What is first-party data and how does it benefit your marketing

First-party data refers to data a company collects directly from customers and audiences on its own channels. This data is typically obtained through customer interactions, website visits, transactions, and other direct engagements. It is viewed as the most valuable data type for businesses because it comes straight from the source, making it accurate and reliable.

From the 2022 report by Acquia, 88% of marketers say that first-party data is more important to organizations than ever. It is a beneficial asset, providing insights to create more targeted and personalized campaigns, enhance customer relationships, and improve overall marketing effectiveness. Moreover, using first-party data responsibly helps build customer trust and is an important step in achieving compliance with relevant privacy regulations.

From our article, you’ll learn how to effectively collect and use first-party data to create better marketing strategies while complying with privacy regulations. We’ll also introduce you to zero-party data, which is becoming a new big thing in the data collection field.

Types of customer data and how to make the most of them

Customer data can be collected through various methods, each with its own characteristics and implications. Selecting the appropriate data collection method depends on research objectives, the nature of the data needed, and practical considerations such as cost and accessibility. Combining multiple methods might provide a more comprehensive understanding of customer behavior and preferences.

Let’s look at different data types.

First-party data

Data gathered directly from a company’s customers or users is known as first-party data. It is obtained through various interactions between the company and its audience.

Types of first-party data that companies collect include:

• Website or app interactions from web analytics, user registrations, and online behavior.
• Transactional data, such as purchase history and order details.
• Customer feedback from surveys, reviews, and feedback forms.
• Data related to customer interactions stored and managed in customer relationship management (CRM) platforms.

Customers provide their data directly to the company, which means a higher level of trust both ways – customers share the data willingly, and companies know it’s an insightful asset. Additionally, first-party data tends to be more accurate than other types of data, which may come from sources whose reliability is more difficult to evaluate.

Collecting and using first-party data requires companies to adhere to privacy regulations and obtain proper user consent. Data privacy laws such as the General Data Protection Regulation (GDPR) or the California Consumer Privacy Act (CCPA) regulate how companies use and handle personal information.

In a report by Deloitte, 73% of respondents believe that using first-party data would mitigate the impact of the rise of privacy awareness.

How to collect first-party data

Implementing an analytics platform on your website enhances the ability to track user behavior and extract valuable insights. You can analyze metrics such as page views, bounce rates, time on site, and user demographics. By employing event tracking, you can also examine specific interactions, including button clicks, downloads, and form submissions.

Encouraging users to register or create accounts on your website allows gathering information like names, email addresses and preferences during the registration process. You can then utilize the data from registered users to create personalized experiences and execute targeted marketing campaigns.

Incorporating newsletter sign-up forms on your website lets you capture user information, especially email addresses. By leveraging newsletter subscriptions, you can build a database of engaged users and facilitate targeted communication. You can also collect user data through contact forms. You can enhance your marketing efforts by adding fields requesting pertinent details such as names, email addresses, and other valuable information.

Creating surveys or feedback forms is a direct method of obtaining insights from website visitors. You can ask questions regarding user preferences, satisfaction levels, and other relevant topics and provide incentives to encourage user feedback.

For websites with an ecommerce component, the main focus should be leveraging data by collecting details on purchased products, order frequency, and average order value. This information allows for more personalized product recommendations that encourage users to make more informed shopping decisions.

Integrating social media platforms with your website facilitates accumulating data on social interactions. You should monitor social shares, likes, and comments associated with your content and utilize social media analytics tools to gather additional insights.

Implementing tools that track user behavior, such as heatmaps and session recordings, enables the analysis of user navigation patterns, dwell times, and interactive elements. You can make use of this data to optimize the user experience and tailor your content accordingly.

Utilizing cookies to collect information about user preferences and behavior necessitates the implementation of a cookie consent mechanism in compliance with privacy regulations. The data gathered during the process can be used to personalize content and advertisements.

Defining custom events and goals within your analytics platform allows for tracking specific user interactions. Actions such as video views, form submissions, and button clicks help you gain deeper insights into user engagement and optimize your website to extract the most out of your paid traffic. Also, it’s essential to perfect the UI so visitors won’t get lost on the website, which can increase conversion.

Tools for first-party data collection

Various tools help businesses collect first-party data across different channels and touchpoints. The choice of tools depends on the specific needs of the company and the nature of interactions with customers.

