Brands these days have a dilemma when it comes to offering personalized experiences. Most consumers expect brands to know their preferences, and offer personalized customer experiences catering to their needs. At the same time, the rapid rise in retargeting ads and cyber threats has made customers protective of their privacy and how much personal data they share online.
To address this issue, many brands are shifting their focus to first-party data. Collecting first-party data helps e-commerce marketers better understand their shoppers' needs, while giving customers the transparency and control over their own data that they so desire.
For example, Emotive and other SMS platforms rely on users to opt in to receive text messages, and our Conversational Ads solution helps you request this high-quality data directly from consumers. Users give their permission to be included on your list and can choose to opt out at any time. This isn't just the law: it's also what allows you to build trust with your own audience.
Interested to know how you can use first-party data to improve your customer relationships? Let’s dig in.
What is first-party data?
First-party data (sometimes referred to as 1st-party data or 1P data) is information that marketers collect directly from their audience, on the company's own properties, with the audience's consent. Examples of first-party data include demographic characteristics like phone number and zip code, email engagement, browsing history, purchase history, support interactions, customer feedback, interests, and more.
Brands gather data using website pop-ups, registration/login, a checkbox on the checkout page, a mobile app, an email subscriber list, or social media (as with Conversational Ads.) And unlike second- or third-party data, brands retain complete ownership over their first-party data and decide how it's stored, collected, segmented, and managed.
Brands might use a customer data platform, such as a CRM system, to compile this valuable data and glean valuable insights. Brands can then use this audience data to easily create audience segments and generate content, ads, promotions, and other experiences tailored to individual consumers.
First-party data gives consumers greater control over the information they share about themselves, and it gives brands the ability to curate the personalized customer experiences that shoppers expect.
What's the difference between zero-, first-, second-, and third-party data?
Zero-party data is a relatively new concept coined by Forrester, and described as "...Data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her". Forrester defines the main difference between zero-party data and first-party data by who initiates it: customers deliberately provide brands with zero-party data, such as their communication preferences, whereas first-party data is data that brands request from customers.
Zero- and first-party data are considered the most valuable data because brands acquire them with customers' permission. From a marketing perspective they yield the most accurate intelligence, which means brands can use these data sources to improve the end-to-end customer journey: targeting efficiency, digital interactions, online engagement, and customer loyalty programs.
Second-party data refers to customer information collected by a "trusted partner." If you've ever signed up for a website or newsletter and seen a checkbox asking if your information can be shared for "marketing purposes," you can assume there are partners behind the scenes. As a brand, you might have a contract or agreement with other companies to share this type of data. Second-party data can include some of the same customer identity information that you would get through first-party data, such as transactional and behavioral activity.
Third-party data is acquired and shared through a third party that doesn't reflect a direct relationship between you and your customers. The most common example is third-party cookies, browser-based technology that companies use to track audience behavior across the web and develop audience insights about interests and preferences. Third-party data typically comes from a variety of sources and is aggregated, segmented, and sold to companies for their advertising needs.
Examples of first-party data
Asking shoppers for their basic contact data (email address, phone number) feels pretty normal to all of us. When shoppers engage with your checkout process they'll provide you with additional demographic data, like a shipping address. And if you offer birthday perks in your loyalty program, you might ask for the date of birth.
Online behavior data
Anytime someone visits your online store, they will need to give you permission to collect and use their data. These are the first-party data cookies that we see at the bottom of most websites today. These cookies allow you to track their browsing activity and discover what products and pages interest them, as well as how they're navigating from page-to-page.
One of the most common ways of learning about your customers’ interests is by asking for their direct feedback. Enter the survey: surveys help you acquire psychographic data like interests, values, lifestyles, and attitudes. Learning about these aspects of your shopping audience is key to personalizing the experience you provide to them. Surveys are also a great vehicle for collecting customers' feedback on what new products they'd like to see or how you might improve.
