A Guide to Zero-Party Data
What is Zero-Party Data?
Zero-party data (ZPD) is a type of consumer data that refers to information that consumers willingly share with a brand in exchange for a certain purpose or value. A brand can directly request and collect this kind of data, and consumers who trust the company can voluntarily provide it. Some examples of ZPD include user preferences, personal context, and even purchase intentions.
With this kind of self-reported or declared data, brands can interact with consumers while giving them control over the handling of their own information. Users can edit their own data, or even revoke permission at any time. This ongoing process, much like consent data, also offers users both privacy and personalization. After directly asking users what they want, companies can utilize the answers in way that benefits both the brand and the consumers.
Zero-Party Data vs. Other Types of Data
To define zero-party data, it must be differentiated from the other existing types of consumer data. Simply put, zero-party data does not contain inferred data, observed data, and self-reported data that may fall under third-party data, second-party data, and first-party data. ZPD only consists of self-reported data, or the kind of information that consumers directly and willingly provide.
Third-party data is all about the conclusions that companies can draw about customer intentions and interests. In this process, your company could hire a data provider to collect demographic and psychographic information from different sources, but that intermediary, has no direct connection or interaction with the consumers. Data like inferred household income, purchase preferences, and page likes on social media also fall under this category.
Second-party data refers to information that is shared through mutually beneficial business partnerships. Your company can purchase this data from another source, which is the company that collected it from users. This kind of data includes self-identified household income, product or category preferences, and web cookies.
First-party data is the information that your company collected through interactions and engagement with your own customers. As the primary source, you are the “owner” of this data and its privacy policies. It can include dates of birth, mailing addresses, purchase history, loyalty program activities, and cross-device identity matching.
Zero-party data is directly and deliberately provided by customers, who also control how it can be used. Some examples include preference insights, purchase intentions, and customer survey feedback.
What is the difference between Zero-Party Data and Consent Data?
Consent data, as the name indicates, refers to personal information that is given with the full consent of the customer. Both the company and customer must also have complete awareness of the data’s usage and benefits. To clarify, consent data is NOT the kind of information obtained through cookies, or things like consent pop-up windows.
ZPD may also be called consent data, but only if that data is processed continuously between a company and a consumer. These iterative consent experiences, like preferences and purchase intentions, can solidify brand engagement and build relationships.
Your company can obtain consent data through repeated interactions with consumers, but you must also build lasting trust by actively maintaining consent. While recognizing the value of your customers and their data, it is important to offer value to your customers as well. Your commitment to this ongoing process will also ensure their commitment to your brand.
How can your company utilize Zero-Party Data?
Zero-party data provides companies and customers the opportunity to engage in a iterative process to strengthen their relationship. With the help of direct feedback, brands can continuously improve their service and the overall customer experience. This exchange of value is verified in a 2018 survey, which reported that 64% of consumers consent to the use of data like personal preferences and purchase history, as long as they get to experience more personalized services.
According to even more recent research by Forrester, the market’s urgent need for both privacy and personalization can effectively be addressed by zero-party data. In the age of the customer, more brands are encouraged to favor ZPD over third-party data. In 2020, it is expected to be utilized by 15% of brands around the world.
Because ZPD can only be shared when customers trust companies, it has become a crucial part of the industry. Brands enjoy the many benefits of zero-party data– improved products, better customer experience, effective marketing, and even employee engagement – as long as customers continue to give their consent. As the conduit towards an enjoyable exchange of value, this kind of trust should be a consistent element of the customer journey, as well as an integral asset of any company.
Safeguarding the trust of consumers must be an essential part of any business, especially when it comes to using ZPD. To build this trustworthy reputation, key values like transparency and dependability must be prioritized and built into the company’s systems. Companies should also invest in ways to resolve issues like data availability, data bias, and information privacy. The ongoing collection and application of data must also regularly recognize customer insights. When your company can consistently and respectfully rise to these customer expectations about the use of their data, success is bound to follow.
