🚀 What Business Owners Need to Know About Zero-Party Data

Good morning. ☕️ Welcome, my day ones. Let’s go!

Recently, Google has been testing alternatives to cookie tracking in its ad network, vying for an interest-based option that preserves consumer privacy while continuing to serve advertising that is relevant to audiences. If you’re wondering, “What are you talking about?” or you’d love a crystal ball into the future of growing your small business, we got you covered.

IN 8 MINUTES, YOU’LL LEARN ABOUT:

1. Your database is your business 📇

2. How consumers have changed and why our businesses must too 🔄

3. The Death of Third-Party Cookies + Rise of Zero-Party Data 🍪

The Foundation: Your Database is Your Business

A client database is the core of your business. A living, breathing, collection of information about your customers, including their contact information, important dates and details, purchase history, and preferences. This database is often stored in a CRM (Customer Relationship Management system), spreadsheet, or worst-case… on note cards, manilla folders, or heaven-forbid, in your head.

A database used daily is an essential tool for any small business that wants to grow its customer base and improve its customer experience.

Executive Summary:

• Build deeper relationships with your customers: The more you know about your prospective and existing customers, the more you can tailor your products and services to their needs and the more relevant your communication can be to each segment.

• Target your marketing campaigns: Speaking of communication, the information in your database can help you to target your marketing campaigns more effectively. By segmenting your customers based on their interests and preferences (often by using custom tags in your CRM), you can ensure that your marketing messages are relevant and timely, which builds relationships and trust.

• Improve your C/X (Customer Experience): A client database can help you improve your customers’ experience by holding insights that give you a better understanding of their needs. By knowing what your customers are looking for and what their purchase timeline is, you can proactively provide them with the assistance they need, when they need it. Being able to anticipate needs and deliver solutions quickly creates raving fans of you and your business.

How Consumers Have Changed and Why Our Businesses Must Too

Consumer behavior has entered a bit of a paradox recently. For years, people have been somewhat carelessly giving away their personal data in exchange for social connection and convenience. In the wake of Meta’s Cambridge Analytica settlement, consumers began to think about their data differently and quietly signaled that they wanted a better way.

Cue Apple leading the way with their release of iOS 14, which added: “App Tracking Transparency that allows users to choose whether an app can track their activity across other companies’ apps and websites for the purposes of advertising or sharing with data brokers.”

Adoption by the majority of Apple iOS users [a recent study found that over 95% opted out of tracking] significantly impacted advertising on platforms like Facebook [Meta ad revenue fell over $1B in 2022], and it became clear that consumers want to have their cake and eat it too. Privacy AND a personalized experience with businesses.

What this means for your business:

• Consumers are becoming more privacy-conscious. This growing public awareness of the importance of data privacy is also due in part to high-profile data breaches, as well as the increasing amount of personal data that is being collected and stored by businesses. As a result, consumers are becoming more careful about how much of their data they share and with whom they share it, and are more likely to opt out of tracking, targeted advertising, and emails they didn’t sign up for.

• Consumers expect a personalized experience. Despite their concerns about data privacy, consumers increasingly expect businesses to communicate with them in a personalized way. They are used to being able to customize profiles and manage their preference online, and they expect the same level of personalization from businesses they interact with. RIP mass emails with the same information to your entire list. Hello, thoughtful content to segmented audiences.

Businesses must find a balance between data privacy and personalization or risk losing customers to competitors who are quicker to adopt these best practices. There is no longer room to continue doing “business as usual.”

The Death of Third-Party Cookies + Rise of Zero-Party Data 🍪

You saw that GIF 👆 coming, didn’t you? I couldn’t help myself. 😅

The death of third-party cookies has been a long time coming. For years, marketers have relied on these cookies to track user behavior across websites and build consumer profiles of their interests. But as consumers have become more privacy-conscious, and some web browsers have begun to block third-party cookies (e.g. Safari, DuckDuckGo), this practice is becoming increasingly difficult.

