Zero-Party Data: How To Leverage It And What To Avoid

By Charlie Heitzig, Vice President, Data Intelligence, The Lacek Group

Marketers have become obsessed with zero-party data — and rightfully so, as it’s the “holy grail” of consumer information. Savvy marketers use zero-party data to improve the personalization of their brand communications and, ultimately, to deepen their relationships with customers — a high priority these days.

So, what’s zero-party data? It’s optional information customers choose to share with a brand; it can be a preference, like telling a hotel company you prefer a king-size bed or a room on a lower floor. Zero-party data can also refer to supplemental profile data, such as a product you plan to purchase.

Zero-party data has grown in importance during the pandemic because more of our interactions are online. And as cookies fall under greater scrutiny, the importance of zero-party data will continue to grow, change, and evolve. According to Adobe Analytics, U.S. online holiday sales in 2020 were $188.2 billion — an increase of 32.2% year over year. If consumers trust your brand (a weighty topic for another day), they’ll willingly share information about their wants and desires if they get better customer experiences in exchange. And isn’t that one of our primary goals as marketers — to create exceptional and seamless customer experiences?

Knowing more about your customers helps you target specific marketing messages to them. Customers want to be seen and understood, and they want their favorite brands to recognize them and their desires. Using zero-party data can help make each brand interaction more personalized for your customers.

Here are three ways to obtain and leverage zero-party data:

  1. Make dependable recommendations: By requesting new subscribers’ reviews of previously watched shows and movies, Netflix is able to offer solid viewing suggestions. Meanwhile, GoodReads provides “read next” titles based on books readers have reviewed. Maybe your brand can leverage this idea, asking customers for their likes and dislikes, and then turn that information into product or service endorsements.
  2. Incent customer preferences: By offering quizzes in exchange for customer answers, beauty brands often provide personalized product recommendations. Perhaps your brand can also gamify zero-party information and then give targeted product guidance.
  3. Offer personalized choices: By asking one or two questions upfront of new Hello Fresh subscribers, the brand personalizes meal choices from the get-go. For example, if a customer says she prefers gluten-free options, the brand may say, “Absolutely—we’ll never tempt you with gluten.” What two or three questions can your brand use early on in a customer relationship to better target product suggestions?

Let’s also keep in mind a few things to avoid (so we don’t disappoint customers):

  1. Collecting data and not using it: Don’t ignore your customers’ provided preferences. If a customer tells a brand she’s interested in casual clothing, don’t send her eveningwear images.
  2. Wasting time collecting data you already know: You can infer a lot about your customers from transactional data. Don’t waste time asking what kind of coffee blend or pastry option they prefer if they’ve been ordering the same thing from you for the past 12 months.
  3. Overwhelming customers: It’s fine to ask a few questions after a transaction or significant relationship milestone, but don’t send a 20-question survey as soon as customers sign up for email communications or a membership program. Ask too many questions and you risk losing their attention completely.

In a way, collecting zero-party data turns customer privacy on its head. Instead of gathering information and hiding how your brand plans to use it, show your customers how you plan to put it to work for them. If your brand is focused on customers, the time is now to capitalize on zero-party data.

Charlie Heitzig is vice president of the Data Intelligence Practice for The Lacek Group in Minneapolis.