When it comes to information about your customers and target markets, first-party data can be a more powerful tool. That said, many marketing and business leaders are still wrapping their heads around what first-party data means. They’re unclear on where the information comes from and how to use it. Below we explore what first-party data is and what it can do for your business.
First-Party Data Comes From Your Audience Members
Instead of buying information from someone else, first-party data contains details your business collects directly from your leads and customers. Think of it as intel audience members willingly give you as they interact with and purchase from your company. Sources of first-party data can include social media pages, customer relationship management apps, and website analytics.Businesses can also leverage first-party cookies on websites and social media profiles for retargeting and retention marketing campaigns. Unlike third-party cookies, first-party versions collect data that your company owns. Your audience also agrees to give you their information with the understanding that you’ll use it for business purposes. For example, you might track their online store behaviors to make product recommendations or send personalized emails.
First-party data is often more useful and insightful than outside market research. It comes directly from the people who are already buying from you or have a strong interest in your products. There’s less guessing about whether the demographics, behaviors, and interests of a general market apply to yours. As a result, you can make more accurate predictions and improvements that build customer loyalty.
First-Party Information Streamlines Costs
Every business needs to know its audience. Otherwise, marketing campaigns and advertising messages won’t move the needle much. But getting to know your market can be expensive when you’re relying on outside sources of information. Paying for data from research firms and agencies can add up. Plus, you’re taking a gamble on how up-to-date or relevant it is.While the initial costs of third-party data might be enough to stretch tight marketing budgets, the expenses don’t end there. If the research data you rely on doesn’t match your audience, your campaigns’ ROI will fall short of expectations. You’ll waste more marketing dollars and staff members’ time and salaries on efforts that don’t deliver good outcomes.
For example, using a third-party email list often results in high unsubscribe rates and spam reports. It can even get you in hot water with your email provider. But lists you build from online contact forms, customer surveys, and in-person conversations at little cost bring better results. These contacts want to hear from you and won’t be surprised when they do. Your open, click-through, and conversion rates will reflect that.
First-Party Data Encourages Consumer Trust
Think about how you feel when a company you’ve never heard of sends you an email. Besides being annoyed, you’re probably wondering how and why that business has your personal information. With the increase in identity theft and data breaches, consumers are more concerned than ever about their privacy.Research shows that 81% of people say it’s important to have a choice in how businesses use their data. About 48% of consumers say this choice is extremely important. An even more critical insight is how buyers say they’ll shift their behaviors if companies misuse their data. About 69% of consumers will stop buying if a business uses their information without permission. And 68% will do the same if a company ignores their data preferences.
This concern about personal data use is one of the problems with using third-party mailing lists or consumer information. These potential customers may not be familiar with you and find unsolicited attempts to engage with them intrusive. They didn’t have a reason to trust you before, and now you’ve given them a reason not to.
First-party data lets consumers control the narrative and exchange the information they feel comfortable divulging. When used properly, first-party data builds confidence and relationships. You also create a positive reputation by showing leads and customers that you respect their wishes and value their privacy. People will be more willing to engage and make purchases with companies they get to know and trust.
First-Party Data Enables the Personalization of Customer Experiences
It’s a well-known fact that customers in specific markets share characteristics. These might include age ranges, income levels, or lifestyles. But at the same time, each client has unique qualities and motivations. You can’t assume that everyone over 65 isn’t tech-savvy or that all members of Gen X grew up as latchkey kids.First-party data moves beyond the generalizations or stereotypes that external market research sometimes provides. The info you collect on your audience allows you to discover what drives each person and target your efforts accordingly. Looking at individual behaviors lets you separate high-value customers and leads from those unlikely to produce a decent ROI. Distinct insights also reveal why some customers are loyal to your brand and others hesitate.
With this information, you can communicate with leads and customers on a more personal level. McKinsey & Company reports that 71% of consumers expect personalization, and 76% grow frustrated when companies fail to provide it. Third-party research doesn’t give you the tools to customize interactions. Only the details that you collect directly from your audience do.