Here are some popular tools used for collecting first-party data:

• Analytics platforms: Piwik PRO Analytics Suite, Google Analytics
• CRM software: Hubspot, Salesforce
• Tag managers: Piwik PRO Tag Manager, Matomo Tag Manager
• Customer data platforms: Piwik PRO Customer Data Platform, Tealium
• Online surveys: Mailchimp, SurveyMonkey
• Customer feedback platforms: Trustpilot, Reviews.io

Second-party data

Second-party data refers to another company’s first-party data that is shared or sold directly between the two parties. In this data-sharing arrangement, both parties exchange the data with mutual consent. This type of data sharing often occurs through trusted partnerships, collaborations, or direct agreements between companies.

The exchange of second-party data relies on high trust between the two parties. Both organizations should know that the shared data is accurate, relevant, and obtained with proper consent from the individuals involved.

Since second-party data originates from another company’s first-party data, it is often considered to be of higher quality and accuracy than third-party data from external sources.

How to collect second-party data

Second-party data is obtained through direct collaboration or partnerships. Here are common sources of second-party data:

• Data exchange platforms (DEPs): Snowflake Data Marketplace, AWS Data Exchange
• Customer data platforms (CDPs): Segment, Tealium AudienceStream
• Application programming interfaces (APIs): REST APIs, GraphQL
• Data management platforms (DMPs): Adobe Audience Manager, Lotame
• Data governance platforms (DGPs): Collibra, Alation

Third-party data

Third-party data refers to information collected, aggregated, and sold by entities other than the one that initially collected the data and the end user. In digital marketing and data analytics, third-party data is often obtained from external sources and can include a wide range of demographic, behavioral, and interest-based data about individuals. This data is typically gathered by data brokers, aggregators, or other third-party organizations that specialize in collecting and selling data.

Data from third parties can differ in quality and accuracy. Since it is collected from external sources, its freshness, relevance, and completeness may be questionable.

Using third-party data raises various privacy concerns. Organizations must adhere to data protection regulations when acquiring, storing, and using such data, which is much more challenging to achieve than in the case of first-party data. Individuals may not be aware that third parties are collecting their data and what specific information they have access to.

Also, there are concerns about third-party data in programmatic advertising. GDPR mandates user consent for data collection, impacting the creation of third-party cookies. Mozilla Firefox and Apple Safari have implemented features like intelligent tracking prevention (ITP) and enhanced tracking protection (ETP) to block third-party cookies by default. Google Chrome was initially planning to phase out third-party cookies by 2022 but extended the timeline to the second half of 2024, aiming for a balance between user privacy and maintaining an ad-supported web. Safari and Firefox block third-party cookies by default, offering users enhanced privacy. 

How to collect third-party data

Third-party data comes in various types and is sourced from a wide range of providers, such as:

• Data brokers specializing in collecting, aggregating, and selling various data types.
• Websites that collect and share data generated by user interactions on their platforms.
• Market research companies that conduct research studies and surveys to gather data on consumer behaviors, preferences, and trends.
• Social media platforms that gather user-generated data, including profiles, interests, and social interactions.
• Location-based services that obtain location data from users’ devices, such as GPS apps, mapping services, and location-based apps.
• Surveys and panel providers that conduct surveys or maintain panels of individuals for data collection purposes.
• Ecommerce platforms that collect and store data on customer transactions, preferences, and behaviors.

Zero-party data – valuable insight into customers’ preferences

Zero-party data refers to information intentionally and proactively shared by individuals with a company or organization. Unlike first-party data, which is observed or collected through implicit actions, the customers provide zero-party data themselves. This type of data is willingly shared by users, often in the form of preferences, intentions, or personal information. This makes zero-party data highly valuable for businesses.

The collection of zero-party data is built on trust and transparency. Companies are expected to clearly notify how the data will be used and give individuals control over their information.

How to collect zero-party data

Companies can gain access to zero-party data by:

• Asking customers about their preferences for product features, content types, or communication frequency.
• Gathering information provided in surveys or questionnaires designed to understand customer opinions, needs, or feedback.
• Acquiring user-generated content, such as reviews, ratings, and comments, which can offer insights into their experiences.
• Focusing on opt-in choices related to newsletters, promotions, or other marketing communications.
• Collecting information provided to tailor the user experience, such as website and content preferences or notification settings.

Which type of customer data is the better choice?

First-party and zero-party data are generally considered more valuable than the other types of data because they are based on direct interactions and explicit consent, which aligns with privacy regulations.

Second-party data, while similar to first-party data, involves data-sharing and collaboration between trusted partners. However, the partner must still obtain customer consent, so collecting customer data is generally quite secure.

