Zero Party Data: The Ultimate Guide for Ecommerce Brands in 2023
The data foundations that ecommerce marketing has been built on are
shifting.
Major changes have arrived on shore (and more are sailing in) as
Safari, Chrome, and FireFox begin to block or phase out third-party
cookie data
collecting
. In addition to this seismic shift, GDPR and CCPA regulations have
doubled down consumer privacy following widespread outcry for digital
privacy protections - further threatening the future viability of
established third-party data collection methods.
The new safeguards heavily incentivize collecting data using consensual,
transparent techniques and discourage third-party collection strategies
that fall below this new standard for privacy. That transition, in a
nutshell, is called zero-party data.
Now, ecommerce brands around the globe are grappling with this new (to
some) data collection method that allows them to provide personalized
customer experiences and product recommendations while refining their
marketing efforts.
What is Zero-Party Data?
Zero-party data refers to any type of data captured directly from the
source - your customers.
First coined by Forrester Research in 2020, zero-party data hinges on
the transparent and willing sharing of information between customers and
their favorite brands.
Rather than tracking, collecting, and analyzing third-party data
hoping to find actionable, relevant information, zero-party data asks
customers about their preferences, intentions, and desires directly to
fine-tune their customer experiences and marketing strategies.
One of the major benefits of zero-party data is it empowers brands to
gather data without relying on soon-to-be-outdated collection
strategies. In fact, Gartner predicts that 75% of the world population
will have modern privacy regulations protecting their personal
data
that will make alternative data collection methods more challenging.
The 3 Principles Involved in Zero-Party Data Collection
Zero-party data is based on three simple principles that make ZPD:
- More trustworthy
- More accurate
- More engaging
- More privacy-conscious
- And better suited for the future of ecommerce marketing and sales
than any other form of data.
Let’s explore these three principles together,
Transparent Data Collection
More than 90% of consumers say brand transparency plays a
role in
their purchasing decisions. Zero-party data emphasizes transparent and
consensual data collection.
That means when customers share their contact, preference, or buying
intention information they’re doing so with complete knowledge that the
post-purchase survey , quiz, or
loyalty program sign-up form is being used for data collection.
Transparent Data Use
Despite the widespread popularity of digital privacy regulations, 83%
of consumers are still
willing
to share their personal information - with a catch. Now, consumers are
only willing to share their personal information in return for perks,
programs, and personalization.
This means that brands can simply be upfront with their customers when
gathering zero-party data. As long as your customers understand that
their responses will be used to improve their experience, product
recommendations, and more, they’ll be more than happy to share accurate,
actionable data with your brand.
Allowing Customers to Update Their Data
Giving your customers the power to update their data, unsubscribe with
ease, and maintain a strong sense of control over the data they share
with you is what zero-party data is all about.
Zero-Party vs First-Party vs Second-Party vs Third-Party Data
Now that we’ve covered the basic principles of zero-party data, let’s
dive deeper into the differences between first, second, third, and
zero-party data.
Understanding the strengths, weaknesses, and collection strategies for
each type of data is crucial for brands preparing to pivot ahead of the
upcoming third-party cookie ban.
First-Party Data
First-party data, much like zero-party data, gathers data streams
directly from a brand's customers.
However, unlike zero-party data (which uses transparent collection
methods, like surveys) first-party data collection relies on implanting
a pixel designed to record the activity, behaviors, and patterns of
visitors to your brand’s site, social media, or product pages.
The internal nature of first-party data makes it more reliable than many
third-party options. First-party data can also easily integrate new data
sets into your sales CRM, making it a strong tool for marketers and
ecommerce brands that want to improve their
retargeting .
The major drawback of relying on first-party data for marketing and
personalization updates is its long timeline. First-party data takes
more time to cultivate than other forms of data and requires large data
sets for actionable analysis.
Second-Party Data
While first-party data is data that you've collected directly from your
customers, second-party data offers a unique way to expand your reach
and gain new insights.
