Zero-party data is a new term coined by Forrester to provide a category for an emerging data type. As retailers prepare for the third-party cookie clampdown, it is more important than ever to forge close relationships with customers. Zero-party data has arisen as a response to this reality.
But what is zero-party data, and how can retailers take advantage of the opportunities it brings?
What is zero-party data?
Zero-party data is data that customers actively provide to brands.
Zero-party data includes:
How the shopper wishes to be addressed
A retailer could attract this data by setting up a survey or a self-service preference page, for example. A social media poll would also qualify as zero-party data.
Yelp’s revamped app experience provides a useful reference point, too. Yelp asks customers to specify their preferences before they interact with the app. The experience is then personalised based on these responses.
It is vital that retailers are transparent when collecting this data. Consumers should be informed about the precise data that will be stored and how it will be used. This value exchange is essential; since retailers are asking customers to share personal information, they must explain the benefits for the customer.
Zero-party data example: Thread
The apparel brand Thread does an excellent job of this during its signup process.
Customers can share as much or as little information as they like, but Thread explains the value exchange clearly. The more information the customer shares, the better the experience will be. The data is used to shape personalised recommendations, so customers can immediately see the impact of their data on the quality of the style suggestions.
The benefits of zero-party data are:
Accuracy: This data comes straight from the customer, so it is more accurate than inferred data. The best way to know what someone wants is to ask them.
Cost: It is cheaper to acquire than third-party data, as retailers do not directly pay for the information.
Compliance: In a GDPR age, retailers need to know what data they have on customers and where it is stored. This compliance is typically built into the zero-party data process/
Personalisation: Richer data can lead to much more effective personalisation, based on a customer’s declared interests.
Trust: Customers that share data with a retailer have trust in the brand. That trust can be nurtured through thoughtful use of personal data.
The drawbacks of zero-party data are:
Scale: There is only so much data a brand can acquire from surveys and forms. This data is high-quality, but typically low quantity.
Planning: Retailers must consider the types of data they wish to collect and the questions they need to ask of customers, before launching a zero-party data strategy.
Customer intentions: Customers do not always know exactly what they are looking for. This is where retailers must work with customers to guide them through the purchase journey.
What is the difference between zero-party data and first-party data?
Zero-party data is information that customers choose to provide, while first-party data is acquired through customer tracking.
Retailers can also think of zero-party data as declared data, where first-party data is often observed data based on onsite behaviours. These data types work most effectively when combined to provide a rounded picture of the customer’s intentions.
How can retailers capture zero-party data?
Zero-party data entails a strategic shift away from tracking users towards inviting them to share their data. Where consumers are increasingly likely to opt out of third party tracking, brands now need to persuade them to opt into data sharing.
Consumers will only be so generous with their time, so make sure you are asking perceptive questions that lead to rich answers. Tastry, an AI app for wine recommendations, asks customers to share the types of flavours they enjoy. For example, ‘Do you enjoy the taste of licorice?’
Retailers in the vintage furniture industry should take notice of this approach, for example. When customers do not precisely know how to define their tastes, the right questions can lead them to share insightful information.
This can then be used to provide personalised recommendations that go beyond the static ecommerce experience too many sites still offer today.
Zero-party data forces retailers to think about what they want to do with the information before they collect it, then put it to work for the customer immediately.
How Cadeera helps retailers to capture and use zero-party data
Cadeera uses a wide range of signals from individual users to shape their ecommerce experience. This includes declared (zero-party) data, observed (first-party) data, and inferred data to power Cadeera’s AI preference engine.
Using visual and linguistic cues to develop multimodal search, Cadeera turns the online retail experience into a space for inspiration and exploration, as well as purchasing.
Get in touch to find out how Cadeera can help you revolutionise your ecommerce platform.