Even shoppers who haven't yet purchased from you are often willing to subscribe to a newsletter or register at your site. And once these shoppers become customers, you can include them in your membership programs. Membership data gives you a more in-depth understanding of your core customers: remember the 20/80 rule, that 20% of your customers will account for 80% of your sales. Knowing how these customers behave relative to other shoppers can help you optimize your marketing and sales tactics.
Chatbots, DMs, and text messages feel personal because they're one-to-one. This means shoppers are often more willing to share information with you on these channels. It's true that human-to-human conversations aren't scalable for fast-growing brands, but many marketers aren't investing where it could really pay off. Automated conversational texting is a great option: it's a scalable, AI-powered way to communicate that feels personal and human.
Mobile apps data
The customers who download and use your mobile apps are often the most loyal ones (that's you, occupying valuable real estate on their phones!) Given all the time people spend on their devices these days, a mobile app isn't just a storefront: it's a great place to learn more about your shoppers and what interests them.
Customer support data
If you aren't already integrating data from your customer support systems with your CRM software, get started on that. Your customer support team talks to customers all the time, so it's one of the best sources of first-party data — not just customers' issues, but preferences, attitudes, and other personal information. The rich data your customer support team generates can give you a fuller picture of your overall customer health.
Why is first-party data so important to digital marketing?
Why should you pay attention to all the talk about first-party data? Why not just keep running your marketing activities the way you have been up to now? Here's why.
First party-data is trusted
Unlike second- or third-party data, first-party data is gathered directly from your customers with their permission. First-party data amounts to a "contract" of sorts between you and your shoppers, where they give you their personal information with the understanding that you will use it responsibly. This trust is the most important asset you have. As a brand, you should ensure that you're following user information protection guidelines and adhering to legal data policies (for example, it's illegal to sell or share customer data without their permission.) We help our brands do this, for example, by ensuring their ads, pop-ups, and SMS messages are Telephone Consumer Protection Act (TCPA) compliant.
First-party data is owned
Since you're the owner of the first-party data you request, you get to determine what information you use and how you use it (per legal guidelines, above.) You're not at the mercy of whatever company is selling or sharing that data with you, so you don't need to question its reliability. And if you're storing your first-party data in one centralized platform, like a CRM system, you'll get a holistic view of your shoppers and gain knowledge that can help drive revenue — like demographic trends or which products are most popular with whom.
First-party data is personalized
Because first-party data comes to you directly from shoppers, it can give you a clear picture of who your shoppers are and what they desire. It's not anonymized, aggregated, or massaged into "look-alike" audience segments, which force you to guess what shoppers want. This high-quality data enables you to learn and adapt to your customers: create and send personalized content, upsell relevant products, and encourage loyalty with customized outreach.
First-party data can also be used to increase conversion rates by applying intelligence about shoppers' buying preferences and habits. In fact, first-party data is essential for growing your business by targeting and understanding shoppers more intentionally. Marketers have always relied on their ability to motivate customers to purchase; using customers' own voluntarily provided data just makes you more effective. And maybe it won't surprise you to learn that customers appreciate it, too: 82% of customers feel more positive about a brand after engaging with personalized content, and 50% of consumers say that personalization based on their interests and past purchases has influenced their decision to purchase from a brand over the last year.
First-party data is an alternative to low-performing Facebook or Google ads
But the real reason digital marketing leaders are increasingly talking about first-party data is that the ubiquitous and popular sources of third-party data marketers have long relied on are being retired. Perhaps you experienced this first-hand with the release of Apple's iOS 14 operating system, which required brands to obtain consumers' permission before tracking them. If your Facebook ads are no longer performing as well, it's because just 25% of iOS users have opted into being tracked. Facebook no longer has access to consistent, reliable, and broad data sets, which has had a huge impact on its ability to target and retarget site visitors with appropriate ads.
And it's not just Facebook: as part of its "Privacy Sandbox" initiative, Google plans to phase out third-party cookies in its Chrome browser by the end of 2023. More than half of all site visitors use Chrome. This will obviously impact the advertising ecosystem, as a majority of brands rely on Google data to effectively generate traffic and revenue (Google does NOT plan to get rid of first-party cookies.)
