Why First-Party Data is Your Most Important Asset for 2022
February 8, 2022
Data – it’s all around us. It’s argued to have more value in today’s organizations than cash. However, not all data is created equal.
While most organizations have access to second and third-party information (data sourced from other parties), first-party data offers so much more potential value.
Unsure what first-party data is or why it matters to you? We’ll explore that and more in this whitepaper.
First-Party Data – Importance
Before we delve too deeply into the topic of first-party data, it would be helpful to have a better understanding of its importance to organizations and their success.
Consider the following:
- Most organizations have prioritized digital experiences and strategies to collect more first-party data.
- Two-thirds of marketers believe that first-party data offers the best path to truly understand their customers.
- 95% of marketers look to first (and second) party data to increase customer LTV.
- 30% of marketers report that collecting and storing first-party data is their highest priority. 58% report that it is one of their top priorities.
- Consumer Packaged Goods companies are increasingly using digital experiences to collect first-party data
- Sites like Facebook and Google are primary sources for leveraging first-party data for advertising and driving traffic, but these so-called “walled gardens” are being supplemented by a growing number of other marketplaces, platforms, and partners.
- Less than 60% of marketers have a clear understanding of the challenges posed by changes to privacy rules and regulations when it comes to first-party data.
As you can see, this is an important topic that has had an increasingly larger impact on organizations across all industries and verticals in recent years.
However, it can be challenging to understand what first-party data even is, much less the role it should play in your decision-making processes.
What Is First-Party Data?
First-party data is information you collect directly from your customers and that you own outright.
For example, suppose you want to launch an email marketing campaign. To do so, you will need email addresses.
You could purchase email lists from a vendor, but that comes with several drawbacks, including:
- You must pay for that information every time you want to send emails out.
- You lack control over the sourcing of that data.
- You have no guarantee that the names/addresses in the list are even interested in your offer.
- You have no real guarantee that the email addresses are accurate or current.
Alternatively, you could build your email list by interacting with your customers directly.
Opt-in forms and social media outreach are just two ways you can reach your existing customers directly and ask them to “opt-in” and provide their email addresses and other information.
This is first-party data – information you’ve sourced directly and that you control and own.
While it does come at a cost, that’s usually less than what you would incur working with another organization.
You also know that the information is accurate and up to date and that the customers are interested in what you’re offering.
As you can see, first-party data has a lot of value. However, we’ve only touched on the proverbial tip of the iceberg.
What Is the Value of First-Party Data?
Now that we have a better understanding of what first-party data is, it’s time to explore why it matters.
What value does first-party data hold? We’ve hinted at that in the previous section, and we’ll explain all the benefits it offers in detail below.
Perhaps the most obvious value is the ability to glean vital customer insights. This information can be utilized to drive further interactions with your customers, improve the accuracy of offers made to individual customers, and boost the ROI of your outreach and marketing efforts.
Communication to Owned Data
Access to information is all well and good, but it’s how you communicate that makes all the difference. With first-party data, you’re able to share insights and targeting details in real-time to empower your teams to make more accurate decisions and improve performance.
Developing Look-a-like Models
First-party data also allows you to develop look-a-like models. This can be beneficial for a wide range of organizations and needs, ranging from extending audiences for content publishers to identifying product offerings that should be marketed to specific audience segments or even individual customers.
What Industries Benefit from First-Party Data?
Who benefits from using first-party data? We’ve seen that there’s a lot of value to be derived here, but what types of organizations can tap into that worth? The answers might surprise you.
If you sell directly to consumers, you can benefit from first-party data. In fact, you are in a prime position to harvest this data and put it to use on behalf of your organization. B2C organizations can directly access customer information in the same way that retailers can, which is not something that can be said for many other industries.
CPG companies are in a unique position because they often lack customer information for retail sales, but they do have control over their customers (brands that buy from them to resell to customers). Often, this means having to interpret first-party data to infer end-consumer behavior and preferences, which can be difficult if retail partners do not have a good grasp on their own metrics.
What Are the Different Types of Options to Acquire First-Party Data?
Now that we’ve covered what first-party data is, the value it offers, and how industries can benefit from it, let’s turn our attention to the big question – how do you acquire it in the first place?
The good news is that there is an abundance of ways to do so. Regardless of your industry, you can use the following processes to acquire first-party data and help build a thriving organization.