What is Second-Party Data?
Second-party data is information that is obtained directly from a
partner, such as a supplier or vendor. Essentially, this type of data is
someone else's first-party data that they have agreed to share with you.
It can include a variety of data points, such as purchase history,
website behavior, and customer preferences.
An Example of Second-Party Data in Ecommerce
Let's say you're an online fashion retailer, and you're looking to
expand your offerings by adding a new line of athletic wear. By
partnering with a popular fitness equipment supplier, you can gain
access to their customer data, including purchase history and browsing
behavior related to workout clothing. This second-party data can provide
you with valuable insights into what your customers are looking for and
help you make more informed decisions about your product offerings.
Where is the Data From?
As previously mentioned, second-party data comes from a trusted partner.
This could be a supplier, vendor, or any other business that you have an
established relationship with.
How Data Is Collected
The data is collected by the partner and then shared with you directly.
This can be done through a variety of methods, such as a secure
data-sharing platform or a direct file transfer.
Where is Data Stored?
The data is typically stored in a secure location by the partner, who is
responsible for maintaining the privacy and security of the information.
Once the data is shared with you, it is your responsibility to ensure
that it is stored securely and in compliance with any relevant data
privacy laws.
Advantages of Second-Party Data
- Additional customer insights: Second-party data provides
additional information about your customers that you may not have
been able to gather on your own. This can include demographic and
behavioral data, as well as information about customer preferences
and interests.
- Cost-effective: Since the data is already collected and ready to
use, it can be a cost-effective way to gain new insights and improve
your ecommerce efforts.
- Expanded reach: Second-party data can also help you expand your
reach by gaining access to new customer segments that you may not
have been targeting before.
Disadvantages of Second-Party Data
While there are many benefits to second-party data, there are also some
potential drawbacks to consider.
- Trust: Since the data was not collected by your company, it's
important to ensure that you trust the partner who is providing the
data. Make sure that you have a clear understanding of how the data
was collected and that the partner is compliant with all relevant
data protection laws.
- Relevance and accuracy: The partner's data may not be as
relevant or accurate as your own first-party data. It's important to
evaluate the quality of the data before using it to make business
decisions.
- Limited control: Since the data is being provided by a partner,
you may have limited control over how the data is collected,
analyzed, and used. Make sure that you have a clear understanding of
the partner's data usage policies before entering into any
agreements.
In conclusion, second-party data can be a valuable tool for ecommerce
businesses looking to expand their reach and gain new insights into
customer behavior. By understanding the basics of second-party data,
where it comes from, and how it can be used, you can make more informed
decisions and drive greater success in your ecommerce efforts.
Third-Party Data
Third-party data is data that's collected by specialized companies that
aggregate information from different sources. This information is then
sold to businesses that need it.
For e-commerce companies third-party data can provide demographic
information such as age, gender, and location data that businesses can
use to create targeted advertising campaigns.
Where is the Data From?
It can come from various sources, such as public records, surveys,
social media, and others. Once collected, data brokers organize and
analyze this data to create customer profiles and segments that can be
sold to companies.
How Data Is Collected
Data brokers collect data using various methods, including cookies,
online tracking, and public records. They then organize and analyze this
data to create customer profiles and segments that can be sold to
companies.
Where is Data Stored
Third-party data is typically stored in large databases owned by data
brokers. By doing so, they create large databases that can contain
billions of pieces of data, including personal and sensitive
information.
Advantages of Third-Party Data
- Large scale: Third-party data can be much larger in scale than
other types of data, making it useful for targeting specific
demographics or conducting large-scale marketing campaigns.
- Cost-effective: Acquiring third-party data can be more
cost-effective than collecting it yourself, especially for smaller
businesses that may not have the resources to collect large amounts
of data.
Disadvantages of Third-Party Data
- Not exclusive: Since third-party data is sold to multiple
companies, you would not have exclusive rights to this data if you
purchased it.
