Personalization and Privacy are flip sides to the same coin. It is more true now than ever as most consumers want their experience to be personalized but almost the same number cherish their privacy as well. How do you balance these most important P’s when it comes to an eCommerce store? First-party data ticks both the boxes!
Studies show that “the probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%.” As a general rule, one-fifth of your existing customers will result in 80% of future profits. You can personalize their customer experience using first-party data: an extremely valuable marketing asset, which you derive directly from their interactions. As it is information shared by the consumers themselves, it addresses key privacy issues as well.
The privacy question
Third-party cookies are rather disturbing when seen in action – as a result of these pieces of ad-tracking code, shoppers can feel that they are being hounded around the internet by overenthusiastic touts! They go beyond personalization and into the territory of surveillance.
Third-party cookies will be phased out by 2024. This is in response to growing user demand for privacy. As a result, first-party data – collected directly from consumers and managed by customer data platforms (CDPs) – becomes crucial.
Salesforce found that “the vast majority of business leaders believe the future of their business hinges in part on a complete and consistent view of their customer. But fewer than one-third of those leaders currently have that complete and consistent view.”
What is first-party data?
Companies collect and own certain data about their customers directly through software and systems owned by the company itself. This can include data compiled from interactions on the online store, social media or other digital media, or even in-store or with a call center to gather insights such as purchase history, search behavior, preferences in terms of category, size, style, and color, etc. Using this data, the company can personalize the on-site user experience as well as the communication strategy in terms of targeting of advertising and content on owned media and earned media.
While any of the three kinds of data could be segmented and monetized, first-party data is the most effective. That’s because this data is the most reliable, collection can be automated, and it involves consent from the customer removing the risk of GDPR violation. Oh – and it’s also free.
How do you use first-party data?
Your first-party data exists on multiple channels, and the real problem is to consolidate it all to create a single view of the customer. Using a customer data platform, you can manage all your data. You can gain some significant insights from a CDP, which collects, unifies, and activates all customer data. This allows you to better understand who your buyers are and what motivates them, and to map the customer’s journey from awareness through consideration to purchase and beyond.
This consolidated customer data clarifies the omnichannel journey by revealing how buyers move between media and retail channels. Since the marketer has complete visibility, they can improve segmentation, targeting, relevancy of content and advertising optimization.
With a complete view of the customer journey, marketers can also better understand how media allocations and budgets influence customer behavior and affect conversion. This helps analyze attribution and the impact of budget shifts on real sales.
The personalization impact
Using first-party data, you can personalize an eCommerce experience for customers much more easily. 92% of leading marketers believe that “using first-party data to continuously build an understanding of what people want is critical to growth. Also noteworthy, 89% of successful businesses acknowledge it is critical to their growth that they anticipate customer needs and provide assistive experiences along the customer journey. Customers expect increasingly personalized experiences in their brand interactions.”
This kind of personalization can be done based on segments built on the available first-party data. For example, if you have an online sneaker store, you can create a targeting list of users based in the USA buying women’s sneakers spending over $500 per month on average. This list can be presented with highly relevant content and ads, such as a woman’s sneaker of the day.
A real-life example of forging meaningful relationships with customers through the use of first-party data is Spalding’s free membership program, Spalding MVP. This program is a method to collect first-party data from customers in a direct value exchange. “Since MVP’s launch, the company has seen three consecutive years of triple-digit direct-to-consumer growth,” says Salesforce. The important point to note is that Spalding MVP is implemented not just by the marketing department but by sales, on the website backend, and at in-store points of contact. In fact, it requires buy-in at all levels and all departments of the company.
Challenges in implementation
The major challenge is the implementation of a data management strategy. Creating the strategy includes knowing your data sources and mapping the buyer’s journey, which means that your first-party data strategy has to be completely customized.
By integrating data across platforms, you can create strong customer profiles for segmentation and targeting. You need tools for this purpose, such as a customer data platform.
A third challenge is that data is timebound. The network must analyze and distribute the data to all media execution partners fast, to take advantage of the user information being generated.
Personalization, consent and the future
Third-party cookies are phasing out and first-party data is gaining importance, primarily due to prioritization of data privacy. An important step to optimizing first-party data collection is by explaining how and why the site collects customer data, and the benefit to the customer in terms of personalization. This honesty increases organization trust and encourages users to freely share their information. The online retailer can also provide some bonus material, such as a whitepaper or special discount, in exchange for the data shared by the customer. Building in consent into the customer experience in this manner improves one-to-one targeting and dynamic CX personalization.
As third-party data is deprecated and first-party data becomes more prominent, the need for a DMP (Data Management Platform) increases. DMPs are intended to collate, manage and analyze data from multiple sources, including web, point-of-sale and mobile data. This data can be enriched through offline demographic and online CX data inputs. The more data that’s available, the better the targeting. That means that the larger the company’s footprint, the more successful its marketing on a large scale. However, first-party data will help significantly in terms of one-to-one personalization. As the first-party data becomes more refined, the results become more reliable and successful, as well.
The future of personalization would be zero-party data which is data voluntarily given by consumers. Consumers would share data intentionally in order to receive some kind of benefit.
In a cookie-less future, businesses are leveraging insights gathered from multiple sources of consumer data to strengthen the personalization process. Embrace the power of personalization without compromising on privacy, to deliver a better customer experience with data shared by your customers themselves. Speak to our team of experts today to learn more.