Point of Sale
Gathering information at the point of sale is an excellent way to acquire first-party data. This can be done online or off (although it is more challenging to do so offline).
E-commerce companies are in a prime position to gather a wide range of information at each stage of purchase, including the customer’s name, contact information, and type(s) of items being purchased.
This data can be valuable in the short term, but it can be invaluable over time, as it allows you to build an accurate picture of customer interests and buying habits.
Physical retail can also yield important first-party data at the point of sale, but you will need to take different steps, such as including a survey on receipts and asking for customer email addresses during the checkout process.
Promotions can provide a lot of traction, too. Ostensibly, the benefits of promotions are basic – you get a boost to sales, and your customers get to save money on their purchases.
However, that thinking is largely outmoded.
Promotions can be so much more than transactional interactions today! Your promotions can open the door to a flood of customer-related information, including interests, budget, preferences, and so much more.
Smart A/B testing can also help you segment your audience so that you can deliver more personalized promotions to each segment.
Acquire Leads through Online Marketing
Online marketing can be an invaluable tool for acquiring first-party data. With the right type of marketing – infographics, video content, quizzes, and other interactive options, you can gain access to an incredible range of information.
Of course, many organizations lack the in-house expertise to design successful online marketing campaigns, particularly when it comes to interactive content.
You can work with a marketing firm to help you reach your audience and acquire the first-party data that you need.
Where Do You Store and Manage the Data?
Data is all well and good, but if you lack the means to store and manage it, it’s useless to you.
An entire industry has grown up around this premise (data science) that focuses on data collection, storage, management, and manipulation.
You have two primary options for storing data today – your CRM and your POS.
CRM stands for customer relationship management, and these software suites have proliferated today.
Examples include HubSpot, Zoho, and Salesforce, to name only a few. These tools provide you with a wide range of ways to store, manage, and put first-party data to use.
Your POS (point of sale) system can also help you store and manage your data. However, POS systems are often less feature-rich than CRMs, and they are often used to funnel information from customers into a CRM.
For instance, when a customer checks out and provides their name, address, and email address that data is transmitted from the POS into the CRM, where it’s stored for future use in your marketing efforts.
How Do You Act on This Data?
With access to first-party data, you need to know how to act on it.
What can you do with it? How do you put it to work on behalf of your organization?
There are multiple ways to do utilize the data, whether you’re operating online or focusing your efforts offline.
Programmatic: Programmatic advertising offers powerful solutions for organizations and ensures that you’re able to engage in highly-targeted marketing based on very specific demographics. It allows you to go beyond day and time. With programmatic methodologies, you can use many other demographics, including:
- Browsing habits
- Buying history
Social: Social advertising has exploded in recent years. And, while Facebook accounts for the lion’s share of the spending, you’ll find advertising options available with most social media platforms today.
Social ads mimic Paid Search ads in most ways. They allow you to tap into your organization’s owned data and insights gleaned from your online following to reach new followers. Additionally, social ads provide the ability to get your offers in front of followers who are most likely to be interested in them.
You’ll also find that social advertising allows you to fine-tune your marketing, much like programmatic advertising, by using a wide range of demographics previously unavailable to advertisers.
Direct Mail: You’re not limited to online marketing using first-party data, either. In fact, it can fuel your direct mail marketing efforts to new heights.
For instance, suppose that you’re a roofing company and you regularly send direct mail postcards to addresses throughout your service areas. Generally, your marketing efforts are probably based on just a few metrics, and the chances are good that you don’t see the ROI that you deserve.
By combining first-party data with direct mail, you’re able to refine your efforts to boost ROI and ensure that you’re getting the right offers in front of the right potential customers, whether its homeowners with older homes, those about to put their homes on the market, rehabbers/property investors, or some other market segment.
USIM and Your First-Party Data Needs
In conclusion, first-party data is more important than ever.
It provides the ability to drill down into meaningful metrics for your organization, personalize your marketing and outreach strategies, use your marketing dollars more effectively and efficiently, and better engage your audience.
Thankfully, there are many ways to acquire first-party data, from mining your social media accounts to monitoring your promotions and many more.
Many organizations find that acquiring, storing, and managing first-party data can be quite challenging, but it doesn't have to be!
If you find that you need assistance with any part of this process, USIM can provide critical expertise to help your organization create an efficient process for collecting, storing and properly utilizing this excellent resource.
Contact us to schedule a review of your situation and a custom-developed solution.