Email Engagement

The Power of First-Party Data: A Guide for Email Marketers and Sales Teams

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Between constantly changing data privacy laws, the ever-present threat of a security breach, and AI evolving at break-neck speed, today’s consumer takes the ownership of their data more seriously than ever before.

In fact, a study by Accenture reported that “87 percent of consumers [believed] it [was] important for companies to safeguard the privacy of their information”.

But how does that track in a world where instant (and personalized) gratification is the norm? How can you get the data you need to offer the quality of service customers want, all while treating their information with the utmost respect?

Fortunately, today’s sales and marketing teams have several channels of communication to work with, each one with its own advantage. And with that comes the opportunity to reach out directly to get a customer’s consent to collect that sweet, sweet first-party data.

What is first-party data?

First-party data is data an organization collects directly from its own customers. This information is collected via first-hand interactions and is uniquely tied to your business. As such, it’s considered highly valuable by sales and marketing teams looking to gain insights into their customers’ preferences, behaviors, and interests in order to personalize marketing campaigns, improve customer experiences, and make other strategic business decisions.

This data is so valuable in fact, that a joint 2021 study from Think With Google and Boston Consulting Group found that, “those using first-party data for key marketing functions achieved up to a 2.9X revenue uplift and a 1.5X increase in cost savings,” noting that:

“Despite its clear benefits […] most brands aren’t yet harnessing first-party data’s full potential.”

Zero, first, second, and third-party data compared

In a world where first-party data exists, you may wonder why there’s even such a thing as second and third-party data. It all comes down to how it’s collected.

Zero-party data is information a customer knowingly and voluntarily shares with a brand.

First-party data is owned by the organization that collects it and is generated through direct, one-on-one interactions (i.e. a customer or prospect fills out a lead form).

Second-party data has been collected by one entity and then shared with another trusted partner entity for mutually beneficial purposes. Second-party data serves to provide additional insights and extend the scope of a company’s data, allowing for more targeted marketing and audience expansion.

Third-party data is collected (then shared, licensed, or sold) by an unaffiliated external entity. The data is generated from various sources (i.e. data brokers, aggregators, public records, etc.) and is typically bought or licensed by companies looking for broader audience targeting, market research, or to fill in gaps in pre-existing data. That said, third-party data may not always be reliable or accurate due to its widespread (and inconsistent) sources.

Types of first-party data

No matter your first-party data strategy, all information should be collected with the consent of the owners, whether explicitly through lead generation or contact forms or implicitly through other agreements (think: terms of service).

Because of this, first-party data encapsulates many types of information, such as:

1. Demographic data

This includes details like a user’s age, gender, location, income level, and other relevant demographic information.

2. Transactional data

This includes purchase-related information like one’s order history and transactional details like date, time, and amount spent.

3. Behavioral data

This data relates to a customer’s behavior, like website visits, browsing patterns, search queries, content-type consumption, and preferences.

Other types of first-party data include things like contact data (i.e., names, email addresses, and phone numbers), social media data (i.e., usernames, profile information, interactions, and other activities), and customer feedback (i.e., survey responses, reviews, and testimonials).

First-party data use cases

First-party data can be used in many ways––from enhancing your marketing efforts and improving customer experiences to informing your overall business strategies––and is invaluable information to have for all teams within an organization. Below are common use cases for leveraging your first-party data.

For email marketers

Personalization and targeting: Capturing the attention of subscribers requires more than following email trends. First-party data empowers marketing teams to personalize their messaging and efforts based on individual preferences, behavior, and demographics. By properly analyzing this data, marketers can enhance their email personalization efforts, recommend more relevant products, services, or content, and deliver seamless, omnichannel experiences.

Marketing attribution and ROI analysis : First-party data allows marketing teams to track and attribute their efforts to specific customer actions or conversions. This data can be used to measure the effectiveness of campaigns, optimize marketing budgets, and more accurately interpret return on investment.

For sales teams

Customer retention and loyalty: Using first-party data, a sales team can track and identify loyal customers, better understand their preferences, and create targeted programs to reward and/or otherwise retain them. By leveraging behavioral data to offer more personalized service, organizations can further increase the worth of their customer’s lifetime value.

Cross-selling and upselling: Because first-party data provides valuable information about customer transactions, sales reps can more easily identify cross-selling and upselling opportunities. With this data, companies can offer more relevant product recommendations or complementary services and, ultimately, increase average order values while enhancing customer satisfaction.

For CRM admins

Customer segmentation: First-party data helps admins organize your customers’ CRM data based on various characteristics, from transaction history to geo-demographic. In turn, this allows marketers to tailor their strategies and communications to specific target segments, ensuring more relevant messaging and higher engagement rates.

Customer journey mapping: First-party data provides insights into the customer journey, from initial transactions to chat history and more. By analyzing customer behavior, touchpoints, and conversion paths, admins can identify milestone moments, pain points, and opportunities for optimization, thereby enhancing the overall customer experience.