The demise of cookies is having a major impact on the digital marketing landscape. Marketers are now scrambling to find new ways to track user behavior and target ads. Enter zero-party data.

What is this zero-party data you speak of?

Zero-Party data, coined by Forrester Research in 2018, are insights voluntarily provided by a customer to a business they trust. This data can include things like genuine preferences and interests, motivations, purchase intentions, or feedback.

Why zero-party data is so valuable 💎

Zero-party data is incredibly valuable data as it allows businesses to generate higher-quality leads and develop much deeper relationships with their customers, which reduces ad spend and increases conversion. It’s accurate and reliable since customers who voluntarily provide their data are likelier to be honest about their preferences and interests.

Zero-party data is also actionable. Businesses can implement insights in real-time to create personalized experiences for their customers. The privacy-friendly box gets checked as well. Customers are more likely to be comfortable sharing their data with businesses they trust, especially if they know their data is being used in a way that benefits them.

Use this data to grow your business 📈

• Personalized marketing campaigns: Businesses can use zero-party data to create personalized marketing campaigns that are more likely to resonate with their customers, which improves conversion and increases the efficiency of ad dollars. For example, a clothing retailer could send a targeted email introducing a new product only to customers who have expressed an interest in that particular brand or style of clothing.

• Product recommendations: Businesses can also recommend products to their customers that they will likely be interested in. For example, an associate (in-store), a website, or a targeted email could recommend a new book to a customer who has purchased several books by the same author. See: How Netflix’s Recommendations System Works.

• To create more relevant content: Zero-party data can be the cheat code to create organic content that is more relevant to their customer's interests. For example, a real estate agent could create social content (i.e. TikTok posts, Instagram Reels, or Facebook Reels) to answer questions their clients and sphere of influence frequently ask them. By personally educating your customers and prospects on the topics they’re interested in, you are bringing them closer to you in emotional proximity and establish not only trust but evidence that you are in business and helpful.

• To increase sales: Improve sales conversions by targeting customers with offers and promotions that are relevant to their interests. For example, a retailer could email customers who have expressed an interest in a specific brand of running shoes with a coupon code for a 10% discount on that particular brand.

Strategies to Effectively Gather Zero-Party Data

• Ask for it: You won’t know if you don’t ask. Include a survey, quiz, or questionnaire on your website or in your emails and social marketing campaigns. Run a contest or giveaway. If your business is digitally based or enhanced, you could use interactive tools and funnels or ranking and rating buttons and sliders to gain insights or feedback.

• Make it easy to share: The easier it is for customers to share their data with you, the more likely they are to do so. Make sure your surveys and questionnaires are short and easy to complete. Perhaps include only one question at a time. Be sure to clarify how the data will be used and benefit them, and how customers can opt out.

• Offer something in return, immediately: One of the most critical parts of encouraging customers to share their data with you, is to provide them with something in return almost immediately. This could be a discount, a free gift, or early access to new products or services.

A note of caution. Be sure to only collect necessary data (to answer the questions that will drive your business), be transparent about how the data is being used, and give customers the option to opt out at any time. By doing so you can maintain the trust you’ve earned with your customers while protecting their data.

The truth about all of this is that it’s really nothing new. It just has a captivating new name to it. Many businesses have been implementing these practices for years. The difference now is collecting zero-party data is no longer a nice to have, it is a key to long-term business survival.

ONWARD TOGETHER.

Everyday Insights 👀

• Meta Adds New Feedback Options on Reels to Better Align with User Preferences

• US consumers send mixed signals in an uncertain economy

• The future of jobs in the age of AI, sustainability, and deglobalization

• Afro Deli & Grill owner Kahin named National Small Business Person of the Year

In The Weeds 🌾

• What is CX? —McKinsey & Company

• Results from Google Ads’ interest-based advertising testing—Google Ads & Commerce

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