Welcome to the retail data renaissance.
Changing privacy regulations, AI marketing technologies, and the retail sector’s digitisation have led to rising interest in first-party data.
Let’s start by defining what we mean when it comes to the different levels of data ownership. First-party is your own data that you have collected yourself. Second-party is someone else’s first-party data which they collected themselves. Third-party is someone else’s data that they did not collect themselves.
As you go from first to third-party, the data becomes less reliable, less accurate and possibly sourced using non-compliant methods. It also requires some adjustment as data classification can differ significantly between datasets.
For example, some companies use the address generator to match addresses from an existing list. Others might require you to enter an address entirely from scratch. Data validation becomes an issue for the dataset with manual entry as there is more room for error.
That’s the way the cookies crumble
Major policy changes around the world have taken the edge out of third-party data usage. Europe’s General Data Protection Regulations (GDPR) gives its citizens ultimate ownership over their data. Meanwhile, Google will end support for third-party cookies in 2022, which marketers often relied on for tracking customer internet activity. Likewise, Apple has changed its policies around unique device tracking with its Identifier for Advertisers (IDFA), requiring customer opt-in for each app.
It’s official; transparency and consent are here to stay. The demise of third-party cookies and behind-the-scenes tracking has led to marketers looking for new ways to connect with customers.
Personalised marketing, marketing automation and dynamic pricing are new data-reliant tools marketers have to create better customer experiences. A recent Forrester study found that while 70% of business leaders recognise the importance and value of first-party data, only 28% have a mature system to leverage it.
According to Accenture, 83% of customers are willing to share their data to create a more personalised experience, and 91% of consumers are more likely to shop with brands that provide offers and recommendations relevant to them. First-party data is the key to unlocking many of these services.
Tips to grow your first-party data
When looking to build out your own first-party data, it’s good to keep some of these strategies and tactics in mind. Remember to:
1. Start at home.
If you don’t have data on most of the customers, you already have, start there first. Register your customers and set up a system in place so that you can capture who they are and how they shop with you. Capture enough data so that you can begin to classify the type of customer they are.
2. Keep it together.
Get a customer data platform to help you deduplicate, authenticate and aggregate your customer data. Bringing it all together into a single source of truth allows you to build reliable, accurate and actionable data.
3. Get creative.
There are many creative ways to gather customer data—surveys, competitions, games and other great content that have a data capture. You can provide exclusives or rewards and a loyalty program, or even customer services through chatbots and virtual assistants. Just be transparent about how you’re collecting and using the data and make it easy for your customers to get their reward without too much effort.
4. Scratch each other’s backs.
There’s no need to write off all second-party data, as it can be a great way to grow your own first-party data in a targeted manner. For example, if you’re a health food brand, then reaching out to a fitness club’s members with an opt-in offer could be a benefit, and vice versa. Explore which brands might have shared interests with your audiences.
5. Get vertical.
Grow your customer segments out by focusing on verticals. These can be broken up into industries, lifestyles or personality types and add valuable segments back into your datasets. Make sure your data has been set up to capture and identify these verticals, as these can be used for personalised approaches with the right marketing automation tools.
6. Make friends of friends.
After all, they’re just friends you haven’t met yet! Empower customer referrals with incentives, or better yet, use them as a sampling program for new products of nominal value. Your customer gets a discount code to buy more, and their friend gets a sample to try, as well as a code for them to sign up and become a customer. Win-Win.
Above all else, try not to be creepy. Always be transparent when collecting data, and tell customers how you are going to use it. Avoid using data that customers wouldn’t know you have about them or didn’t share with you directly.
During the pandemic, the retail sector has shown remarkable levels of creativity and innovation, adapting and creating new services to keep customers happy and business flowing. With many retailers upping their digital game during this time, customers will have increasing expectations around the level of service they receive. Ensuring your brand has a robust first-party dataset is the backbone for your business to deliver customers a modern, frictionless and enjoyable customer experience.
Find out how Simplus can help you develop your retail data strategy and set you up for customer success.