In case you haven’t heard — or if you’re immune to the virality of digital marketing’s latest hot topics — Apple’s recently released iOS 14 includes a whole host of privacy controls and the capacity to “limit how much of [a user’s] personal data is shared with companies” (Forbes.com), notably with “opt-in for IDFA,” set to be switched on in 2021.
Although it’s arguably a striking blow to advertisers, data privacy is simply part of the changing tide of stricter regulation that we’ve seen over the past few years, notably with GDPR in Europe, CCPA in the US, PDPA in Singapore, and more. Google’s announcement this year that third-party cookies (and therefore pixel tracking) will be eliminated by 2022 adds another element to the narrative.
What does this mean for your brand? In order to better understand and serve your customers while driving business outcomes, you’ll want to move away from third-party data, and focus on first-party data.
Actually, strike that — it’s not that you’ll “want” to move away. You’ll have to.
The good news is, the brands who’ve already embraced the move toward acquiring, storing, and utilizing first-party data for marketing have not only been able to build more compelling customer journeys and deliver better customer experiences, but they’ve also asserted a distinct competitive advantage over their competitors who have not fully leveraged and taken control of their first-party data.
Fully leveraging first-party data gives you a competitive advantage
Until now, most brands primarily relied on third-party data or pixel tracking to fuel their marketing efforts because they didn’t have a choice. For those brands, dealing with the inevitable changes in customer data regulations and practices will be a sobering experience.
Many of your competitors are dragging their heels when it comes to effectively capturing and utilizing first-party data, so why not get out in front and prioritize it now?
What’s so good about first-party data, anyway?
Unlike third- or second-party data, first-party data is uniquely yours (as in, your business), collected at various touchpoints you’ve established along your customer’s journey, and can come from online and offline sources. In terms of insights you can gleen about your customer, it has significantly more depth, richness, and accuracy than other data you might use.
Insights such as channel affinity, product affinity, shopping behavior and tendencies, predicted lifetime value, and even loyalty status are all invaluable when it comes to forming a single, complete view of your customer, and delivering the omnichannel personalized experiences that are integral to lasting customer relationships.
Remember, this is data your brand captured and collected, so your competitors won’t have it (they’ll have to get their own!). But therein lies the difficulty. Since you can’t just go out and buy first-party data, you probably don’t have as much as you’d like, and what you do have may be underutilized.
However, the more first-party data you collect and leverage for your marketing efforts, the greater your competitive advantage will be, because you’re using unique data to form unique insights about your customer in a way that your competitor hasn’t. You’ll have a deeper understanding of your customer, and thus, can offer them richer, more relevant personalization that is superior to what your competitor can offer.
“We use Emarsys … as our enhanced SCV, and we link this with our other agencies and channels for contact. Then we go on to the channel that the customer purchases on. So whenever they purchase in-store, online, or the call center, that purchase behavior is fed into that one single source. And having all that data in the one single source, that allows us then to interrogate that data, to make decisions whether to reward or target customers through whatever channel then best resonates with that customer. And that can be store, call center, [website] … email, SMS, targeted social, pre-bought vouchers or even a store card. And having that breadth of channels available to us allows us to be sure that we are hitting the customer where they want to see the most relevant message.”
The transition to first-party data is inevitable
According to eMarketer, only 6% of marketers “fully utilize” their first-party data currently, while a whopping 78% are only utilizing their first-party moderately, barely, or not at all.
Yet, eMarketer also shows us that, as Google and other major browser developers discontinue support for third-party audience cookies, many data professionals foresee a huge increase in “spending/emphasis on first-party data.”
So it’s not a matter of if you’ll need to start focusing more on first-party data and fully utilizing it, it’s when.
Many of the world’s largest and most powerful brands like Amazon are already using the first-party data they acquire to great advantage (some might argue too great of an advantage) by building out competitive products that they know their customers want based on that first-party data.
Here’s what David Eldridge, Chairman & Co-Founder of 3radical — the leader in audience engagement and earned data solutions — had to say about the powerful competitive advantage of data in a recent chat with Emarsys’s SVP of Verticals, Alex Timlin:
“Just to your first point about data being a competitive advantage — I think it absolutely is. And what we’re seeing with [the] antitrust cases that are happening against the likes of Amazon and Google and Facebook, you know, to me, [at] the foundation of that issue, is data. It’s the amount of data that those organizations control and how they use it. And if you look at the Amazon case in particular, as it relates to retailers … effectively, the accusation of Amazon gathering this data that they don’t pass onto the underlying retailer and [use] to build competitive products, and to sell those competitive products to that retailer’s customer, [is] kind of at the heart of demonstrating how powerful data can be, and why brands need their own data, and to have their own relationship, if you like, with that individual [customer]. So absolutely a competitive advantage.”
Your brand may not be working with the same astronomical amounts of data that Amazon, Google, or Facebook work with on a daily basis. And that’s okay. Because the real and vitally more important competitive advantage of a fuller utilization of your first-party data is that it enables you to deliver significantly more value to your customer on an individual level.
How can you turn customer, product & sales data into new revenue opportunities, FAST?
What’s in it for the customer?
If you’re viewing the shift to first-party data as a back-up strategy in response to a potentially cookie-less world, that’s the wrong perspective. This isn’t just about protecting your business (though it certainly will) and complying with regulations. A focused approach to first-party data is ultimately about improving the experience you’re able to provide to your customer.
But a customer doesn’t always see it that way, at first.
Unfortunately, in the era of digital marketing, customers are so jaded by irrelevant, invasive, and sometimes “creepy” marketing, they are hesitant to give marketers unbridled access to their web behavior and personal info… UNLESS there is value in it for them, and they can trust that you’ll use the information ethically, responsibly, and of course, legally.