- Compliance issues: There are many compliance issues that could
arise from using third-party data, especially with regards to
privacy and data protection laws. This could result in legal issues
and damage to your company's reputation if not handled properly.
It's important to weigh the advantages and disadvantages of third-party
data before deciding whether or not to use it in your marketing
strategy.
Zero-Party Data
Zero-party data is the information that consumers intentionally and
proactively share with brands. This can be any information that a
customer willingly provides such as their preferences, interests, and
purchase intentions. Essentially, zero-party data is data that consumers
give you directly, without being prompted.
For example, a customer may provide their email address and preferences
for email marketing campaigns in exchange for a discount code on their
next purchase. In this case, the customer is giving you zero-party data.
Where is the Data From?
Zero-party data is provided directly by customers. This means that there
are no middlemen involved in the collection or selling of this data.
How Data Is Collected?
Zero-party data can be collected through various channels such as online
surveys, quizzes, preference centers, feedback forms, and more. It’s
essential to make the process of collecting zero-party data easy, fun,
and engaging for the customer. The customer should feel like they are
getting value out of providing you with their information.
Where is Data Stored?
Zero-party data is typically stored in a customer relationship
management (CRM) system or a data management platform (DMP). This
information is kept separate from any other types of data you may
collect, and it’s usually only accessible to a select few members of
your team.
Advantages of Zero-Party Data
Zero-party data has several advantages for ecommerce companies:
- Better quality data at your disposal: Since customers provide
you with this information, you can be confident in its accuracy.
- Build personalized campaigns: With zero-party data, you can
personalize your campaigns to meet your customers' specific needs
and preferences.
- Accurate inventory management & forecasting: By having a clear
understanding of what your customers are interested in, you can
better forecast inventory needs and avoid waste.
- Lower cost per acquisition (CPA) with personalization: With
personalized campaigns, you can reach your ideal customers with less
effort and cost.
- It’s accurate: Since it’s provided by the customer, you don’t
have to question the source. Additionally, it is freely given to
your company so there are no concerns about how the data was
acquired.
Disadvantages of Zero-Party Data
Despite its advantages, zero-party data also has its downsides:
- The expectation of a value exchange: Some customers expect
something in return for giving up their information.
- A disconnect between what customers think and what they truly
want: Some customers may provide you with information that they
think they want, but it may not reflect their actual preferences.
Definition |
Data that a company has collected directly from their customers or
users |
Data that is collected by a partner company and shared with another
company |
Data that is collected by a third-party company and sold to other
companies |
Data that is intentionally and proactively shared by the customer or
user themselves |
Where is the data from |
This data is collected directly from the company's own customers or
users. |
This data is collected by a partner company, who then shares it with
the company. |
This data is collected by a third-party company from various sources
such as websites, mobile apps, and other companies. |
This data is intentionally and proactively shared by the customer or
user themselves. |
How is the data collected |
This data is typically collected through interactions with the
company's website or app. |
This data is collected by the partner company through their own
interactions with their customers, then shared with the other
company. |
This data is collected through various methods such as web scraping,
data brokers, and partnerships with other companies. |
This data is collected through surveys, quizzes, polls, and other
methods where the customer or user voluntarily shares information. |
Advantages |
Higher accuracy since it's coming from the source directly. Better
control over the data. |
Additional information on customers to help drive sales. Ready to
use upon purchase. |
Massive in scale since it comes from multiple sources. Can help fill
gaps in your other types of data. |
Better quality data. Build personalized campaigns. Accurate
inventory management and forecasting. Lower cost per acquisition with
personalization. Accurate since it's provided by the customer. Freely
given to your company. |
Disadvantages |
Limited in size since it only comes from the company's own
interactions with customers. |
Trust is a major issue. Compliance issues may arise. |
Not exclusive to your company since it's being sold to multiple
companies. Compliance issues may arise. |
Customers may expect something in return for giving their
information. Disconnect between what customers think they want and what
they actually want. |
As privacy concerns grow, customers are becoming more aware of their
rights and are looking for businesses that prioritize transparency in
data collection. Ecommerce companies, in particular, are realizing that
they need to earn customer trust and loyalty by being mindful of how
they collect and use data.
