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According to The Economist, the world’s most valuable resource is no longer oil — it’s data. In today’s hyperconnected world, brands need to collect consumer data from every touchpoint. Marketers, in turn, use these insights to serve consumers highly-targeted ads that are more likely to drive conversions.
Is your organisation tapping into its full data potential? Do you have the right combination of data to achieve your marketing objectives? Below, we break down the differences between first-, second-, and third-party data, examine the pros and cons of each, and discuss how the right data mix can help your organisation meet its goals.
First-party data is data that your organisation has collected from your audience. This could include data from CRMs, website visitors, social media followers, email subscribers, transaction records, and phone calls.
First-party data offers significant advantages for businesses seeking to enhance their marketing strategies. Here are some key benefits:
The only drawback to first-party data is that it can be limited in scope. First-party data can help you retarget your existing prospects and customers with ads, but it doesn’t provide much insight into new audiences that haven’t engaged with you online, in person, or over the phone.
Second-party data is another company’s first-party data put up for sale. The seller collects this data directly from their audience and sells it to your organisation, without a middleman.
For example, an auto parts chain could reach out to a car dealership or service network that has a significant target audience overlap. The car dealership could then arrange to sell its data to the auto parts dealer at an agreed-upon price.
Second-party data can help you gain more insights on your existing prospects and customers, allowing you to form more complete profiles for targeting.
Also, second-party data gives you insights into audiences similar to your own. This gives you a valuable opportunity to expand your marketing reach and target new consumers.
Since you’re going directly through a trusted partner and not a third-party data broker, you’ll still have the competitive advantage of being one of the few organisations with access to this data.
Companies using second-party data can face migration or integration issues. Every company is unique in how it collects, stores, and manages its data, and it can be difficult to combine data from an outside organisation with different standards than your own.
Second-party data can also be limited in availability. Finding organisations willing to trust you with their data can be a challenge, especially in the wake of the Cambridge Analytica scandal, and in light of internet privacy regulations like GDPR and The California Consumer Privacy Act (CCPA).
Third-party data is purchased from an outside broker that did not play a role in collecting the data. Third-party data brokers often aggregate large-scale datasets from a variety of websites to create comprehensive consumer profiles. Acxiom, Experian, and Quantium are among the largest and most commonly-used third-party data brokers.
The primary drawback to third-party data is that its use is often restricted by data privacy laws and the methods used to collect it don’t align with consumers' increasing expectations for privacy. This is particularly true when it comes to third-party browser tracking cookies. Since most browsers now block them by default, even if their use is not restricted by privacy regulations, they’re not of much use now, anyway.
Additionally, there is no transparency into how third-party data has been collected. This can lead to several issues, including:
In addition, third-party data is not unique — your competitors are free to purchase the same datasets from the broker.
Data brokers are organisations that collect information about potential customers in order to resell it to other interested companies. They filter and organise the data based on who they think particular companies are targeting as a way to streamline the lead gathering process. Data brokers gather typical information like your name, address, date of birth, etc. and, depending on the brokerage, have the capabilities of gathering more sensitive information like your income, purchase patterns, and even your hobbies!
First party data is internal information gathered from your own sources. Demographics you’ve gathered about your own customers, data in your own customer relationship management systems, and customer feedback are all examples of first party data. Since it’s all your own information, its integrity and accuracy all depends on the standards your company establishes and maintains. One negative aspect to consider about first party data is its limited range. There are potential customers in untapped markets that have to be taken into account if your company is looking to grow.
Second party data is information shared with a trusted partner or purchased from a second party marketplace. While it may not be as reliable as first party data, it can give you insight into the new markets we referred to before.
Third party data is purchased and collected from unknown third party brokers and should be utilised as a last resort. It should be scrutinised more to make sure the information is properly processed, cleansed, and complements your own company. Keep in mind that your competitors have access to the same information so be strategic and be sure you can continue to differentiate yourself if you’re going to follow through and use it.
Zero-party data is information that a consumer willingly provides to a company. This could be from a survey, form fill, social media poll, quiz, or another similar format. In return, the consumer receives a better user experience that is tailored to their needs.
Collecting zero-party data is a transparent process — the user provides the exact information they’re comfortable disclosing. They don’t feel duped or deceived when you, in turn, use that data to improve their experience.
