Everything you ever wanted to know about first-party data

The 2020 pandemic disrupted the economy, leaving marketers scrambling to adapt to new consumer needs and behaviors. Consumer data is more important than ever as marketers learn what products and services are most important to their audience, personalize communications to fit prospects’ new reality and revamp acquisition and retention programs.

Despite the challenges of 2020, new opportunities abound for legacy and emerging players alike. A recent survey by Invesp found that 88% of marketers reported using third-party data to enhance their understanding of their customers and that companies that use data-driven insights to fuel their marketing strategy delivered 5-8 times the ROI on marketing spend than companies who didn’t.¹ Brands that master data-driven strategies to elevate customer experiences and improve marketing ROI (return on investment) will gain an edge over their competitors. As such, understanding how marketing data is collected and leveraged is key to driving growth in a post-pandemic economy.

Over the next three weeks, we will run a column devoted to teaching you the ins and outs of consumer data – from first-party to third-party, from collection to how to use it to your advantage and everything in between. This week, we start with first-party data.

What is first-party data?

First-party data is information about your prospects and customers that is collected, owned, and managed by your company. It is all the information, both observed and inferred, that you have gathered about your audience. It can be data that is observed through spending behaviors or it can come from first-party cookies on a brand’s own site.

First-party data is also known as:

• Customer data
• CRM data

Why should companies collect first-party data?

First-party data is your bread and butter – one of your most important strategic assets. According to Google and Econsultancy, 92% of leading marketers said using first-party data to get an understanding of their audience is critical to growth.²

First-party data is beneficial to marketers because it is:

• Highly reliable – There are typically no middlemen between you and your first-party data’s collection, so you know the information is current and insights gleaned from it are reliable.
• No cost – First-party data is collected directly by you and, therefore, available at no cost.
• Flexible – It can be used to execute and optimize campaigns across many different channels.

How do brands capture first-party data?

First-party data is typically collected using tracking pixels or cookies, website analytics, app data, social media, marketing campaign activity, and account activities (deposits, withdrawals, new loans, etc.).

First-party data includes:

• Form-submissions: data containing basic contact details
  Example: Name, shipping address, email, etc., collected via web forms, product inquiry forms, and email subscription forms
• Transactions: data related to day-to-day transactions
  Example: Payments, invoices, fees
• Marketing channel and campaign activity (observed data)
  Example: website page views, email clicks, content downloads, comments, and likes

What can you do with first-party data?

Since first-party data includes the bulk of the information you’ve collected about your audience, the applications are nearly limitless. The insights you gather from first-party data can inform all marketing program components – from email creative and copy, to loyalty program design, to crafting in-person experiences and choosing what products to highlight on your physical and digital properties.

This is data-driven marketing at its core – taking insights from the data you’ve collected first-hand about your audience and applying them to create more impactful, profitable programs.

Here are a few examples of some smart marketing applications for first-party data:

Generate deep product/services insights

First-party data related to which products/services your customers are using, and how and where they use your services, can give companies important details about their marketing efforts, products, and customers. Analyzing how customers use your services can help brands forecast demand, predict which products appeal to certain customer segments and which drive the most revenue, and understand sales trends by account/product type, season, or region.

Generate customer insights

Brands can glean crucial information about their audience from first-party data, everything from identifying the highest-value customers, to grouping key customer segments (by demographic, behavior, geographic, etc.), to understanding the customer journey.

Data-driven cross-selling

Considering the demographic attributes and behavior of your customers can be critical for developing accurate customer profiles you can use to create campaigns for upselling and cross selling.

Brand example:

An analysis of your customer database might help you identify a key audience segment for a product or service. For example, ATB Financial may have developed the below campaign after an analysis of their customer database led to a realization that young consumers were a key segment for the bank’s “Load & Go” prepaid Mastercard. The campaign targeted 17-19-year-old ATB customers who do not currently use the prepaid credit card product. In addition to the load & go product, the bank highlighted their mobile app and mobile payment capabilities that are perfect for young consumers on the move.

Dynamic and automated messaging

Having direct data from consumers about what they want can help brands deliver powerful messaging, especially when this knowledge is combined with technology to dynamically serve personalization at scale, resulting in compelling, cost-effective marketing communications.

Brand example:

Boating and water sport retailer, West Marine, delivers dynamic content to consumers based on their psychographic preferences. In their preference center, the brand directly asks their audience about the types of water activities they enjoy (fishing, sailing, paddle boarding, etc.) and then uses this zero-party data to deliver personalized, relevant communications.

Trigger-based communications

Brands can use first-party data to create triggered email campaigns which are automated based on consumer behaviors.

Lands’ End uses first-party data to create a comprehensive email program that has achieved a 158% higher conversion rate (purchase per email click) than the retail industry average. Each of the 15+ trigger message types uses insights from subscribers’ email activity, purchase history, browse behavior, and product interests to create personalized, relevant communications, including welcomes, cart abandonment, reactivation and more. In addition, Lands’ End combined first-party data with testing to determine the optimal message frequency and volume for their triggered communications – building a carefully planned message hierarchy and automated threshold rules.

Engage with the right message at the right time

Brands can use first-party data to create personalized messages that resonate with their audience.

Brand example:

Brands can create campaigns to automate the upsell process and ensure that they don’t miss an important opportunity to reconnect with customers. HSBC sends a triggered welcome email to new customers. The email is written in a casual, friendly tone and features an important call to action – offering a “financial review” at the new branch as a way to upsell new customers on additional financial services.

Build stronger acquisition campaigns with lookalikes

First-party data can be applied to lower acquisition costs and boost campaign results by creating lookalike models or similar audiences. Brands can take what they know about their best customers – how they behave, what incentives and offers they respond to, what they’re interested in – and use it (in combination with third-party data) to target new audiences who are most likely to convert.

Be sure to check out our guide to second-party data. Want to learn more now? Contact us to start putting your data to work.

_{¹ https://www.invespcro.com/blog/data-driven-marketing/
² https://www.thinkwithgoogle.com/data/first-party-data-user-statistics/
³ https://www.facebook.com/business/success/haven-life/}