Why Is There a Need for Ecommerce Stores to Adopt Zero-Party Data?
With the rise of privacy concerns and the changing landscape of data
collection, ecommerce stores must be more mindful than ever of how they
collect and use customer data. This is where zero-party data comes in.
Apple's privacy policy
Apple has been at the forefront of the privacy movement with its
updated privacy
policy
, which requires apps to obtain explicit permission from users before
collecting data. This directly impacts ecommerce stores, as they rely
heavily on customer data for marketing and advertising efforts. By
adopting zero-party data collection methods, ecommerce stores can comply
with Apple's privacy policy while still obtaining valuable customer
data.
Customers' demand for stricter data privacy
Customers today are becoming increasingly concerned about their data
privacy. According to a survey conducted by Pew Research Center, 79% of
Americans are concerned about the way their data is being used by
companies. By adopting zero-party data collection methods, ecommerce
stores can show their customers that they value their privacy and are
committed to protecting their data.
Better data quality
One of the biggest advantages of zero-party data is that it is provided
directly by the customer, which leads to better data quality. By
collecting data directly from customers, ecommerce stores can ensure
that the data is accurate and up-to-date, leading to more effective
marketing and advertising efforts. This can help reduce wasted ad spend
and increase conversion rates.
Improved personalization and segmentation
Zero-party data enables ecommerce stores to create more accurate
customer profiles and deliver more personalized experiences, leading to
increased customer satisfaction and loyalty. By collecting data directly
from customers, ecommerce stores can segment customers for more relevant
messaging, which can increase the effectiveness of marketing campaigns
and reduce ad fatigue. This can also help improve the customer
experience and increase the chances of repeat business.
Long-term customer relationships
By using zero-party data to create personalized experiences and build
trust with customers, ecommerce stores can foster long-term customer
relationships and increase customer loyalty. By collecting data directly
from customers, ecommerce stores can show that they value their
customers and are committed to providing them with a personalized and
engaging experience. This can help increase customer lifetime value and
drive long-term growth for ecommerce stores.
What Data Can You Collect?
By directly asking customers for information, you can gain valuable
insights that can help you personalize your marketing campaigns, create
better customer experiences, and build long-term relationships. Here are
some examples of zero-party customer data that you can collect:
- Personal preferences: Zero-party data collection allows you to
ask customers directly about their personal preferences, such as
favorite colors, styles, or products.
- Purchase intent: Collecting data on customers' future purchase
plans can help ecommerce stores anticipate demand for certain
products and create marketing campaigns that target customers who
are more likely to make a purchase.
- Feedback and reviews: Gathering feedback and reviews from
customers can help ecommerce stores improve their products and
services. It also demonstrates to potential customers that the
company values their opinions.
- Social media behavior: Asking customers about their social media
usage can provide valuable insights into channels and even
influencers that can help you reach a similar audience. This can
help ecommerce stores create more effective social media campaigns
and better engage with their audience.
- Demographic information: Collecting demographic information such
as age, gender, and location can help ecommerce stores personalize
their marketing campaigns and improve their overall customer
experience.
These are just a few examples of the types of data that you can collect
through zero-party data collection. By asking the right questions and
analyzing the data, you can gain valuable insights into your customers'
preferences, behaviors, and needs, which can help you build more
effective marketing campaigns and create better customer experiences.
How to Collect Zero-Party Data
Zero-party data is voluntarily given by customers, making it more
valuable and accurate than other types of data. Now, the question is,
how can ecommerce stores collect this type of data?
Adding a Post-Purchase Survey to Your Ecommerce Store
One way to collect zero-party data is through a Shopify post-purchase
survey app . You can ask customers about
their preferences, interests, and habits. For example, a clothing store
can ask their customers about their favorite colors, styles, and
clothing sizes. By doing so, you can create a more personalized
experience and improve customer satisfaction.
