What is Zero-Party Data?

December 8, 2023

Data has emerged as the lifeblood of companies' strategies. As companies try to understand their customers on a deeper level, the distinction between various types of data has become increasingly important. First party data, often garnered through transactions and primarily encompassing demographics, has long been the cornerstone of customer insights. However, a new player has risen to the forefront - zero party data. Why? Owning your data is much more powerful.

Let’s start with understanding the different types of non-owned data.

What is first, second, and third-party data?

First, second, and third-party data are terms used to categorize different types of data collected and used by companies and marketers. They vary in terms of their source and ownership, as well as their potential applications. Let's break down each of these types of data:

First-Party Data:

First-party data is the information that a company collects directly from its own interactions with customers or users. This data is typically gathered through various touchpoints, such as websites, mobile apps, social media profiles, and other interactions. It's considered the most valuable type of data as it's specific to the company's own audience and behaviors. 

Examples of first-party data include customer demographics (age, gender, location, etc.)

Second-Party Data:

Second-party data refers to first-party data that is shared between two companies or entities. In other words, it's another company's first-party data that you gain access to, often through partnerships or data-sharing agreements. This type of data can be valuable when you're trying to reach a similar or complementary audience to your partner's customer base. 

For example, an outdoor apparel company might partner with a camping equipment manufacturer to share customer data and target a broader outdoor enthusiast audience.

Third-Party Data:

Third-party data is collected by external sources that are not directly related to your company. These sources specialize in aggregating data from various places, such as public records, surveys, and online behavior, and then selling it to businesses. This data is usually more general and less specific to your brand's audience. Examples of third-party data include consumer behavior data from market research firms.

It's important to note that third-party data has faced growing privacy concerns, and regulations like GDPR have led to increased scrutiny on its usage. Moreover, recent shifts in digital advertising (such as the deprecation of third-party cookies by major browsers).

Let’s dive into why you need to start owning your audience by focusing on zero-party data collection.

What is zero-party data?

Zero party data is data you own and isn't sourced passively; rather, it is information that customers willingly provide with full transparency and control over its usage. While first party data often revolves around basic demographics like age, gender, and income, zero party data delves into the realm of personal preferences, desires, and unique characteristics that truly define an individual.

Forrester Research states, zero-party data refers to any “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 [them].” 

Imagine a skier versus a snowboarder. Someone who prefers phone calls over text messages. A person's dietary choices - vegan, carnivore, vegetarian. These seemingly insignificant details might not only influence marketing strategies but also paint a comprehensive picture of an individual's personality and needs and can be collected using popups.

Why you need Zero Party Data in Today's Landscape

In an era where privacy concerns and stringent regulations like GDPR have reshaped the data landscape, the importance of zero party data cannot be overstated. With third-party cookies being phased out, marketers are compelled to embrace alternative means of acquiring insights. This is where zero party data steps in, allowing customers to become active participants in data collection. The underlying philosophy is simple: let customers determine what they want to share, and in return, provide them with tailored experiences that align with their preferences.

1. Building Trust: The Cornerstone of Zero Party Data Collection

At the heart of collecting zero party data lies the crucial aspect of trust-building. Marketers must communicate openly and transparently about the data collection process. Clearly outlining what data is being collected, why it is necessary, and how it will be used is paramount. This extends to having a comprehensive privacy policy and offering customers the choice to opt out if they so desire.

Studies emphasize the significance of transparency in this process. According to Forrester, 72% of consumers are more likely to engage with a brand that provides a clear explanation of how their data will be utilized. This statistic underscores the pivotal role of transparent communication in fostering customer trust and engagement.

2. Respecting Privacy: A Non-Negotiable Principle

Respect for privacy is not just a best practice; it's a cornerstone of ethical data collection. Ensuring the secure storage of data and granting customers the autonomy to delete their data is essential. The relationship between trust and privacy is symbiotic - customers are more likely to share their information when they are confident that it will be handled responsibly.

3. Elevating Customer Experiences through Zero Party Data

The potential benefits of zero party data extend beyond mere data collection. Salesforce reports that 87% of customers are more willing to share their data when they believe it will result in a superior customer experience. Once gathered, zero party data becomes a valuable asset, capable of revolutionizing customer interactions.

From a practical standpoint, using zero party data effectively involves aligning it with specific business objectives. This means leveraging the insights to tailor experiences, create personalized product recommendations, and streamline the shopping journey. By analyzing purchasing history, preferences, and unique traits, companies can boost customer satisfaction, increase average order value, and foster brand loyalty.

4. Maximizing the Value of Zero Party Data

Collecting zero party data isn't just a trend; it's a fundamental pillar of modern marketing. Employing best practices - transparency, relevance, privacy, and ethical usage - is pivotal for harnessing the full potential of this data type. By allowing customers control over their personal information, marketers cultivate trust and bolster customer loyalty. The result? An enhanced overall experience that not only drives business growth but also establishes a long-lasting rapport between companies and their customers.

5. The Dawn of a New Era in Data Collection

Zero party data emerges as a beacon of customer-centricity and ethical engagement. It empowers customers to actively shape their interactions with companies while enabling marketers to craft personalized experiences that resonate deeply. The fusion of transparency, respect for privacy, and customer-oriented strategies positions zero party data as a cornerstone of modern marketing success. As we venture into this new era of data collection, embracing the principles of zero party data will undoubtedly redefine the way companies and customers connect, collaborate, and thrive in the digital age.

Embracing Owned Data: A Pathway to Trust, Personalization, and Customer-Centric Success

In the world of data-driven strategies, zero-party data has emerged as a game-changer. It's all about giving the reins back to customers. Unlike regular data that's quietly gathered, zero-party data is what people willingly share – their preferences, quirks, and desires – all in their control. With privacy concerns reshaping the scene, zero-party data steps up, becoming the key to understanding customers. It's like building trust through a two-way street. You're open about what you're collecting, they're comfortable sharing. And privacy? It's the golden rule. You store data safely and let people delete if they want. But here's the cool part: zero-party data isn't just for collection; it's about creating immersive experiences. 


  1. https://www.forrester.com/blogs/straight-from-the-source-collecting-zero-party-data-from-customers/

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December 8, 2023