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What to consider before collecting zero-party data

August 18, 2021

By Megan Angell, 84.51° Senior Data Scientist

With third-party cookies on the way out, zero-party data is becoming increasingly important. The term “zero-party data” originated with Forrester, a research and advisory company, which defines it as “data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her.” For example, you may want to collect information on customers’ ages to help you choose products to recommend, or about their preferred method and frequency of communication to help your marketing reach them without causing annoyance. While it may be tempting simply collect as much data from the customer as possible, creating a framework that weighs the benefits and costs of different types of data and then carefully selecting attributes will yield far greater benefit to your organization in the long term. We break down some of these key tradeoffs below.

Utility

When customers explicitly provide you with their information, they will likely expect something in return, whether that is more personalized communications, tailored deals, or added convenience. Before choosing to collect a piece of data, you should have a clear use case of how it will help drive value for your customer and your organization. Zero-party data can be especially useful for new customers who may not have purchase or clickstream data in your system yet.

Accuracy

How accurate is the data provided by customers themselves versus 1st, 2nd, or 3rd party data? While some data points are straightforward, such as birthday, asking customers if they are interested in healthy products may be less accurate—customers may say yes as a form of “wishful thinking” or because they don’t want to admit otherwise, but their actual purchase data may indicate the opposite.
Other attributes may change over time, and while customers may be willing to give explicit feedback once if prompted, they may be unlikely to respond to future requests or adjust their data in their settings/account options. Are there ways you can design the experience so that customers are more likely to update you when their data changes?

It is also important to consider whether you are collecting data at an individual or a household level. Some preferences may apply to some household members but not others, and incorrectly applying this information to the whole household may even have a negative impact.

Sensitivity

In some cases, there may be negative impacts to collecting some attributes. For instance, they may consider their diet/allergen information to be personal. Too many questions may increase customer fatigue and reduce the likelihood that they will fill out your questionnaire. Additionally, you should ensure that you are prepared to comply with privacy regulations like CCPA and GDPR, depending on where your customers are located.

Ranking What is Important

Zero party data chart

You may want to create a formal scoring system, deciding on specific criteria and then rating each attribute you’re considering collecting according to these criteria.

Final Thoughts

Well-chosen zero-party data can drive significant value for both your customer and your organization. And, in a post-cookie world, it may be increasingly difficult to do without.

Forrester Research, https://go.forrester.com/blogs/straight-from-the-source-collecting-zero-party-data-from-customers/

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