What is first-party data and why is it important? 

In recent years, the world has become increasingly concerned with privacy and how data is collected, used, and shared. This heightened awareness has reshaped the landscape of data-driven practices, emphasizing the importance of responsible data collection and usage. Against this backdrop, first-party and zero-party data have emerged as cornerstones in the realm of data-driven marketing strategies. That’s because these types of data help foster a more transparent and reciprocal relationship between businesses and their customers.

So, if you’re looking to find ways to connect and deepen your relationships with customers, make sure you’ve got first and zero-party data on your radar.

First-party data is information about your customers collected directly by your company. It includes data like website visits, purchases, or customer service interactions. Your company owns this data, which offers a reliable source of insight into customer behavior and preferences.

While first-party data is collected from customer actions, zero-party data is information customers willingly provide. Individuals share zero-party data through surveys, questionnaires, feedback forms, etc.

The key distinction lies in the level of user involvement. First-party data is more observational, derived from implicit user actions. On the other hand, zero-party data is explicit, originating from the intentional sharing of information by users themselves.

External entities collect second-party and third-party data.

Certain internet browsers, like Chrome, Firefox, and Safari, utilize third-party cookies to monitor online activities and display targeted advertisements. That's third-party data. However, in recent years, these browsers have begun phasing out third-party cookies to protect their users’ privacy and offer more secure browsing experiences. After all, using customer-provided information is more ethical than purchasing data without their consent.

Curious about how to collect first-party data? There are several ways. The most common way is to add tracking pixels to your website, product, or social media profiles that collect data about visitor behaviors and actions. This information is then recorded in your CRM or customer data platform (CDP).

So, for example, if someone visits your website, the tracking pixels will record what actions they take while browsing. You can combine this information with direct conversations that these visitors have had with your company. That might be an interaction with the chatbot on your website or a DM sent to a social media account. From there, you can leverage this combination of data to inform your retargeting efforts.

Here are some common sources of first-party data:

• Website analytics: Data collected on your website, like page views or conversions
• App usage: Data collected in your app, such as feature usage and app installations
• Email engagement: Data collected from subscription-based emails like opens, clicks, and replies
• Purchase history: Data from in-app purchases
• Social media interactions: Data collected from your social media accounts, including private and public conversations
• Event participation: Attendance or engagement in company events or webinars
• Subscription preferences: Details of newsletter subscriptions or communication preferences

Oh, let us count the ways!

First-party data is the richest, most reliable information you could have about your audience—the people actually buying and using your products and services. It allows you to create customer-centric products, services, and processes.

Here are three key reasons why first-party data is so important to your business and your marketing:

Rather than paying for some other source to gain access to a dataset of people’s information, you can invest your money into building systems that collect rich data for you—with your users’ consent.

You uniquely own your first-party data. Unlike second- or third-party data, which can be sold to your competitors, no one else has access to the treasure trove of information that is your first-party data.

Another benefit of first-party vs. third-party data (or second-party data) is that you don’t necessarily have to pay to access it. That isn’t to say that all first-party data is free. Your company will likely have to pay to build the optimal system for collecting, analyzing, and leveraging data. However, there is no limit to the amount of data you can collect once you build that system.

Creating an effective first-party data strategy starts with ensuring that your data collection is efficient, effective, and gathered with consent. Translation? Before you can even begin to develop a strategy, you have to ensure that you have access to clean, accurate data.

A CDP can make sure that all the first-party data you collect from various sources is clean, organized, and usable for your purposes.

Your CDP will typically combine your various data sources about a person or entity into a unique user ID. First-party data enrichment is often part of this as well. You can further enhance the information in users' profiles with additional demographic and behavioral information.

Leading CDPs integrate seamlessly with the other tools in your martech stack, allowing you to create ultra-personalized customer experiences. They also structure data to make it ripe for AI and machine learning. And they comply with privacy laws like GDPR and CCPA.

Designing a first-party data strategy is the most reliable way to continuously optimize your acquisition, onboarding, and retention marketing efforts.

An effective first-party data strategy arms you with the exact information you need to create better, more personalized experiences for current and potential customers. It’s also key for creating memorable customer interactions across channels like push, email, in-app, SMS, and paid media.

For better marketing, let's look at leveraging first-party data across the entire customer lifecycle.

At the very top of the funnel, there are countless ways to leverage first-party data in your marketing to better attract qualified prospects. Customer profiling, for example, can help you create a vision of your ICP (ideal customer profile) with demographic data, past purchase behavior, and preferences. From there, you can craft lookalike audiences with similar characteristics to your best customers for your social media and display campaigns.

During onboarding, you have the opportunity to not only ask your customers direct questions about themselves and your product (zero-party data), but you can also observe everything they do within your tool during this critical time (first-party data). That information is vital to creating personalized, segmented marketing campaigns that encourage product stickiness.

For example, you might send emails with tailored recommendations for products or features that align with the interests a user shared in the sign-up flow. Or, you might leverage first-party data to determine the optimal timing and content for in-app messages.

If you want to build long-lasting relationships with your customers, look no further than first-party data. During the retention phase of the customer journey, you might want to create predictive analytics models based on the customer data you’ve collected to date. With these models, you can identify behavioral patterns indicating a customer's likelihood to churn. From there, you can craft omnichannel campaigns for segments likely to churn that emphasize the value of your products and services.

Predictive analytics can also tell you who your super users are. You can target these folks with cross-sell and up-sell campaigns that recommend complementary products or premium features based on purchase or usage patterns. For example, when a customer uses a specific feature of your tool, you might send an in-app message recommending a similar feature they have yet to try. Or, you might send a push notification when a new product launches in a category they’ve shown interest in previously.

The importance of first-party data cannot be overstated, especially with the recent shifts away from third-party cookies and other forms of data collection that compromise the privacy of your users.

First-party data is not merely a collection of information; it's a strategic asset for every business. It's the gateway to understanding your customers at a granular level—their preferences, behaviors, and individual journeys. In this era where customer trust is paramount, first-party data is the most ethical and reliable source, empowering businesses to build transparent and mutually beneficial relationships.

At Customer.io, Data Pipelines and Journeys work perfectly together to allow you to collect, store, and leverage your first-party data for your marketing campaigns. Data Pipelines delivers first-party data to the tools you already use, and Journeys helps you build a unified view of each customer. Together, you can use these products to deliver personalized messages to your customers and customize your engagement with confidence. Give them a try today!