How Zero-Party Data Is Shaping The Future Of Marketing

By Josh Rosenheck @ Community.com

As marketers in the tech space, we use data every day to inform our decisions. It informs how we shape interactions with our customers, the tools we use and the types of content we serve. The right approach to data is key to a business’ marketing, and thus to its success.

But with increased regulation, growing privacy concerns, and issues with data inaccuracy and disparity, it’s becoming more and more difficult for brands to get the valuable consumer insight they need to inform their marketing strategy.

For decades, businesses have relied on questionable third-party data for this insight—and for decades, they’ve borne the brunt of that decision. Ads that are incorrectly targeted, and thus not relevant (a recent study from Audience Project found that only 10% of online users found the ads they received to be relevant). Ad dollars spent that ultimately don’t translate to revenue, or even engagement. And, of course, privacy backlash from consumers.

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As concerns about data tracking continue to grow, platforms are taking steps to protect consumer privacy and eliminate third-party data completely (while still owning the data they’d previously collected). Brands like Lush and Patagonia have even gone so far as to all-out boycott sites like Facebook. This step away from third-party data stems from a surge of consumer suspicion over data tracking, a demand for greater privacy, and a desire for trust and transparency from brands.

Recent events like Google’s initiative to phase out tracking cookies by 2023 have only confirmed what we, at Community, have known with certainty for years: Third-party data is dying. Apple’s iOS 14.5 and 15 updates were the nail in the coffin. 

It’s not that consumers are adverse to sharing their data — in fact, here at Community, we’ve seen that it’s quite the opposite. But consumers, rightly so, prefer to choose the brands who they share their data with, and how that data is used.

It’s one of the key principles we founded Community on: the belief that a direct relationship with customers is the foundation for successful marketing. By building close relationships through SMS, our clients have gained access to a new, better type of data — data the customer shares willingly. Zero-party data, when coupled with first-party data brands already have collected, allows businesses to create powerful marketing strategies that then translate to revenue.

Personalizing the CX through zero-party data

Zero-party data removes the guesswork associated with third-party data by getting critical information about preferences and customer intent directly. Businesses can, in turn, combine those valuable insights with other data (transactional, for instance) to tailor their marketing strategy and personalize the customer experience. It’s a symbiotic relationship — a true win-win for customers and brands alike.

The value of zero-party data becomes obvious when you consider just how much personalization impacts the customer experience. It’s what makes zero-party data so revolutionary: the ability to provide the level of personalization that is needed to successfully market to today’s customers. When businesses create experiences that are relevant to their customers, trust and loyalty will follow. That’s how you nurture brand loyalty and “win” at marketing in the long run … by leveraging both zero-party and internally collected data to create a truly personalized experience for customers.

Before you can take zero-party data and turn it into a winning marketing strategy, though, you’ve got to put in the time to gather it. And capturing zero-party data, as many companies have already begun to discover, requires a deep shift in the way you approach marketing.

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As trends in data shift, so too must our approach to marketing 

Over the past months, I’ve witnessed a burgeoning excitement about the potential of zero-party data, and am excited to watch it shift into the forefront. Brands have needed better data solutions for decades, and we’re well aware of the value of customer-offered insights here at Community.

But while businesses are right to embrace zero-party data, the tricky thing about zero-party data is that successfully capturing it requires trust and direct access to the consumer — two commodities that are increasingly difficult to come by in a world racked by data-tracking suspicion and advertising overload.

In the past, brands relied on traditional marketing channels like email to facilitate one-sided conversations with consumers. Zero-party data calls for a direct approach. To truly capture and leverage zero-party data, marketers will have to adjust their strategy and — in particular — the tools they’re using.

SMS marketing providers like Community facilitate the direct conversations between brands and their customers that make zero-party data possible, and it’s been incredible seeing the impact these communications have had. The benefits are two-fold, allowing marketers to know their customers better while ensuring that their relationship to that customer remains genuine and on-brand.

When you consider the benefits of SMS marketing, it’s easy to see why it’s such a natural channel for the collection of zero-party data. SMS helps to power personalized experiences because:

  • It provides direct access to the customer
    • Alcohol brands can directly learn their customers’ preferences, and with tools like polls and quizzes (like identifying what type of wine you might like based on other food you like to eat), can in turn inform future content and recommendations
  • People engage with it more than other channels like email or social media
    • Retail brands are able to broadcast access to exclusive, targeted content on a channel that boasts higher rates of engagement, while also reaching users where they are in the mobile space
  • It’s a more intimate mode of communication
    • Musicians and entertainers, whose marketing targets millions, use SMS to grant access to exclusive content and experiences — all personalized according to their fans’ preferences
  • It provides several ways to capture zero-party data (either directly through SMS or by complementing zero-party data collection efforts on other channels)

As brands embrace a more personalized approach to marketing, SMS is quickly becoming one of the most useful channels for acquiring zero-party data, building trust with customers, and personalizing customer experiences.

So yes, third-party marketing as we know it is changing — and marketing needs to adapt along with it. But with SMS, the possibilities are endless. As we move towards a future centered around personalized marketing experiences — ones backed by real consumer insight rather than ethically questionable third-party data or conjecture — the brands who will thrive are those willing to embrace zero-party data and evolve their tools accordingly.

 

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