Hosting Contests and Giveaways
Another way to collect zero-party data is through contests and
giveaways. You can ask customers to provide their email addresses,
names, and other relevant information in exchange for a chance to win a
prize. This strategy can increase customer engagement and help you
collect valuable customer information.
Allowing Customers to Manage Their Preferences
Preference centers are another great way to collect zero-party data.
These are dedicated pages that allow customers to manage their
communication preferences and provide information about their interests
and preferences. By creating a preference center, you can collect
valuable customer information and improve the effectiveness of your
marketing campaigns.
Each method has its advantages and disadvantages, and the key is to find
the right balance between collecting valuable customer
information
and respecting their privacy. By collecting zero-party data ethically
and transparently, you can improve the effectiveness of your marketing
efforts and build stronger relationships with your customers.
Where Should You Store Zero-Party Data?
When it comes to storing zero-party data, the best approach is to keep
it in-house on your own servers.
Storing zero-party data on third-party servers can pose a risk to data
privacy, as these servers could be accessed by outside parties. By
storing the data in-house, you have complete control over who has access
to it and can ensure that it is protected by strong security measures
such as firewalls and encryption.
It's also important to regularly backup your zero-party data to ensure
that it can be easily restored in the event of a server failure or other
issue. By taking the necessary steps to store zero-party data securely,
you can maintain the trust of your customers and protect their privacy.
6 Use Cases for Zero-Party Data & How to Interpret Results
Now that you have a good understanding of what zero-party data is, how
to collect it, and where to store it, you may be wondering what to do
with all of this valuable information. In this section, we'll explore
some of the ways you can analyze survey
responses
and use zero-party data to personalize your customers' experiences and
drive engagement.
Personalized Product Suggestions
One of the most effective ways to use zero-party data is to personalize
product suggestions. By collecting information about a customer's
preferences, interests, and behaviors, ecommerce stores can create
targeted product recommendations that are more likely to resonate with
customers. For example, if a customer has previously purchased products
related to fitness, an ecommerce store could suggest similar items or
accessories to complement their existing purchases. To interpret the
results, you can track the click-through rates and purchase rates for
each product suggestion, and adjust your recommendations accordingly.
Personalized Newsletters
Another way to use zero-party data is to personalize newsletters. By
collecting information about a customer's interests and preferences,
ecommerce stores can tailor their newsletters to provide content that is
more relevant to each individual subscriber. For example, if a customer
has previously shown an interest in a particular category of products,
you can send them a newsletter that focuses on that category. To
interpret the results, you can track the open and click-through rates
for each newsletter, and adjust your content accordingly.
Personalized Advertising
Zero-party data can also be used to personalize advertising. By
collecting information about a customer's browsing and purchase history,
ecommerce stores can create targeted advertising campaigns that are more
likely to convert. For example, if a customer has previously browsed a
certain category of products but didn't make a purchase, you can show
them ads for similar products to encourage them to complete their
purchase. To interpret the results, you can track the click-through
rates and conversion rates for each ad, and adjust your targeting
accordingly.
Personalized Promotions
Ecommerce stores can also use zero-party data to personalize promotions.
By collecting information about a customer's preferences and behaviors,
stores can create targeted promotions that are more likely to drive
engagement and sales. For example, if a customer has previously
purchased a particular brand or category of products, you can offer them
a discount or promotion on similar items. To interpret the results, you
can track the redemption rates and revenue generated by each promotion,
and adjust your offers accordingly.
Personalized Loyalty Programs
Zero-party data can also be used to personalize loyalty programs. By
collecting information about a customer's purchase history and
preferences, ecommerce stores can create loyalty programs that are more
tailored to each individual customer. For example, you can offer
customers rewards based on their past purchases, or provide exclusive
discounts or offers for their favorite products. To interpret the
results, you can track the participation rates and revenue generated by
each loyalty program, and adjust your rewards accordingly.
