A Guide to Gaining Customer Insights in the Absence of Third-Party Data 

The future of third party data continues become more uncertain each day as governments and consumers worldwide are demanding more privacy online. In 2018, the EU passed the General Data Protection Regulation (GDPR) which dictates how personal data can be collected and shared amongst organizations of all sizes, requires disclosure on how the data will be used, and allows individuals to delete their personal data (EU, 2021).The United States has yet to pass a comprehensive federal law concerning consumer privacy, but states such as California, Colorado, and Virginia have passed their own (Klosowski, 2021). The California Consumer Privacy Act possessing the most strict protections, such as giving citizens the right to delete and opt out from the collection of personal information (Bonta, 2022). This legislative phenomenon is occurring in countries around the world, and failure to comply with privacy laws can result in severe fines and consequences for businesses—- resulting in great caution and hesitancy around third party data already. 

In 2019, Google announced their Privacy Sandbox initiative, which aims to eliminate all third-party cookies from the Chrome Browser by 2023 (Goel, 2021). A terrifying proposition as  Chrome possesses over 66% of market share for global desktop browsers (Vailshery, 2022). Safari and Mozilla Firefox announced similar initiatives for their browsers, and Apple and Android have created settings to allow customers to block all third party cookies on their mobile devices (Statt, 2020; Dussart, 2022).

The changing data landscape demands that businesses and organization find new sources of collecting consumer data for optimized and personalized digital marketing. However, one study shows that only a third of marketers recognize how the elimination of third party data will effect their business strategy (Sentance, 2020). A more recent study shows two-thirds of marketers presume that consumers will not choose an alternative based on privacy, and lastly 90%  believe consumers don’t read or comprehend privacy disclosures (CMO, 2022). Hesitancy to plan for a digital future without third-party data and adapt data collection to prioritize consumer privacy could lead to many businesses downfall. 

The Future is First Party Data

Currently, there are three types of data that can be collected from consumers: first, second, and third party. Traditionally, these three types of data are used in conjunction— allowing marketers to strategically find more target markets and create personalized advertisements (Robinson, 2021). Many businesses heavily rely on third-party data in their digital marketing strategy, but due to its unsteady future, businesses must pivot to prioritizing first party data. First party data is collected by a company directly from their consumers on their own platforms. For example, this data can be gathered from the company’s website, mobile application, or customer accounts. Since the company owns and directly sources the data, it is the most accurate and reliable form of data collection. Therefore, despite fear about a future without third party data, there is compelling potential in prioritizing first party data (Engelhart, 2021). 

Privacy, & Transparency

Enhancing first party data collection poses an exciting opportunity to benefit both the consumer and businesses. The first step in transitioning from an emphasis on third to first party data requires independence from browsers and cookies in creating a customer profile. To achieve this, a business must look at all the data they already have and discover what identifiers they are missing : who, what, where, why, and when (Long, 2022). Then create target segments from the existing first party data, find “lookalike” audiences, and begin collecting the needed first party data.

Consumers want to protect their privacy, but they also value transparency and personalized experiences. Studies show that 73% of consumers are willing to share personal information if  marketers respect their privacy by only collecting the data they need, and are explicit on how the data will be used (Williams, 2019). Additionally,  marketers should propose ways in which the shared personal information aids in customizing and improving  the customer experience. Forbes’ statistics reveal “83% of consumers are willing to share their data to create a more personalized experience” and “70% of consumers says a company’s understanding of their personal needs influences their loyalty” (Morgan, 2021). Establishing trust with consumers on the foundations of privacy and transparency is crucial to collecting first party data and gaining significant customer insights. 

Collecting First Party Data & Value Exchanges 

Since first party data must be sourced directly from consumers, implementing digital capabilities that connect and collect information from consumers in-store and online is vital. Marketers should also prioritize making the data collection experience user-centric and rewarding through value exchanges that make data sharing profitable and appealing for the individual (Latyala et al., 2022). 

One method includes registering customer accounts. Developing accurate and evolving customer profiles requires value exchanges without the customer lifecycle. However, this exchange must begin from the first touchpoint or purchase (Lewis, 2021). For example, offering first time clients $15 off if they create an account with your store. This collects valuable identifier data on the customers’ name, age, phone, email, and even address, but businesses must convince customers to continue interacting and purchasing through their brand account—collecting de-anonymized and detailed data on each customer action (Bahari et al., 2015). 

Accessing accounts online and in-store must be a frictionless sign in experience. Using tools like QR codes or Single-Sign On (SSO), which allow consumers to log in using their Facebook, Google, or Apple, eliminates the hassle of forgetting a username or password. If a customer uses guest checkout or creates another store profile, it threatens a potential loss in the quantity and quality of the first party data. Therefore, in addition to being user-friendly, consumers should be motivated to use their online account through convenience and rewards.

Convenience

To promote customer engagement, the accounts should create a more convenient shopping experience for the consumer while simultaneously collecting and storing first party consumer data.  For example, saving digital copies of receipts/purchase history, keeping forms of payment on file, or placing store products on hold. Account can also collect data on customers’ browsing in-store and online (Claravine, 2022). Online, data is collected through clicks, pages of the website visited, time viewing a product, abandoned carts, etc. In-store, a customer could login to their account via mobile app or website and begin creating a dressing room. Conveniently, the customer doesn’t have to search for their size or carry items around the store, and it collects vital  in-store browsing data. 