Third-party data, on the other hand, is much less reliable and may raise privacy concerns, as it is often collected without the knowledge or consent of the individuals involved.

If you want your company to prioritize customers’ privacy and trust, you should focus on first-party data collection, supplemented by zero-party data. It’s a more valuable source of information and a privacy-compliant way to better understand your customers.

How to use first-party data to improve your marketing strategy

Leveraging first-party data is crucial for improving marketing strategy. Here are several ways you can do that.

Personalized marketing

First and foremost, you can use first-party data to create highly personalized marketing campaigns.

To do this successfully, you can, for example:

• Organize first-party data in a centralized customer relationship management (CRM) system to facilitate accessibility and analysis.
• Segment audiences based on shared characteristics, enabling the creation of detailed buyer personas that represent ideal customers. Subsequently, it can be used to craft individualized email campaigns, provide tailored recommendations, or incorporate dynamic website content, such as dynamic forms, adaptive menus, real-time social media feeds, or user-specific notifications.
• Offer exclusive discounts or promotions aligned with customer behavior to further enhance personalization.
• Use social media marketing to create targeted content for specific customer segments.
• Obtain consent and ensure privacy compliance when using customer data.
• Regularly monitor and analyze the results of personalized marketing efforts, including engagement and conversion rates. This lets you continuously refine strategies, ultimately improving customer satisfaction and loyalty.

Segmentation and targeting

Harnessing first-party data for segmentation and targeting involves a systematic approach to understanding and categorizing your audience based on directly collected information.

To begin, you should define key criteria for segmentation, such as age, location, and buying behavior, and analyze the data to identify patterns. Then, you can create distinct customer segments, each with its detailed buyer persona, incorporating unique attributes and behaviors.

Such data can help tailor marketing messages, including personalized email campaigns, customized website content, and dynamic ad campaigns, to address each segment’s needs and interests. Also, it can be used to develop offers and promotions aligned with the preferences of each group.

Thanks to first-party data, companies can continuously optimize segmentation strategies based on evolving customer behavior and market dynamics.

Customer retention

A comprehensive dataset that includes customer purchase history, preferences, and interactions is crucial for practical customer retention efforts. Data analysis can help discern patterns and better understand customer behavior to strengthen relationships with existing customers.

You can use first-party data for customer retention by:

• Implementing targeted email campaigns that recognize past purchases, offer exclusive promotions, and deliver relevant content tailored to individual preferences.
• Anticipating customer needs and providing suggestions for products or services aligned with their previous choices.
• Creating loyalty programs and personalized incentives to reward and retain valued customers.
• Regularly assessing customer feedback and satisfaction data, promptly addressing concerns to enhance the overall customer experience.

Cross- and upselling

Using first-party data for cross-selling and upselling involves a strategic approach to adjusting recommendations based on customer preferences and interactions. By aggregating comprehensive customer profiles, businesses can segment their customer base according to buying behavior.

Analyzing first-party data helps identify natural cross-selling opportunities, enabling the recommendation of related products or services that complement previous purchases. Tailored upselling offers are crafted by understanding the customer’s spending patterns and interests and presenting premium or upgraded options that add value to their selections. Also, strategic bundling of products, personalized email campaigns, and dynamic website content further enhance the effectiveness of cross-selling and upselling efforts.

Optimizing ad and email marketing campaigns

Data collection can be used to craft ad and email campaigns targeting specific customer segments with messaging that addresses individual interests.

There are various ways to optimize marketing campaigns, such as:

• Showcasing products or services based on customers’ interactions for dynamic content and recommendations in ads and emails.
• Sending timely and relevant messages using behavioral triggers, such as abandoned carts or previous purchases.
• Encouraging engagement and conversions with customized offers and discounts based on past behavior.
• Cohesive customer experience through cross-channel consistency and A/B testing.

Additionally, segment-specific landing pages and customer feedback integration contribute to refining and enhancing the effectiveness of marketing efforts. Also, it’s essential to follow privacy regulations and obtain explicit consent, which shows the importance of transparency and fostering trust with customers.

Product and service optimization

Optimization is a strategic process to refine offerings based on customer data insights. By collecting detailed first-party data, you can understand experiences and expectations, identifying recurring themes and areas for improvement. Then, you can evaluate customer usage patterns and behaviors to pinpoint features that resonate or areas that may need enhancement.