Why should you use SMS marketing to build your first-party data?
Brands collect first-party data through channels like pop-ups, email, and memberships, but it's SMS marketing that has lately emerged as one the most effective way to build both your customer data set and your revenue.
Why is SMS marketing so effective? People tend to keep their phone numbers for a long time, which makes phone numbers a great customer identity marker. We carry our mobile devices with us nearly everywhere, which adds to the high open and response rates for text messages. And as you build out your brand's customer profiles with the first-party data you've gathered, texting helps you build direct relationships with those customers.
Here are some reasons why SMS marketing is a great way to acquire and apply your first-party data.
High open rates
Text message open rates are estimated to be as high as 98%, with most texts read within 15 minutes of delivery. If you are trying to send time-sensitive notifications, high open rates could be useful since customers are most likely to read these messages almost instantly.
High conversion rates
According to Gartner, text messages have a 7X higher response rate and a 30X higher click-through rate than email. Brands using our SMS opt-in checkbox at checkout gather see a 60% opt-in rate, on average. and using SMS to follow up on abandoned shopping carts yields a double-digit conversion rate.
Return on investment
Although SMS is still an under-used marketing channel (G2 estimates that only about 40% of brands are using text messaging to communicate with customers) it's a highly efficient one. Adding SMS to your marketing mix can drive a 30-60% lift in revenue. Emotive brands, for example, see an average of 27X return on their investment.
If you're trying to build your brand, you need to spend time where consumers hang out — on their phones. A majority of consumers indicate that they're open to receiving branded texts.: 75% say they’d be happy to receive an offer via SMS, and 62% say they're happy to hear from brands at least once a week.
Remember the 20/80 rule? It shows in the loyalty numbers. Increasing your customer retention rate by just 5% can drive a 25% increase in profits. SMS is the perfect way to check in with customers on their birthday, remind them of their points in your loyalty program, or let them know when their favorite product is back in stock.
Data collection is only the beginning when it comes to acquiring new shoppers, improving customer engagement, and building relationships with existing customers. Most SMS platforms offer an analytics dashboard where you can see campaign performance; good ones will also offer insights to help you analyze attribution and see the relationships between campaigns, conversions, revenue, and customer lifetime value (CLV).
How can e-commerce brands improve sales with a first-party data strategy powered by SMS marketing?
There are tons of ways to leverage first-party data and SMS to boost the effectiveness of your marketing efforts and drive sales at your e-commerce store. Here are a few tactics we see from the most successful brands.
Promotions and deals
Everyone loves a discount or coupon, but not everyone sees the ones you're sharing. Texting's high deliverability and open rates mean you'll likely see higher conversion rates on your SMS promotions. And creating a sense of urgency about your promotion, which is always more effective in getting people to click, is easier when you know your audience will see it in time to act on it.
Holidays, birthdays, and seasonal offers
Decades of consumer spending data tell us that certain days prompt people to spend more, and SMS is a highly effective way to capitalize on those days. Any brand will tell you that Black Friday is often their biggest revenue-generating day of the year, but all those other key days — Valentine's Day, Mother's Day, Memorial Day, Christmas, etc. — add up, too. We have one brand that generated 10X in sales just with an April Fool's campaign!
Automated appointment and status reminders
Most customers appreciate a text message letting them know that their order has shipped, a favorite product is on sale, or their credit card on file is about to expire. You can even embed relevant links in your message to help them take action where needed.
After you collect first-party data about your customers, you can use it to improve the customer experience for each of them. For example, you can create custom segments for different audiences based on product views, purchase history, or membership status. With SMS you can not only address your customers by name, but customize your texts to include their favorite colors, flavors, or styles.
Get started with first-party data
First-party data is the foundation of digital marketing. Your data strategies should include not just how you'll collect first-party data, but how you'll aggregate it, analyze it to generate insights, and use those insights to optimize your customer experience — from acquisition to retention, and from potential customers to existing ones. SMS marketing can help you both in capturing first-party data and integrating it effectively into communications that convert, increase sales, and improve loyalty.