First-Party Data: The Key to Building Winning Brands

In a post-GDPR world, leading brands will gain customer trust and a competitive edge by embracing their own data says Vijay Chittoor, Co-founder & CEO, Blueshift 

At a time when GDPR is rolling out, and the Cambridge Analytica episode is still fresh, brands and marketers face an important imperative: reduce their reliance on third-party data, which is packaged and resold, and switch their attention to first-party data, which is collected with trust and transparency. Leading brands have started to act, with Facebook shutting off third-party data for ad targeting and brands like Nestle starting to prioritize first-party data. 

This shift in focus is good news for brands, not only for establishing trust and privacy, but also for building a competitive advantage. While third-party data is equally available to all bidders, first-party data is an exclusive asset that can be nurtured. However, there is a challenge that must be overcome before this data can be turned into gold: unlike third-party data that is already scrubbed and packaged into segments or audiences for multiple buyers, first-party data must be unified, analyzed, and activated, and it’s up to marketers to invest in doing so. 

The First-Party Data Opportunity 

Many marketers might question whether they have sufficient first-party data. That’s why it is useful to understand that this data can come in many forms, and can be collected through various interactions that customers have with your brand. These include: 

• Customer-submitted Data (typically captured in a CRM), including customer attributes and demographics, such as name, gender, location, birthday, etc., as well as opt-in preferences and other communication choices.
• Transactional & subscription data, including purchases, upgrades/downgrades, and cancellations. 
• Product/content interactions and behavioral data (observed data, gleaned by collecting the customer’s behavior), including page views, swipes, clicks, likes, and “add-to-list” actions. 
• Customer service data, including trouble tickets that have been submitted, resolved, or are still outstanding.
• Marketing interactions, such as opens or clicks of emails and push notifications, as well as views and responses to ads from multiple channels.
• Derived information (gathered by analyzing “metadata,” or patterns, of customer interactions across channels), including identity, location, and customer lifecycle attributes.
   

Collectively, this data provides marketers with insights that can provide deep personalization. Some of the common use cases for these insights include:

 

• Audience targeting and micro-segmentation: Tapping into customer data will help you find the right audiences for your marketing efforts, and will help you understand where each customer is in their journey with your brand. 
• Product and content recommendations: Understanding how customers interact with your product and content is the key to delivering personalized recommendations. By using techniques like collaborative filtering (“people who viewed item X also liked item Y”), you can help your customers discover relevant items based on data from your entire customer base. 
• Campaign optimization: Patterns of customer engagement with your brand can be used to optimize your marketing campaigns. With this type of data, you can get the right message to each customer over the right channel at the right time. 
   

Shifting your focus from third-party data to first-party data provides clear advantages around reliability and timeliness, as well. In cases where marketers have a chance to validate third-party data against trusted first-party sources, they often find that third-party sources incorrectly classify attributes, such as gender or household income, for a large number of customers. 

Using such unreliable data in your personalization can cause embarrassing failures. Marketers also find that third-party data is often outdated, especially customer intent data or in-market data. In today’s connected world, where the purchase window is shrinking, timeliness is the key to staying relevant.

The Benefits of Activating First-Party Data

The use of first-party data leads to a virtuous cycle—a chain of events that positively reinforces itself. When customers interact with a brand and leave behind first-party data, this data can help the brand deliver more personalized experiences for their customers. This personalization leads to increased trust with their customers. In turn, this increased trust encourages customers to interact more with the brand and share more data—and so the cycle continues to reinforce itself.

This virtuous cycle is the key to winning with today’s customers. In fact, a recent study showed that 70% of brands that use 75% or more of their customer dataOpens a new window exceed their revenue goals.

The Challenges of Activating First-Party Data

However, activating first-party data is not without its challenges. As brands shift their focus from third-party data to their own customer data, they will need to invest in processes to harness the data. It’s been found that 54% of marketers are able to use less than half of their customer data in their marketing efforts. 

There are multiple reasons for this low rate of activation. One of the challenges in activating data is unification. Customer data must be unified across multiple forms of “identity,” e.g. “anonymous” customer interactions identified only through cookies, and “known” interactions of some of the same customers identified through an email address or another form of identity. Unification also involves combining different types of data—for instance, behavioral data that changes over time versus demographic data that tends to remain static over time. Often these different types of data are captured in different systems and need to be consolidated. 

Access to data is another challenge. In many organizations, marketers rely on IT teams or analysts who write complex queries before the data can be put to work. However, issues of access can be resolved by investing in marketer-controlled customer data systems.

But even once the data is accessible, analysis of that data is yet another challenge that brands and marketers face. And given the complexities of data types, identities, and channels, marketers need the analysis of the data to be automated. AI is a key technology that can come to the aid of marketers to provide advanced analytics on a continuous and automated basis.  

Lastly, segmenting data presents another hurdle inactivating data. Many marketers struggle with getting their segmentation efforts to keep pace with fast-moving data (especially behavioral data, which is very dynamic). Marketers who segment customers multiple times a day are far more successful in driving revenue goals, compared to their peers. It is important for brands to invest in real-time segmentation systems that can keep pace with the changing nature of data.  

What Marketers Must do to Win

It’s clear that first-party data, when activated successfully, leads to revenue success. However, most brands find it challenging to activate this data for cross-channel marketing. The key to activating more first-party data is to invest in systems that enable “marketer-controlled” data access. Marketers who have advanced access to work with first-party data end up activating more of their data and are also more successful at deploying advanced AI techniques for personalization and segmentation. 

In a post-GDPR world, the brands that win will be the ones that successfully invest in first-party data. More importantly, they will leverage that data to build trusted and personalized relationships with customers.