Are the Benefits of Zero Party Data?
It should come as no surprise that this type of data has a large number of benefits.
In the right hands, it can be leveraged to substantially increase your revenue. Let’s take a closer look.
1. Improved Customer Experience
One of the biggest benefits of zero party data is that it can be used to improve the customer experience.
This data can be used to segment your audience, personalize marketing messages, and create a more customized experience. At Kobie, a proprietary emotional loyalty framework helps brands understand which audiences are more willing to offer zero party data.
Kobie President, Marti Beller, explains “Types of segmentations enable better personalization and reduce the cognitive load on customers who may not care enough to provide you with the insights you’re seeking.”
This factor is important because it can help you focus on the right data collection while also protecting customer loyalty. The better customer experience you provide, the more value they will bring to your company.
So, never neglect this obligation.
2. Increased Revenue
Another benefit of zero party data is that it can be used to increase your revenue.
This data can be used to generate more sales, improve marketing ROI, and reduce customer churn. All of this can have a major impact on your bottom line and help you achieve your desired results.
3. Improved Decision Making
This data can also be used to make better decisions about your business.
This includes things like product development, marketing strategies, and even organizational changes.
Having access to this data can give you a competitive edge and help you make the right decisions to grow your business. In fact, it’s entirely possible to scale your company after collecting the right amount of relevant data from your customers.
You will have a much better understanding of when they are likely to spend the most money at your business. From here, you can begin to provide them with products, services, and promotional offers that will satisfy their needs.
4. The Foundation For a Loyalty Marketing Strategy
Perhaps the most notable benefit of zero party data is that you can use it to develop a loyalty program strategy for your business. You will have all of the necessary information to create something that your target demographic will be interested in.
For example, you might learn through the data that you collect that many customers feel that your prices for certain services or products are slightly too high. You could then gear your loyalty program toward offering discounts for those in order to increase your sales numbers.
From here, your business will be able to take advantage of increased performance and your customers will be more satisfied when engaging with your brand.
What Are Some Common Challenges With Zero Party Data?
While there are many benefits to using this data, there are also some challenges that need to be considered.
Let’s take a look at some of the most notable.
1. Lack of Data
One of the biggest challenges with zero party data is that it can be difficult to collect.
This is because it requires customers to proactively share this information with you. It can sometimes be difficult to compel your customers to share this data with you.
The good news is that it doesn’t have to be complicated. Something as simple as asking them to fill out a survey after they have made a purchase from your brand can provide substantial insight into what they need from you.
2. Privacy Concerns
Another challenge with zero party data is that it can raise privacy concerns. Customer data is some of the most valuable, and it can be a lucrative target for cybercriminals. Put simply, you should treat customer data with just as much importance as you would treat other information at your business.
When you can prove to your target audience that they can trust you with their information, they will be much more likely to provide it. Be sure that you keep this in mind when moving forward.
3. Management and Analysis
Another challenge with zero party data is that it can be difficult to manage and analyze. This is because this data can be scattered across different platforms and systems. This means that you need to have a plan for how you’ll consolidate this data and make it easy to use.
This can feel overwhelming at first, but it’s essential if you want to make the most of this data.
What Are Some Best Practices for Collecting Zero Party Data?
If you want to collect this data, there are a few best practices that you should follow. This will help ensure that you make the most of this opportunity.
Let’s take a look at some of the most important.
1. Be Transparent
When you’re collecting this data, it’s important that you’re transparent about it.
You need to let customers know why you’re collecting it and how you’ll use it. This will help to build trust and ensure that customers are comfortable sharing this information with you.
2. Offer Incentives
As we mentioned earlier, one of the challenges with this data is that customers need to be incentivized to share it.
This means that you need to offer rewards or discounts for doing so. This will help to increase the likelihood that customers will be willing to share this information with you.
Of course, a key component of this is ensuring that your incentives are something customers want. Make sure that you have thoroughly researched your demographic so that you can avoid wasting your time when coming up with offers.
3. Protect Data Privacy
As we mentioned, this data can be sensitive, so it’s important that you protect it.
This means that you need to have a plan for how you’ll collect, store, and use this data. However, companies that already have a robust security infrastructure in place don’t have to worry too much about this.
For instance, if you properly secure your servers, hard drives, devices, etc., you are unlikely to encounter any issues.
How Can I Leverage Zero Party Data?
One of the most effective ways that you can take advantage of this type of data is by building more comprehensive customer profiles.
Zero party data can be used to fill in the gaps in your customer profiles and give you a more complete picture of who your customers are. It can also be used to segment your customers and create targeted marketing campaigns.
You’ll then be able to improve your marketing ROI and generate more sales. Additionally, you can use this data to reduce customer churn. It can be used to identify at-risk customers and take steps to prevent them from leaving.
Finally, this data can also be used to improve your product development process. It data can help you understand what customers want and need from your products.
Zero Party Data Is Not Something You Can Overlook
Although it might seem difficult to manage zero party data at first, it’s not quite as complicated as most people expect.
The above guide has all of the information that you need in order to ensure that you can safely collect and leverage this information. From there, you will be well on your way toward hitting your target metrics and improving your relationship with your customers.
Want to learn more about how Kobie can help? Be sure to reach out to us today.