Zero-party data is also compliant with all the new privacy regulations that governments are enacting, since the information is willingly provided.
In addition, capturing zero-party data gives you richer customer insights than you can capture from other data sources. You can literally ask consumers the exact questions that will help you to personalise their experiences and more effectively market to them.
Zero-party data can be more difficult to capture than the other forms of data listed above, since it requires effort on the part of the consumer. If you’re asking them for their time, they often expect something in return — promising a better experience is sometimes enough, but consumers may want something more, such as a discount or special offer.
Another disadvantage is that consumers need to trust your brand before they will give you zero-party data. If you haven’t put in the time to build that trust with the consumer then, regardless of what your incentives are, they won’t disclose any information.
Here are some great strategies to collect Zero-Party Data:
The winds of change are blowing in the data privacy landscape. Regulations like the CCPA in California and the GDPR in Europe have placed stricter controls on how companies collect and use consumer information. This trend is only expected to accelerate.
One major development that's sending shockwaves through the marketing world is Google's decision to phase out third-party cookie tracking in its Chrome browser, the dominant player in the web browsing market. The move this year will significantly limit the ability of marketers to follow consumers across the internet, piecing together a detailed profile based on their online activity. Previously, this data was a cornerstone of targeted advertising, allowing companies to reach specific demographics with laser focus. However, in the cookieless future, these traditional methods are facing obsolescence.
Companies can no longer afford to rely solely on external data sources. To navigate this evolving landscape and maintain a competitive edge, they need to prioritise collecting first-party data directly from their customers. This valuable information includes email addresses, purchase history, website analytics, preferences gleaned from phone conversations, and any other details a customer willingly shares. By building a robust foundation of first-party data with explicit consent, companies can personalise the customer experience to a deeper level. This means sending targeted promotions based on past purchases, offering content relevant to specific interests, and nurturing relationships that foster loyalty.
First-party data empowers marketers to deliver the right message to the right person at the right time, even as the ability to track users across the web diminishes. In this privacy-focused era, first-party data is not just an option — it's the key to unlocking a successful customer-centric marketing strategy.
Organisations’ data needs differ depending on their industry, their marketing objectives, and the tech stack they have in place. However, as an increasing number of data privacy regulations go into effect, we’re seeing a concerted shift in how marketers use data. Rather than relying on third-party brokers who may be breaching data regulations, marketers are tapping into more of their first-party data. In fact, a recent survey found that 82% of marketers plan to increase their use of first-party data.
If you’re planning on tapping into more of your organisation’s first-party data, don’t forget about this often-overlooked source of insights: consumer phone calls. In 2019, digital ads alone drove over 162 billion calls to businesses.
On inbound calls, consumers are literally telling you in their own voice a wealth of first-party data on their intent, their product/service interests, sentiments about your brand, and more that you could use to make smarter marketing decisions. When you turn phone conversations into structured first-party data with a conversation intelligence platform like Invoca, you can optimise your marketing across channels to drive more high-value sales calls, deliver more personalised online and offline experiences, and convert more callers to customers.
First-party data is essential for marketers seeking to create impactful campaigns. By effectively using this valuable asset, businesses can gain a competitive edge, improve customer experiences, and drive growth. Let’s explore the key steps to harnessing the power of first-party data:
Ethical data collection isn’t just about compliance; it's about building a foundation of trust with your customers. Obtaining clear and informed consent is crucial—this includes being transparent about how their data will be used. Adhering to best practices for data privacy, such as implementing robust security measures, and complying with relevant regulations, is equally important. By being upfront about your data practices, you empower customers to make informed decisions about sharing their information.
High-quality data is the bedrock of effective marketing strategies. It's the raw material from which valuable insights are extracted. Inaccurate, incomplete, or inconsistent data can lead to flawed decisions, wasted resources, and missed opportunities.
To ensure data quality, meticulous validation and cleaning processes are essential. Identifying and rectifying errors, inconsistencies, and duplicates are crucial steps. This involves tasks such as standardising data formats, filling in missing values, and removing outliers. Additionally, employing data quality tools can streamline this process and enhance accuracy.