Value exchanges through rewards and customer loyalty programs also promote account usage, and allow marketers to consistently collect the most relevant and up to date first party data from consumers. The registered account rewards customers for making purchases through point or tier-systems, but can also reward their participation in sharing information. For example, after an online or in-store visit, customers could be sent a quick survey that if completed they receive a 15% off coupon on their next purchase. Additionally, the customer could customize their profile according to their interests, preferences, etc. to sign up for updates or sales on the items they love. Loyalty programs and rewards make customer feels valued and incentivize them to share information. (Lewis, 2021; Bahari et. Al, 2015)

Connecting Online 

In addition to online customer accounts, first party data can be collected from social media, customer reviews, and customer service inquiries. Social media allows companies to get more information on the demographics and psychographics of their current audience, and provides data on potential new target markets. By analyzing customer reviews and keeping detailed accounts of customer service inquiries/interactions, companies can collect valuable first party data on areas of improvement and success (Claravine, 2022). 

Leveraging Data

Regardless of the future of third party data, companies should prioritize first party data as their primary source for gaining insights on their customers. First party data is the most reliable, accurate, and applicable form of data for any company. By building trust with consumers through  privacy and transparency, data can be collected through value exchanges of convenience and rewards. The first party data collected can be leveraged to create personalized and improved products and services. 

References

Bahari, T. F., & Elayidom, M. S. (2015). An efficient CRM-data mining framework for the prediction of customer behaviour. Procedia computer science, 46, 725-731.

Bonta, R. (2022, March 28). California Consumer Privacy Act (CCPA). State of California – Department of Justice – Office of the Attorney General. Retrieved April 20, 2022, from https://www.oag.ca.gov/privacy/ccpa 

Dussart, S. (2022, February 17). Google Announces Privacy Sandbox for Android. Adjust. Retrieved April 20, 2022, from https://www.adjust.com/blog/google-announces-privacy-sandbox-for-android/ 

Claravine. (2022, February 17). Thank you: 22 ways to collect First Party Data. Claravine. Retrieved April 20, 2022, from https://www.claravine.com/thank-you-pages/thank-you-22-ways-to-collect-first-party-data/ 

CMO. (2022, February). The highlights and insights report February 2022. The CMO Survey. Retrieved April 20, 2022, from https://cmosurvey.org/wp-content/uploads/2022/02/The_CMO_Survey-Highlights_and_Insights_Report-February_2022.pdf 

Engelhart, M. (2021, July 30). Rethinking your customer data strategy without the third-party cookie. Tealium. Retrieved April 20, 2022, from https://tealium.com/blog/first-party-data/rethinking-your-customer-data-strategy-without-the-third-party-cookie/ 

EU. (2021, June 4). Data protection. European Commission . Retrieved April 20, 2022, from https://ec.europa.eu/info/law/law-topic/data-protection_en

Goel, V. (2021, June 24). An updated timeline for privacy sandbox milestones. Google. Retrieved April 20, 2022, from https://blog.google/products/chrome/updated-timeline-privacy-sandbox-milestones/ 

Klosowski, T. (2021, September 6). The State of Consumer Data Privacy Laws in the US (and why it matters). The New York Times. Retrieved April 20, 2022, from https://www.nytimes.com/wirecutter/blog/state-of-privacy-laws-in-us/ 

Latvala, L., Horn, J., & Bruno, B. (2022). Thriving in the age of privacy regulation: A first-party data strategy. Applied Marketing Analytics, 7(3), 211-220.

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Long, L. (2022). Effective first-party data collection in a privacy-first world. Applied Marketing Analytics, 7(3), 202-210.

Morgan, B. (2021, December 10). 50 stats showing the power of Personalization. Forbes. Retrieved April 20, 2022, from https://www.forbes.com/sites/blakemorgan/2020/02/18/50-stats-showing-the-power-of-personalization/?sh=5baf47392a94 

Robinson, A. (2021, April 12). Definitive guide to 1st VS 2ND VS 3rd Party Data – EP 5 – Identity Resolution Demystified. YouTube. Retrieved April 20, 2022, from https://www.youtube.com/watch?v=HFt5CwbUcIs 

Sentance, R. (2020, July 30). How well-prepared are marketers for the impact of the third-party cookie crackdown?Econsultancy. Retrieved April 20, 2022, from https://econsultancy.com/how-well-prepared-are-marketers-for-the-impact-of-the-third-party-cookie-crackdown/?MvBriefArticleId=23392 

Statt, N. (2020, March 24). Apple updates safari’s anti-tracking tech with full third-party cookie blocking. The Verge. Retrieved April 20, 2022, from https://www.theverge.com/2020/3/24/21192830/apple-safari-intelligent-tracking-privacy-full-third-party-cookie-blocking 

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Williams, R. (2019, October 17). Accenture: More consumers willing to share data when there’s transparency. Marketing Dive. Retrieved April 20, 2022, from https://www.marketingdive.com/news/accenture-more-consumers-willing-to-share-data-when-theres-transparency/565195/