For product teams

Product development and innovation: First-party data is a valuable source of feedback and insights for product development and innovation. By collecting and analyzing customer feedback, reviews, and suggestions, product teams can efficiently identify areas for improvement, ideate on new lines of product or service, and make informed decisions to meet customer needs more effectively.

For customer service reps

Customer Service and Support: As you’ve long guessed by now, first-party data helps organizations offer personalized and efficient service by using it to support reps in addressing customer issues promptly and with a personalized touch.

Of course, these are just a few examples of how first-party data marketing is used (and how it benefits all areas of a business). As you can see, many of them overlap, making collaboration inevitable and proper data management crucial.

4 challenges of using first-party data (and their solutions)

As with everything in life, there are potential risks and challenges that come with using first-party data. Below, we break down a few things that could go wrong (and what you can do to fix them).

Challenge 1: Low- or poor-quality data

Unreliable first-party data contains errors, inconsistencies, or otherwise invalid or missing information and is bad news for any organization or team. If you’re not careful where and how your data is collected, you may end up with a big pile of just plain bad data. This data will inevitably lead to:

  • Flawed decision-making
  • Ineffective personalization efforts
  • Misguided customer targeting
  • Suboptimal campaign performance
  • Irrelevant messaging, recommendations, or offers
  • Decrease in trust and brand perception
  • Negative customer experiences

Solution: Prioritize data quality through robust data collection, validation, and cleansing. That means regular data audits, good data hygiene, and firm data governance frameworks to improve and maintain the quality and reliability of your first-party data. Investing in the right data management tech doesn’t hurt, either!

Challenge 2: Wrong data integration tool(s)

Trying to leverage first-party data without the right tool(s), platform, or integration is a little like trying to hit a nail without a hammer. Without proper data integration tools, first-party data may be stored in isolated systems or departments. If your organization struggles to properly consolidate data from various sources, the result could be a ton of frustration and strain as they attempt to fix things manually (which is time-consuming, error-prone, and unscalable). Not to mention:

  • Siloed or fragmented data
  • Outdated or incomplete customer data
  • Decrease in inter-departmental collaboration
  • Inaccurate data analysis
  • Inefficient cross-channel marketing
  • Disjointed messaging
  • Data processing delays
  • The inability to handle large data volumes.

Solution: As mentioned above, investing in a robust set of data integration tools facilitates seamless data integration, transformation, and synchronization. In turn, this allows organizations to connect the dots between disparate data sources, automate data pipelines, ensure high data quality, and provide a unified view of the customer.

Challenge 3: Limited data volume

Leveraging first-party data with limited data volume can be tricky. After all, such a small amount of data may not provide enough statistical significance for accurate analysis and insights. In such a case, any insights derived from a limited volume of data are unlikely to be representative of your larger customer base or market (which isn’t exactly helpful). Trying to work from a limited pool of information can also result in:

  • Insufficient data points
  • Inaccurate conclusions or misinterpretation of data
  • Ineffective predictive analytics and forecasting models
  • An inability to conduct meaningful experiments or A/B tests
  • An inability to benchmark against external sources or industry standards

Solution: Again, it’s also important to focus on high data quality, ensuring that the limited data available is accurate and up-to-date. Additionally, you can explore data augmentation techniques, such as data modeling or synthetic data generation, to expand your data volume (for analysis and modeling purposes).

Challenge 4: Regulatory non-compliance

Leveraging first-party data without regard to data privacy regulations is a big mistake and comes with major consequences. Not only is ignoring data privacy regulations, such as the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), or other applicable laws a huge violation of your customers’ trust and safety but failure to implement the appropriate security measures and data protection practices can also result in:

  • Financial losses from fines, penalties, and legal actions
  • Negative publicity
  • Erosion of brand loyalty
  • Increased customer churn
  • Inefficient data governance
  • Increased organizational risk
  • Unauthorized access, hacking, or data leaks
  • Data quality issues
  • Inability to do cross-border services (i.e., international data transfers)
  • Restricted data flow, and;
  • Limited data access and collaboration.

Solution: Prioritize data privacy and ensure compliance with all relevant regulations. This includes obtaining proper consent for data collection, implementing robust security measures, establishing data governance frameworks, and, above all, being transparent to customers about your practices. Remember to regularly assess and update your privacy policies and procedures to ensure they stay aligned with changing regulations and evolving best practices.

Personalize your marketing efforts and improve customer retention with ZERO-party data

Consumers expect personalized experiences from brands but an ever-changing privacy landscape makes it difficult for companies to deliver. Fortunately, zero-party data makes it possible for personalization and privacy to (finally!) coexist.

To implement a winning strategy for zero-party data, download our eBook, Zero-ing in on Zero Party Data, today!