With that data, you can:

• Personalize offerings according to individual preferences, recommend related products and anticipate future needs through predictive analytics.
• Implement iterative testing and improvement strategies based on insights gained, including A/B testing, refining user interfaces, and tweaking service delivery processes.
• Optimize customer journeys, roll out updates and features aligned with data insights, and enhance customer support services by proactively addressing common issues.
• Evaluate pricing strategies and benchmark against competitors to ensure competitiveness.
• Continually refine and adapt products and services in response to shifting customer needs and market dynamics.

Improved user experience

You can also utilize first-party data to elevate the user experience of your website or app. It can be valuable in personalizing website content, offering customized recommendations for products and services and streamlining the customer journey.

The insights derived from first-party data enhance interactions’ relevance and contribute to smoother user navigation. Furthermore, first-party data can improve customer support services by comprehensively understanding customer histories and preferences.

Thanks to such knowledge, customer support teams can provide more personalized and efficient interactions, delivering targeted solutions that align with the unique needs of each user. Integrating first-party data into your strategy empowers you to create a user-centric digital environment, fostering satisfaction, engagement, and long-term loyalty.

Increase user acquisition

Effective user acquisition strategies can be more precise and impactful thanks to the strategic utilization of first-party data. Businesses can create targeted campaigns by identifying and attracting similar audiences through studying the characteristics of their existing customers.

This approach increases the efficiency of user acquisition efforts and enhances the likelihood of reaching individuals who share key traits with the established customer base. In essence, by harnessing first-party data, businesses can refine and optimize their user acquisition strategies for greater precision and success in expanding their customer reach.

A/B testing

Finally, businesses can conduct meaningful experiments using insights from A/B testing and optimization strategies. This data-driven approach allows for informed decision-making, helping to identify which elements contribute to enhanced engagement and conversion rates.

In essence, by incorporating first-party data into the A/B testing process, businesses can iteratively tailor their offerings and messaging to align more closely with the preferences and behaviors of their diverse customer base.

Data collection and privacy – where are we heading

The intersection of first-party data and privacy is a critical and evolving landscape shaped by technological advancements, regulatory changes, and changing consumer expectations. Countries and regions worldwide are implementing and strengthening privacy regulations to give individuals more control over their personal data and require businesses to handle data responsibly.

Consumers are also gaining higher awareness of data privacy issues spurred by high-profile data breaches, scandals, and increased media coverage. Verizon’s data breach investigation report stated that human error, social engineering attacks, or data misuse caused 74% of breaches.

As a result, customers are more aware of how their data is collected, used, and shared. They are also more interested in businesses that are transparent about their data practices and provide options for controlling their personal information. According to Razorfish, nearly two-thirds of US consumers stated that a company’s transparency about how they plan to use personal data increases their trust. Over half of respondents said a company would be more likely to gain their trust if it didn’t unnecessarily collect personal data.

Businesses are recognizing the value of zero-party data that customers willingly and proactively share. This shift involves obtaining explicit consent and building trust by allowing users to provide information on their terms.

Another crucial aspect is the increasing development and adoption of privacy-enhancing technologies (PETs). They include tools and techniques that allow data analysis without compromising individual privacy, such as federated learning, secure multi-party computation, or differential privacy. Businesses are exploring different methods to de-identify or anonymize data to protect individual privacy while still gaining valuable insights. This involves stripping personally identifiable information (PII) from datasets.

Some of the most popular data anonymization methods include:

• Pseudonymization, where identifying data is replaced with a pseudonym or token.
• Deleting direct and indirect identifiers.
• Data masking, which involves replacing data within a set with fictitious data.
• Data aggregation, which presents collected data as aggregated values with no attributes attached. This is the only truly irreversible method.

Moreover, businesses are investing in more sophisticated consent management systems to obtain and manage user consent for data collection and processing. It includes providing users with granular options for what data they are comfortable sharing.

Overall, companies are emphasizing ethical considerations in data collection and usage. This involves ensuring that data is used responsibly and for the benefit of both businesses and consumers. The privacy landscape is dynamic, and businesses must continuously adapt to changes in regulations, technology, and consumer expectations. Staying informed and proactive in addressing privacy concerns is crucial.

Taking first-party data to the next level

First-party data offers a privacy-conscious and consumer-centric approach to creating more targeted marketing strategies that contribute to overall growth and success. Businesses prioritizing transparency, user control, and ethical data practices will likely navigate this evolving landscape more successfully.

Piwik PRO Analytics Suite is a flexible analytics platform that helps you easily collect the most valuable first-party data about your customers in a privacy-friendly way. With the gathered information, you can better understand how people interact with your company and use those insights to improve conversions.

Contact us to learn more about our approach to first-party data.