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The call to create first-party customer data strategies

Navigating the new data landscape

Today’s consumers expect increasingly personalized experiences. To deliver that customized experience and increase market share, business leaders rely on personalization. Ever wondered how ads seem to follow you around the internet? That’s personalization at work. And the engine that drives it is data. 

The changing data landscape makes it essential for companies to re-evaluate their customer data strategies — and fast. Let’s get started.

Where we are now

As part of building a direct relationship with your customers, you probably collect some form of data with their consent. This information, known as first-party data, can include purchase history, application and website interactions, opt-ins and subscriptions, and the like. A customer provides a business with first-party data with the understanding that the business —and only that business — will use that data to better serve them. 

But not all data is collected through active consent. All your customer’s online activity and search history is currently tracked by cookies. That information, known as third-party data, can be sold from one business to another, without the customer’s knowledge, with the goal of getting more information about aggregated pools of consumers with similar behaviors. 

Think about the last time you shopped for a new car. You probably looked up options online or Googled dealerships nearby. Then, BAM! Suddenly all the ads you saw on Facebook, YouTube, and other websites were from car dealerships, with information targeted to the very model you were thinking about. That’s third-party cookies at work! 

Using third-party cookies, advertisers pay to get one step closer to consumers’ brains, gaining access to the professional status, consumer preferences, and personal interests that are otherwise outside of their first-party scope. 

Data in real-life 

While most organizations collect first-party data from their customers, many still rely heavily on third-party data and use a combination of the two to build their personalized customer experience. 

For example, using in-store Wi-Fi, Walmart collects a combination of first- and third-party data on close to 145 million Americans. Individual profiles include what customers buy, which stores they visit, and where they linger while they shop. Analyzing every clickable action the customer takes on, social media activity, and even weather data completes a full customer profile. 

By aggregating and analyzing all this data, Walmart makes inferences about highly personal circumstances, knowing that if you’re buying newborn diapers today, they should start hitting you with advertising for toddler sizes in two years. Even without a loyalty program, Walmart’s data and analytics ensure they know their customers and they have what they need to create a personalized shopping experience. 

Why these trends matter

While customers may enjoy the customization of their experience, they don’t necessarily appreciate the creepiness factor of how often their privacy is invaded. The amount of information that consumers provide — knowingly or unknowingly — on a regular basis, which is then sold to other companies, creates a huge risk of data breaches and identity theft. 

Many organizations and advertisers see the coming deprecation of third-party cookies as a win for privacy, but a loss for businesses. But it doesn’t have to be a one-sided victory. Smart companies are figuring out how to use first-party data to achieve a personalized customer experience, turning the challenge into a win-win opportunity. 

Leveraging your first-party data 

To make up for the loss of third-party data, you need your customers to feel comfortable sharing their data with you. First-party data requires customers to be actively involved. Many customers are willing to give their information if they know it is being used responsibly by the business and that they will receive a better customer experience because of it. 

Your goal is to communicate how the information customers provide your company enables you to deliver a valuable, relevant experience that fits their needs and leaves them in control of their data.

Focus on customer retention over acquisition 

When you deliver a relevant experience to your customers, they’re more likely to stay customers. First-party data allows you to deliver a more customized experience by gaining an understanding of each customer’s preferences for your products and services. You’re then able to re-engage through your owned channels and increase the lifespan of the customer relationship. 

And it doesn’t mean you have to leave acquisition behind. Just think … happy, loyal customers are likely to refer friends and family. 

Offer value in exchange for data 

Customer loyalty programs are an excellent example of successfully using first-party data, especially where there is a value-add such as accumulating points, getting a discount, early-bird notifications, and the like. In this case, customers are incentivized to provide their data and you can build a unique customer profile that will allow you to customize their interaction with your brand in the future. 

Create personalized content

First-party data helps you discover who your customers are and find out about their habits and preferences directly from the source. Insights gained through first-party data analysis allow you to create different targets and strategies for delivering content personalized to your most loyal customers. 

It’s a trade-off

The reality is, by increasing consumer privacy, businesses lose access to aggregated information and the ability to mass personalize and customers potentially lose the personalized experiences they’ve come to expect.  

The biggest question remains: can organizations fill the gap and start collecting and leveraging quality first-party data? 

The time is now

Data and marketing teams must work together, and fast, to create first-party customer data strategies ahead of the cookie deprecation timeline. Building processes to collect quality data, keep it safe, analyze it correctly, and use it to create meaningful customer experiences won’t be easy, but laying that groundwork now can position your company for success in the new customer data landscape.

This article was originally published on CDO Magazine.

About the author

Mark Johnson

Mark Johnson is Fusion’s Southwest Ohio Regional Vice President and Strategic Data Management & Analytics Executive Leader. He has more than 40 years of experience in the IT industry, with a deep concentration in data management and analytics over the most recent 25. He is responsible for leading Fusion’s engagement with major clients to accelerate data-driven digital transformation.

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