How Zero-Party Data is Shaping the Future of Marketing

As marketers in the tech space, we use data every day to inform our decisions. It informs about how we shape interactions with our customers, the tools we use, and the types of content we serve. The right approach to data is the key to marketing a company, and therefore to its success.

But with increased regulation, growing privacy concerns, and issues of data inaccuracy and disparity, it’s becoming increasingly difficult for brands to get the valuable consumer insights they need to inform their marketing strategy.

For decades, companies have relied on questionable third-party data to get this insight, and for decades they’ve borne the brunt of that decision. Ads that are poorly targeted and therefore irrelevant (a recent Audience Project study found that only 10% of Internet users found the ads they received to be relevant). Advertising dollars spent that ultimately don’t translate into revenue, or even engagement. And, of course, the negative consumer reaction to privacy.

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As concerns about data tracking continue to grow, platforms are taking steps to protect consumer privacy and completely eliminate third-party data (while retaining data they previously collected). Brands like Lush and Patagonia have even gone as far as boycott sites like Facebook. This move away from third-party data stems from a rise in consumer mistrust of data tracking, a demand for greater privacy, and a desire for trust and transparency from brands.

Recent events like Google’s initiative to phase out tracking cookies by 2023 have only confirmed what we at Community have known for sure for years: Third-party data is dying. Apple’s iOS 14.5 and 15 updates were the nail in the coffin.

It’s not that consumers are against sharing their data — in fact, here at Community, we’ve seen quite the opposite. But consumers, understandably, prefer to choose which brands they share their data with and how that data is used.

This is one of the key principles on which we founded Community: the belief that a direct relationship with customers is the basis of successful marketing. By building close relationships through SMS, our customers have had access to a new type of better quality data: data that the customer willingly shares. Zero-party data, when combined with the first-party data that brands have already collected, allows businesses to create powerful marketing strategies that then translate into revenue.

Personalize CX with zero-party data

Zero-party data eliminates the guesswork associated with third-party data by directly gaining critical insights into customer preferences and intent. Companies can, in turn, combine this valuable information with other data (transactional, for example) to adapt their marketing strategy and personalize the customer experience. It’s a symbiotic relationship — a real win-win for customers and brands.

The value of zero-party data becomes apparent when you consider how personalization affects the customer experience. This is what makes zero-party data so revolutionary: the ability to provide the level of personalization needed to successfully market to today’s customers. When companies create relevant experiences for their customers, trust and loyalty will follow. This is how you cultivate brand loyalty and “win” at marketing in the long run…by leveraging both zero-party data and internally collected data to create a truly personalized experience for customers.

However, before you can take draw data and turn it into a winning marketing strategy, you need to take the time to put it together. And zero-party data capture, as many companies have already begun to discover, requires a profound change in the way you approach marketing.

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As data trends evolve, our approach to marketing must also evolve

Over the past few months, I’ve witnessed a burgeoning craze for the potential of zero-party data, and I’m thrilled to see it come to the fore. Brands have needed better data solutions for decades, and we know the value of customer insights here at Community.

But while businesses are right to embrace zero-party data, the difficulty with zero-party data is that successfully capturing it requires trust and direct access to the consumer – two products that are increasingly hard to find in a data-ridden world – tracking suspicion and ad overload.

In the past, brands relied on traditional marketing channels like email to facilitate one-sided conversations with consumers. Zero-party data calls for a direct approach. To truly capture and leverage ground zero data, marketers will need to adjust their strategy and, in particular, the tools they use.

SMS marketing providers like Community facilitate direct conversations between brands and their customers, making zero-party data possible, and it’s amazing to see the impact of these communications. The benefits are two-fold, allowing marketers to get to know their customers better while ensuring that their relationship with that customer remains authentic and on-brand.

When you consider the benefits of SMS marketing, it’s easy to see why it’s such a natural channel for zero-party data collection. Text messages help power personalized experiences because:

  • It offers direct access to the customer
    • Liquor brands can learn their customers’ preferences directly and, through tools such as surveys and quizzes (such as identifying the type of wine you might like based on other foods you like to eat) , can in turn inform future content and recommendations.
  • People engage with it more than other channels like email or social media
    • Retail brands are able to deliver access to exclusive, targeted content on a channel that shows higher engagement rates, while reaching users where they are in the mobile space.
  • It is a more intimate mode of communication
    • Musicians and artists, whose marketing targets millions, use SMS to provide access to exclusive content and experiences, all personalized to their fans’ preferences
  • It offers several ways to capture zero-party data (either directly via SMS or by complementing zero-party data collection efforts on other channels)

As brands take a more personalized approach to marketing, SMS is quickly becoming one of the most useful channels for acquiring zero-party data, building trust with customers, and personalizing the customer experience.

So yes, third-party marketing as we know it is changing – and marketing needs to adapt along with it. But with SMS, the possibilities are endless. As we move toward a future centered on personalized marketing experiences – backed by real consumer insights rather than ethically questionable third-party data or guesswork – the brands that will thrive are those that are ready to embrace draw data and to develop their tools accordingly.

About Madeline Powers

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