Just by being alive, we create so much data. An average of 1.7 megabytes of data was created every second by every individual in 2020. Another way of looking at this is at the total: 25,000,000,000,000,000,000 (1 billion x 1 billion) quintillion bytes of data are produced by humans every day. That is staggering. So there isn’t a lack of data about customers, especially for businesses and brands, but rather confusion about what to do with the data and how to get the right data is harder than ever.
While there isn’t a firm right and wrong when it comes to collecting data, some data ends up being more useful. It’s not news that browsers are phasing out third-party cookies and well-known tech companies are explaining clearly how they gather, use, and share consumer data.
From our point of view, the best data a company can collect is what their consumer tells them directly. That’s zero-party data. Zero-party data, as defined by market research firm Forrester, is “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.”
Here’s an example: I buy a pair of football cleats for a member of my family. This is first-party data, which shows my behavior and purchase history. The reason that it’s not zero-party is because the football cleats weren’t actually for me, and I don’t play football. So any future retargeting that is about football will not be relevant for me. But if a sports brand asks what sports I like, I may share that I like to run and swim. Then they will be able to share better and more relevant products in their marketing to me.
According to The Drum, just 15% feel they’re getting good value from granting access to their data. Meanwhile, 80% of consumers are more likely to purchase from a brand that provides personalized experiences, found Publicis Groupe’s Epsilon, a company specializing in personalization. When we compare these two statistics, we can see there’s a big opportunity in helping our audience get more value from the information they share with us. When marketers make the benefits of data sharing timely and relevant, it’s a win-win for them and their customers.
As marketers, we need to understand and always remember to clearly define the value exchange for the customer. When we ask for information, we need to make sure that we offer something of value in return. The privacy calculus is a subconscious process that consumers go through before they make a decision. In a matter of seconds, they decide whether it’s worth sharing what the brand or business is asking for.
Benefits like providing entertainment, financial incentives, or personal relevance tip the scale in favor of sharing what the brand is asking for. Whereas costs like entering data (maybe it’s a long form to be filled out), loss of privacy, or intrusiveness (maybe the consumer feels that what they are being asked is not appropriate), can tip the scales against the consumer sharing information with a brand or business.
Here is a visual we often use to illustrate the privacy calculus:
Game mechanics can help with the benefits such as providing entertainment (a personality test where they learn something about themselves) and even prizes like vouchers (financial incentives). Of course, this is just one way to provide benefits, but we recommend keeping this scale in mind when you make a request of your audience.
Most businesses dream of developing a strong relationship with their consumers. To do this, it’s important to create trust and one way to do this is by being very transparent about the value exchange and how you’ll use the data you collect.
Another way to do this to show that you understand the needs (or wants) of your audience. For example, earlier we talked about sport preference — it’s important that when you ask for data, you then be sure to use it. If I’ve shown my preference for running and swimming over football, then if I see ads or content about football, I’ll realize that what I’ve shared isn’t being used as ‘promised’. Customer experience management platform Sitecore summarizes how to better personalize with four tips: (1) show customers you understand their needs; (2) give your customers a reason to trust you; (3) don’t waste your customers’ time; (4) recommend the next best action.
Some times are better than others to use personalization. While it’s harder than ever to reach consumers because of the number of average ads seen every day (the number varies between 5,000-10,000 per day), brand blindness, and increased time spent online, businesses and brands still need to keep their audience top of mind when planning. Getting personalization right should be a win-win-win: it benefits your audience, it benefits your business, and it benefits the brand-consumer relationship.
Think With Google found that customers most liked personalization (services and recommendations) when they are busy, or have limited time or energy to complete a task. Think With Google gave three examples: when one is rushing for a train, working against a deadline, or running late to meet a friend. On the contrary, when your consumer has enough time, they are less open to a personalized service.
What does this mean? That brands and businesses must always keep the consumer’s preference at the forefront as they design experiences. Brands should prioritize trust when asking for data, creating a campaign, or personalizing an experience. Then they need to use the data when it makes the most sense for the consumer.
That being said, Think With Google also found that the more trust there is between the consumer and the brand, the more the brand can use the personal information.
Let data help you with this — to understand preferences and what your consumer wants. In return, you’ll be able to better segment your audience, personalize communication, re-activate ‘sleepy’ members of your database, create deeper engagement with your audience, and increase loyalty.
With so much data being created and available, it can be difficult to know how to approach data-driven marketing. But if you keep the consumer front-of-mind, then you’ll make the right call.
If you’d like to know more, check out our webinar Tried And True Ways To Gather Customer Intelligence.