How Zero-Party Data Can Power Your Business

Segment on January 24th 2023

Growing concern over how companies collect and use private data has led to increased government regulations at a local, national, and even international levels. To stay ahead of tightening data privacy regulations, companies like Apple and Google are clamping down on the ability of companies to use third-party cookies to glean information about their audience.

Businesses still need data to power growth and better serve their customers. But in light of these rapid changes in attitudes and laws surrounding digital privacy, more businesses are turning to first-party data and zero-party data for the information they need.

What is zero-party data?

Forrester Research coined the term zero-party data to describe the data users knowingly provide to a brand after being directly asked to do so. Examples of this can include filling out a form with your contact information or completing a survey.

Types of zero-party data and how they're collected

The kinds of zero-party data are essentially limitless. You can ask people for their phone number, communication preferences, their favorite marketing channels, interests, professions, purchase intentions, and how they plan to use your product. Anything that will help your business create a better customer experience is a potential data point you can ask customers to provide.

Some of the methods companies use to collect data include:

  • Quizzes: This is a great way to learn about customer preferences, whether you're a coffee brewer or an e-commerce company selling hair extensions. Quizzes give your customers a fun way to engage with your brand. If coupled with an incentive (like free shipping, or a discount on product) they can lead to both high participation rates and a treasure trove of data on customer preferences. Those preferences can help guide your personalized marketing strategy as you deepen your customer relationships.

  • Polls: Many platforms let you A/B test headlines, graphics, layouts and messaging. But if you don't feel like poring over comparison charts and other analytics, you could try just asking your audience what they prefer. A poll gives your audience the feeling that they're helping build your brand in their image. And, if you listen carefully to what they have to say, you will be - to both your benefit and theirs.

  • Giveaways: Giveaways can be more than an effective lead-generation tactic. You can ask for an email in exchange for an e-book or a telephone number in exchange for a gift card. If it’s a suitable value exchange between what you’re offering and what you’re asking for, you can learn lots of helpful information about your target audience. That makes it easier to tailor your messaging and build a product that suits their needs.

  • Surveys: A survey can range from a post-purchase questionnaire about customer satisfaction to an onboarding flow that asks customers about their use case for your product. Regardless of its form, it can unveil hard-to-get information about who your product serves and how it's meeting their needs.

  • Popups: A blunt - but sometimes effective - way to get the information you need is to put your question into a popup and serve it to users as they scroll your website. 

Why more companies are turning to zero-party data collection

Companies face pressure from consumer advocacy groups, state governments, and entire continents to abolish data collection obtained without explicit permission from users.

Public sentiment stands in lockstep with these trends. A global survey of more than 6,000 consumers found three in four distrusted how data was collected. And nearly nine in 10 wanted government agencies to play a role in regulating data collection. Governments have responded with legislation like the California Consumer Privacy Act (or CCPA) and the General Data Protection Regulation (or GDPR) in the European Union.

The biggest companies on the planet are also stepping in, regardless of whether the government does or doesn't. In April 2021, Apple made opt-out the automatic setting for iOS users instead of opt-in for tracking by digital advertisers. That simple, seismic change cost advertisers more than $10 billion, with Facebook taking the lion's share of the losses.

Though its timetable is in flux, Google has also promised to end tracking via third-party cookies, which advertisers have used to track users across the internet.

In short, companies that rely on consumer data and aren't already pivoting - or planning to pivot - to zero-party and first-party data are at risk of having the rug pulled out from under their carefully laid business models.

How zero-party data compare to other types of data

The zero in zero-party data refers to how closely the data originates from the actual user. Unlike first-party, second-party, and third-party data, zero-party data is the only information companies can collect that comes directly from users with the explicit permission of those users.

First-party data 

First-party data is collected directly by a company but without the user's explicit, intentional participation. Examples of first-party data types include behavioral data like bounce rates and click-through rates on a website, purchase history, or open rates on an email campaign. 

Second-party data 

Second-party data is when a company buys first-party data from another organization, usually one that isn't a direct competitor. For instance, a wine delivery company might purchase data from a food delivery company because those two audiences may share characteristics. At this point, a user's permission of who gets to see and use their data is an afterthought.

Third-party data 

Third-party data comes from aggregators. These aggregators collect lots of information from various sources and pool them together to sell a complete profile of a given user. Like second-party data, the user doesn't directly control who has this information or how it's used.

Tools to collect zero-party data

The market for zero-party data tools is growing every day. Any platform that gives you the power to build forms, surveys, quizzes, or popups can play a role in your zero-party data tech stack. Here are just a few examples:

Jebbit

Jebbit makes it easy to build and launch quizzes and surveys to learn more about your audience. Users can custom-design their questionnaires or use dozens of templates. After the form is live, Jebbit tracks, collates, and analyzes the data to make it easy for companies to turn all that information into valuable content, features, and experiences to engage their users. Jebbit is one of many tools Segment integrates with seamlessly.

Typeform

Typeform lets users create beautiful, engaging online forms right out of the box. This is another interactive way to invite customers to tell you a little bit more about themselves. Marketers can build, brainstorm and publish an effective survey, questionnaire, or poll in minutes.

Segment

Segment is a customer data platform (or CDP) that lets you collect, centralize, manage and analyze all your customer data in one place. It integrates with hundreds of data collection tools, which makes it a natural fit for any digital tech stack.

Combine zero- and first-party data to power your business (with privacy in mind)

The tension fueling this new era of digital marketing is this: people demand privacy. They also crave personalized experiences.

Zero-party and first-party data are the best tools available to companies to ensure they both protect customer data and deliver a unique experience that keeps users coming back.

The market for zero- and first-party data collection tools is large and growing. But without a way to manage and analyze all that information, harvesting more data is a fruitless effort. 

Twilio Segment helps businesses deliver the personalization customers expect and the privacy they deserve. Our tools make it easy to manage your data stack by standardizing how it's collected and centralizing all that data into a single database. That way, your entire company has a single "source of truth" from which to draw insights.

Learn more about how Quartz uses Twilio Segment to stay compliant and ahead of the competition in a world without 3rd-party cookies.

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