The use of zero-party data is on the rise as customers increasingly seek better experiences. Recent research has revealed that almost half (48 per cent) of consumers would rather share their personal data in exchange for a better brand experience than monetary rewards or other goods and services.
Data privacy still remains a key concern for many consumers, but they also expect more personalised interactions from brands in exchange for the data they choose to share. This creates an opportunity – and a challenge – for marketers to get smarter about how they collect, manage and use customer data. Getting this fine balance between privacy and personalisation right means more meaningful, trust-based relationships between customers and brands.
In particular, brands that can optimise the value of their zero-party data alongside first-, second- and third-party data will lead the way in refining personalisation strategies that enhance customer experiences and increase loyalty in the long-run.
Defining zero-party data
Zero-party data refers to information that customers intentionally share with a brand, often in exchange for personalised content and experiences. According to Forrester, this includes “preference centre data, purchase intentions, personal context, and how the individual wants the brand to recognise them.”
If your brand uses polls, quizzes, forms or surveys to gather information on customers, you’re already collecting and using zero-party data. This type of data is a goldmine in the marketing world because it comes directly from the customer.
When customers willingly provide this type of data, you don’t need to infer what they want or what their intentions are. Not to mention that it’s a symbol of trust in the brand, and signals not just an interest in products and services but also a willingness to engage in an age where capturing a customer’s attention is more difficult than ever.
While zero-party data is sometimes seen simply as a more nuanced description of first-party data, there are some key differences. First-party data is collected passively, based on behaviours like website visits, purchases, or app usage which often requires data analysis to uncover insights. On the other hand, zero-party data provides direct customer input, telling a brand exactly what a customer wants, thinks or prefers.
That being said, zero-party data does have its limitations. The volume of data available is often smaller than other data types so it can be difficult to scale when only around half of customers are willing to provide it.
Incentivising customers to share data
Brands can only leverage zero-party data to deliver personalised experiences, refine product recommendations and improve the relevance of customer advertising if they take the appropriate steps to maximise its true value.
The biggest barrier to collecting zero-party data is relying on customers to willingly share their data and preferences. To encourage this, brands should incentivise customers by offering something immediate in return, which could include exclusive content or discounts, personalised offers, early access to new products or members-only perks. This creates a value exchange where customers are made to feel like they’re gaining something meaningful right away, whilst also encouraging them to continue sharing data with the brand.
Another step brands can take is combining zero-party data with first-, second- and third-party data to maximise its value and truly deliver valued experiences to customers. While zero-party data provides accuracy, it doesn’t often paint the whole picture. Combining it with other data types – such as linking customer preferences (zero-party) to purchase history (first-party) – allows brands to enhance the depth and richness of their customer profiles for better-targeted product recommendations and content.
One other limitation of zero-party data is that customer preferences are constantly evolving, so zero-party data should never be treated as static. Brands should create ongoing opportunities for customers to update their preferences to ensure they continue to deliver relevant and up-to-date experiences. A skincare brand, for example, might ask customers about their skin type and concerns, then use this data to serve up relevant product recommendations, whilst understanding that their skincare concerns can change over time.
Increasing customer loyalty
When used effectively, zero-party data can help brands move beyond generic communication to deliver hyper-relevant, value-driven experiences. This, in turn, builds customer loyalty as customers who feel understood and valued are more likely to stick around, spend more, and advocate for the brand.
In a world where data privacy concerns are rising and third-party cookies are in flux, zero-party data offers a path forward for brands looking to get closer to their customers. It empowers brands to deepen their understanding of their audience while respecting their privacy and preferences. And for customers, it signals a new era where personalisation is consensual and genuinely useful.
Brands that embrace this shift and unlock the true potential of zero-party data will be the ones that lead not just in customer experience – but in consumer trust, loyalty and long-term growth.
Lisa Andreou is EMEA Head of Client Partnerships at Acxiom.
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