Regular data updates and maintenance are equally important. Customer information evolves over time, so keeping your data fresh is vital. Implement processes to regularly update customer records and remove outdated information. By prioritising data quality, you build a solid foundation for data-driven success.
By consolidating customer data into a single location, businesses can streamline operations, enhance data accessibility, and improve overall efficiency. A centralised repository facilitates data sharing across departments, enabling collaboration and informed decision-making.
Security is paramount when centralising data. Implementing robust security measures, such as encryption, access controls, and regular backups, is essential to protect sensitive customer information. To effectively manage and store customer data, consider utilising specialised platforms like customer data platforms (CDPs) or data warehouses. These tools offer advanced features for data organisation, management, and analysis, empowering businesses to extract maximum value from their data assets.
Effective marketing hinges on understanding your audience deeply. Audience segmentation involves dividing your customer base into distinct groups based on shared characteristics. These segments can be defined by demographics (age, gender, location), behaviors (purchase history, website interactions), psychographics (interests, values, lifestyles), or a combination of these factors. By creating well-defined segments, businesses can tailor their marketing efforts to resonate with specific customer groups, increasing the likelihood of conversions and building stronger customer relationships.
Delivering personalised experiences has become a customer expectation. By leveraging first-party data, businesses can tailor marketing messages, content, and offers to resonate with individual customers or segments. This level of personalisation fosters stronger connections, drives higher engagement, and ultimately boosts conversions. From personalised product recommendations and dynamic website content to customised email campaigns and exclusive offers, the possibilities are vast. By understanding and catering to individual preferences, businesses can create truly exceptional customer experiences.
Data is a powerful asset when harnessed effectively. By delving deep into customer data, businesses can uncover hidden patterns, trends, and preferences. This invaluable knowledge illuminates customer behavior, preferences, and the overall performance of marketing campaigns. To extract maximum value, employ a range of analytical tools and techniques, such as data mining, statistical analysis, and predictive modeling. The insights gleaned from these analyses serve as a compass, guiding marketing strategies in the right direction. By acting upon these insights, businesses can refine their campaigns, optimise resource allocation, and ultimately drive better results.
Safeguarding customer data is paramount for building trust and maintaining a strong reputation. Adherence to stringent data privacy regulations, such as GDPR and CCPA, is essential to avoid legal repercussions and reputational damage. Implementing robust security measures, including encryption, access controls, and regular audits, is crucial to protect sensitive information. Transparency is key; clearly communicate data collection practices, storage methods, and individuals with data access to customers.
With over 300 locations, AutoNation is America’s largest and most admired auto retailer. In an average year, they sell over 500,000 new and pre-owned vehicles and service nearly five million customers. Their mission is to deliver the most customer-focused sales and service environment in automotive retail. AutoNation uses Invoca to capture first-party data from phone calls and create seamless digital-to-call experiences.
When the COVID-19 pandemic began to take hold in the U.S., the vehicle buyer journey changed dramatically. Buyers were shopping online and placing phone calls to dealerships, rather than visiting brick-and-mortar locations. It became more important than ever for AutoNation to understand each customer’s needs and create a unified omnichannel experience for them. To accomplish this, they used Invoca to capture first-party data from phone conversations. They then combined Invoca’s conversation intelligence data with data from their digital channels to get a 360-degree view of every customer.
“The car buyer journey is different for everyone — some people want safety features and others want performance. Invoca has helped us tap into phone conversations so we can understand each buyer’s unique needs,” said Marc Cannon, Executive Vice President and Chief Customer Experience Officer at AutoNation. “As a result, we can deliver a truly peerless car buying experience.”
With Invoca, AutoNation sends buyers personalised marketing campaigns touting the type of features they mentioned over the phone. AutoNation also gives its sales agents access to those insights, so they can tailor the conversation to win the sale. This creates a seamless omnichannel experience that makes every customer feel acknowledged and valued.
Invoca’s conversation intelligence platform helped AutoNation not only survive the COVID-19 pandemic, but truly thrive. AutoNation had its best quarter in company history in Q2 of 2021, and the company is poised for future growth as it continues to open new locations and increase its used car inventory.
Want to learn more about how Invoca can help you tap into first-party data from phone conversations? Request a personalised demo.