Going forward, one of your most important duties as a marketer will be convincing your customers that, in exchange for their data, there is something in it for them: They will receive more meaningful and relevant personalized experiences. Then, you must deliver on that promise.
This means, you’ll need to have a strategic approach in place to capturing a customer’s consent and their data.
Taking a strategic approach to capturing first-party data
Here’s a thought that may alarm you: Apple’s new iOS14 will bring the IDFA opt-out option out from the shadows of the settings menu and place it front-and-center for iPhone users. Experts predict only 20% of users, at best, will opt-in to being tracked across apps and websites. And considering consumer spend on iOS “hit $15 billion in Q1 2020, compared to $8.3 billion on Android,” according to Forbes, iOS users are “close to twice as valuable to advertisers and publishers compared to Android users.” On top of this, iOS14 is being adopted at a rapid rate, so the number of users impacted by the IDFA changes will be substantial.
This means, unless you start using first-party data over third-party data, your return on ad spend will be dropping significantly as you won’t be able to easily personalize ads to unknown (unidentified) consumers in the hopes of acquiring them.
Because of how critical first-party customer data is to your marketing efforts (and the success of your business), you need to be strategic in your approach to capturing and utilizing it. Otherwise you’re missing a huge opportunity to gain a competitive advantage.
Start by evaluating what you already have
As mentioned, if you’re like most brands, you probably have first-party data. But are you effectively using it? Before you make a plan to collect more, begin with an evaluation of the first-party customer data you already have. Determine if you’re fully leveraging it, and if you aren’t, what is standing in your way?
For many businesses, it can be any of the following reasons:
- The quality or accuracy of your data is poor
- Your business doesn’t have consent to use it
- Your data isn’t stored in a way for it to be properly used by your marketing team
- You don’t have the technology to fully leverage it and turn it into money
You may find that you’re currently sitting on a gold mine of data, but you’ve yet to fully unlock and harness all of its potential. Often, breaking down data silos and getting the right technology in place to create a single, unified view of your customer lets you maximize the value of data you already have.
Use gamification to earn the customer’s consent
You can discover a good deal about a customer based on their behavior, like what they browsed on your website, what they purchased, etc. But you learn much more about the customer when the information comes directly from the customer themselves… as long as they are willing and want to share that information with you.
Earned data, as 3radical describes it, is essentially when a customer intentionally and consensually divulges data about themselves to a brand, usually as part of a clearly defined value exchange, and with an understanding of how the data will be used. As mentioned, disclosing to a customer how you intend to use their data to provide them better shopping experiences is a type of value. But offering some immediate, incentive-based value to the customer along with that data request is particularly powerful for eliciting their participation.
This is where “gamification” comes into play. Consider crafting data-for-value exchanges in the form of a branded game, where the customer’s consent to their data is the ante, and discounts, vouchers, or other rewards you offer are the prize.
Examples could include:
- “Fill out this survey and have a chance at winning 30% off your next purchase.”
- “Take our quiz and be entered in a drawing for a $50 gift card.”
- “Grab this bonus PDF with extra tips and be added to our premium e-newsletter!”
- “What’s our most popular fashion choices for this spring? Tell us your favorite spring fashion pieces and see the results.”
Gamifying the data collection process makes it fun and rewarding for customers, further incentivizing them to share. As always, be fully transparent with the customer about what data you’re collecting, how you’ll protect it, and what you plan on doing with it.
Be transparent, and give customers the power
Being obtuse about how a customer’s data will be used for fear that they won’t share it is not only unethical, but you’d be only shooting yourself in the foot. The fact is, the more transparent you are about a customer’s data will be used, and the more control you give to the customer over their data, the more likely they are to share it. This is about earning the customer’s trust, as much as it is their data.
“Providing a clear and easy way to control if and how user data is used” is the most compelling attribute when it comes to getting customers to willingly share important information (i.e., location data), according to e-Marketer. Without that clarity, customers fear their data can and will be used in the most invasive ways possible.
Often, if you are upfront with your intentions, customers will see that, not only will your use of the data be respectable, but it will also provide them with a more beneficial, personalized shopping experience.
Another consideration: outright ask the customer directly if they want personalized marketing based on their data. For example, asking a customer, “Would you be interested in receiving emails with personalized product recommendations?” lets you know whether a customer would see value from this type of marketing, or if it would be a waste of time and energy. And keep in mind, a “no” in this instance from the customer isn’t a bad thing. You may end up retaining that customer by turning off excess communications that would’ve otherwise annoyed them and driven them away from your brand.
A good portion of your current marketing strategy may be fueled by the info and data you’re getting from third-party cookies and sources. And to date, you’ve been able to make a lot of inferences about customers without them even knowing it.
But ready or not, those days are coming to an end.
Using first-party customer data to deliver better customer experiences that translate into better business outcomes is not only a strong business strategy, but an inevitability. Making the shift now puts you well ahead of your competitors, who will be panicking when Google eliminates tracking and Apple goes forward with their opt-in for IDFA.
Plan ahead and gain a competitive advantage by creating a strategy to responsibly acquire, store, and utilize first-party customer data. The end result isn’t simply about compliance. Granted, it’s essential that your legal and/or compliance team and marketing teams are aligned and actively involved when it comes to devising the strategy around consent and data capture. But ultimately, the end result should be about ensuring better business outcomes by, most importantly, delivering more satisfying experiences and greater value to your customers.
How are leading brands leveraging first-party data to drive engaging customer experiences & business outcomes?
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