Personalized Messaging
By collecting information about a customer's interests and preferences,
stores can send targeted messages that are more likely to engage and
convert. For example, you can send customers personalized emails or push
notifications about products they have previously shown an interest in.
To interpret the results, you can track the open and click-through rates
for each message, and adjust your messaging accordingly.
3 Examples of How Companies Collect Zero-Party Data
Now that you understand the importance of zero-party data and how to
collect it, it's time to see some real-life
examples
of companies that are doing it right.
Netflix Movie Options Customization
Netflix is a perfect example of a company that uses zero-party data to
personalize its service. When you sign up for Netflix, you provide your
email address, which is first-party data. However, when you tell Netflix
what shows you like and dislike, you're providing zero-party data. This
information helps Netflix create a personalized movie and TV show
selection for you.
Yelp's Food Preferences Questionnaire
Yelp uses zero-party data to provide personalized restaurant
recommendations to its users. When you sign up for Yelp, you provide
your zip code, which is first-party data. However, when you fill out a
questionnaire about your food preferences, you're providing zero-party
data. This information helps Yelp recommend the best vegan food options
in your area.
Good American's Post-Purchase Survey
Good American is a clothing brand
that uses the Fairing Post-Purchase
Survey
to collect zero-party data from its customers. After making a purchase,
customers receive a survey that asks about their style preferences, fit,
and other relevant information. This data is then used to create
personalized recommendations for the customer's next purchase. By using
this approach, Good American can tailor its products and marketing to
its customers' unique preferences and needs.
As you can see, there are many different ways to collect zero-party
data. By leveraging this data, companies can create more personalized
experiences for their customers, which can lead to increased customer
satisfaction and loyalty. So, if you're an ecommerce store owner, it's
time to start thinking about how you can collect zero-party data from
your customers and use it to improve their shopping experience.
FAQs About Zero-Party Data
How can eCommerce brands benefit from zero-party data?
These insights can then be used to guide and improve product
recommendations, personalized customer experiences, and digital
marketing campaigns.
Many digital privacy advocates are also hailing zero-party data as a
step in the right direction compared to conventional third-party data
tracking.
Brands that want to build a trustworthy, customer-focused reputation can
earn major brownie points with customers by empowering them to make
decisions about their data (a full 80% of consumers feel they have no
control
over their personal data being collected!)
Can zero-party data be first-party or third-party data?
No, zero-party data cannot be first-party or third-party cookies or
data. The strategies and techniques used to capture consumer data
dictate whether the data is zero, first, or third-party.
This means data cannot be both zero and third-party because their
collection methods are mutually exclusive. And whole first-party and
zero-party data marketing can appear extremely similar, they both have
fundamental differences that make them stand apart.
How to make sure You're not breaching privacy laws when collecting zero-party data?
It might be easier than you think to make sure you’re not breaching
privacy laws when collecting zero-party data. If you follow zero-party
data collection best practices, which include encouraging the
intentional, transparent, and completely consensual sharing of data you
should avoid most potential legal issues.
Is there an app to collect zero-party data for Shopify stores?
Yes, there is an app to collect zero-party data marketing for Shopify
stores. Zero-party data marketing pioneers Fairing have released an app
designed for plug-and-play zero-party data collection on any Shopify
store .
Fairing's post-purchase surveys consistently generate response rates
north of 50% , providing brands with invaluable
data streams.
How to Start Collecting Zero Party Data for Your Ecommerce Store?
Now, it's time to take action and start collecting zero-party data for
your own ecommerce store. One easy way to do this is by using
Fairing's post-purchase survey . With
our tool, you can quickly and easily collect valuable insights from your
customers and use them to improve their shopping experience.
Start unlocking the full potential of zero-party data for your ecommerce
store today with a free trial of Fairing's post-purchase survey. Visit
our free trial page to get started.