No one knows your customer like you do. You have so much information that you're not effectively tapping into.
Where do you get the most understanding of your subscribers and customers? Who understands your user base the most? You do, from your own data. As operators of publishing or ecommerce sites, you’re already collecting this data (at least I hope you are). Buried in your server logs, CRM, and other data pools lies the biggest opportunity you have to really drive engagement, brand affinity/loyalty, and lifetime value.
In a recent report released by eConsultancy called The Promise of First-Party Data, 64% of respondents stated that First-Party Data gave the highest increase to their customer lifetime value. The study asked senior marketers at companies with over $100m in revenue about their view on data sources, from First-Party Data to Third-Party Data. Today’s leading publishers and retailers have realized the power First-Party Data holds, and they are investing the resources to understand, measure, and execute on this data source to give superior user experiences to every single user on an individual basis.
[tweetthis hidden_hashtags=”#bigdata”]First-Party Data holds the key to remaining relevant and reducing #userchurn.[/tweetthis]
First-Party Data holds the key to remaining relevant and reducing user churn. The more you understand about your users, the better you can communicate and engage them on a relevant, personal level. Greater relevance in communication results in greater engagement. Today’s consumers are weary about providing their personal information to just anyone. This trust they have given you displays a level of value they have in your content, your products, and your brand. It is your job to not violate that trust by sending them irrelevant communications.
The value of First-Party Data (FPD)
In order to further understand the value of First-Party Data, let’s look at the primary types of data used by marketers:
First-Party Data (FPD):
First-Party Data is information that you “own” about your customers. First-Party Data is information collected directly by website publishers and retailers, either internally or with the help of partner vendors. This information stems from a direct relationship with the end user through transactions (products purchased, items in cart), onsite behavior (content read, videos viewed, items shared, and more), form submits (including name, email, phone numbers, and more), reviews, comments, and more. Because companies with this information have a prior relationship with their customers, they are able to use this First-Party Data to communicate directly with them.
Second-Party Data (SPD):
Second-Party Data is First-Party Data from a partner who gave you permission to use. It’s First-Party Data from another source – meaning it’s collected in the same manner as FPD, however, that data is then shared with another organization. It’s often used for cross promoting between partners (co-marketing). This arrangement is becoming more common and shows the importance of First-Party Data.
Third-Party Data (TPD):
Simply, Third-Party Data is aggregated data from multiple sources (often 10’s or 110’s of thousands) in very indirect channels. This data is heavily used in the AdTech space. The volume of data is staggering and can bring value to marketers when it comes to advertising.
I had previously worked in the adtech space for years, and while there, the talk was all about 3rd party data. For advertising across networks, 3rd party data is good. It works. (as long as the supplier is providing quality data). After all, you need to be able to target at scale across the web to deliver advertising. And it can be a bit hit or miss at times due to the large buckets of aggregated profiles that are being targeted. For non-AdTech related pursuits, Third-Party Data can be useful to fill in the large gaps in the breadth and depth of insights, however it is often not as up-to-date nor complete.
The advantages of using First-Party Data:
- They’re Your Users: No one else has access to this data, and you actually own it. You aren’t relying on generic Third Party Data. It’s unique to your brand and your users.
- It’s Accurate: The data comes from either your users’ onsite behaviors or information they have provided in forms and opt-ins. It comes straight from the source!
- Readily Available: You’ve been collecting it in your server logs, CRM, partner technologies, and other means. Yes, it is cumbersome to marry these data sets together, but it is worth it.
- Always Up-to-Date: Since it it your data on your users, you aren’t relying old data from another source.
74% of those surveyed by eConsultancy reported that First-Party Data provided the greatest insight into customers.
The beauty of First-Party Data is that it is your data on your users. You own it! No other competing company has that same data about your users. You have access to valuable information about every one of your users that you can use to drive engagement and directly affect your bottom line. As stated above, each one of your subscribers or customers has trusted you with their information. Don’t violate that trust by ignoring them. Feed them value.
Continuously Offer Value
Value exists in a bidirectional model between you and your users. You give value in the form of great content, products, and user experiences, and they show their value by consuming your content, buying your products, and signing up for your offers. Value begets value.
In order to provide continuous value to your users, you have to understand your users at an individual level. Third-Party Data is too broad and inexact to target the individual effectively. First-Party Data from real people will give you all the insights and understanding you need to begin offering real value to them on the one-to-one level they demand. Think of it this way, you have a “file” on each one of your users from their first touch to their most recent and everything in between. This record of information is the best source to drive value to that user. You know which content or products they have interacted, engaged, or purchased. Why not start by giving them similar content or products? Give them more of what they value from you.
Whether you house all of the First-Party Data internally or you leverage partners to track, store, and execute on this data, the fact remains that your users are showing you how to better engage and communicate with them. The most powerful data is the data you already own.
First-Party Data is key to driving user retention and measurable lifetime value, however, you must make sure you are diligent about the collection and analysis of this data. To scale these efforts and deliver one-to-one user experiences across all your communication and marketing channels requires investment in time, resources, and technology. First-Party Data does not necessarily need to be stored by you. More and more often, this data is being stored, analyzed, and executed upon by partner vendors on your behalf, especially when you need to really scale by leveraging machine intelligence.