The Current State: Data is Where CX Begins and Ends
Why does customer experience (CX) matter?
In the digital marketplace, customers are even more demanding than ever before. More than half of customers today say they’ve switched companies solely because of poor user experiences. Companies who fail to embrace CX as a strategic path to growth won’t just be lagging, they’ll get left behind.
Today, more and more companies are realizing that true competitive advantage lies in creating an engaging customer experience — one that is personal, fast, easy, and useful. The only problem: many companies are not quite sure how to create it. By using advanced analytics, companies can make better use of their customer and user experiences, leading to higher satisfaction — and loyalty — in the long term.
With customer data increasingly driving the personalization strategies fueling the customer experience across marketing, sales, and customer support, your data strategy has never been more important. Customers expect consistent experiences across the myriad channels they interact with — whether in-store, on the website, or in an app.
Your customers want every experience to be personalized
The era of one-to-many engagement is over.
Your customers need each experience to be relevant. Something as simple as knowing what pages a customer has looked at on your site before they call into the help center can go a long way. Without personalized, relevant experiences, consumers will choose to go elsewhere.
Customer data is what fuels the teams and technologies responsible for your customer experience, but for years there was little incentive for companies to prioritize customer data as an asset itself to be taken care of and safeguarded. Now, consumers and regulators alike are pushing new data privacy rights. These rights, like the ability to know what data companies collect, to delete that data, and to compel legal action when it’s misused, are now compelling every company to pay attention to the data.
Marketers are losing access to data that once fueled their ad campaigns due to changing attitudes and laws around privacy
The New Norm
To take on personalization and privacy, you need a unified view of customer data at an individual level to deliver relevant experiences with consent. It’s a stark change from the past when siloed teams worked in siloed tools to deliver scattershot campaigns. Not only is this a bad experience, but it also opens you up to risk.
The demise of third-party data won’t mean the end of marketing or cross-departmental CX. What it does mean: in order to scale engagement across all of your tools and all of your channels— accurately and with consent— you need to rethink the kind of data you’re using, how you’re collecting it, how it’s distributed, and how you keep it secured. So how do organizations address this challenge today? What data should you collect, how can you protect it, and— most importantly— how can you ensure you’re delivering experiences that matter to your customers?
Know your Party and Data Type
Now, more than ever, where you get your data matters. That’s why understanding the difference between the different types of data – first, second, and third
What is 1st Party Data?
First-party data is information a company has directly collected itself on a consumer.
For a brand, this data could be personally identifiable information (PII) such as name, mailing address, email address, and phone number. It could also be the technical identifiers such as cookies or mobile device IDs associated with an anonymous user or his/her PII as well as behavior/engagement with the brand. This information could be gathered from sales, surveys, lead gen forms, and direct observation of consumers on-site engaging with the brand.
For a publisher, this data could be similar information collected from subscription or registration to read the content.
What is 2nd-Party Data?
Second-party data is when two trusted parties share their directly gathered information. For example, American Airlines and Hyatt have partnered around their loyalty programs. American Airlines might market to Hyatt customers and Hyatt might market to American Airlines through this partnership which may facilitate sharing of user data for joint customers.
What is a 3rd-Party Data?
Third-party data is any information collected by an entity that does not have a direct relationship with the user the data is being collected on. Often times, third-party data is collected from a variety of websites and platforms and is then aggregated together by a third-party data provider.
For example, A user might visit a sports website and select their favorite team. They might then navigate to an auto enthusiast blog, and finally, fill out a credit card application on a banking site. The sports site doesn’t necessarily know that the user loves luxury cars or has a high income. Unlike the sports site, the data provider does not have a direct relationship with the user, however since the provider collects data from the user as they travel the web, not just on an individual property, they can form a more complete view of that user.
Ok, now what?
Well, while third-party data has comprised the majority of the data that marketers and analysts work with (because it was easy and readily available), the evolution of data privacy regulations and the rigors of crafting personalized customer experiences are elevating first-party data and since this data is collected on your web properties, apps, or independent systems and sources of data, the information can flow in real-time from the moment it is produced. That is, of course, assuming you have set up a customer data supply chain connecting customer data to the systems that deliver the customer experience.
Why Should I Switch to a First-Party Data Strategy Now?
Meeting the needs of now and the future
The days of delivering marketing outcomes and CX strategies on the basis of third-party data are coming to an end. But the degradation of third-party data’s value doesn’t mean personalization or marketing are over. Even in the world of display advertising. When Europe’s largest publisher SPRING, was faced with continuing their web advertising in a post-GDPR world, they needed a way to personalize their ads while remaining compliant with regulations. Faced with ad-blocking rates as high as 30 percent within European countries in the EU, SPRING Axel Springer adopted a first-party data approach to their ads by employing a combination of enterprise tag management and Customer Data Platform. Even though SPRING Axel Springer historically operated with third-party data, they were able to transform their digital strategy by using first-party visitor data in Audiences to enrich their desired DSP segments and create personalized, dynamic advertising campaigns. This not only improved conversions but switching to a first-party data strategy helped align teams across the organization who were now relying on a unified set of customer data.
This means marketers must move away from piling up first-party unknown identities and start building fully-consented, CCPA- and GDPR-compliant repositories of known identities. They have to redefine their performance media KPIs for demand generation, and to achieve CRM critical mass, they must clarify the payoff for sharing personal data.
3 Key Reasons to Shift to a First-Party Strategy
Here’s why you should move away from third-party dependent strategies as soon as possible.
- Web Browser Changes
- Personalization without third-party data
- Data Privacy Laws
The Benefits of a First-Party Data Strategy
Switching your marketing and CX strategy to a first-party data strategy isn’t swapping out one set of data for another. It’s complementing this existing approach with richer and more strategically-aligned data that maps to your organization’s revenue goals. Building a first-party data strategy (which we’ll cover next) requires a robust yet adaptable customer data supply chain to move from collection to unification to activation.
Turning to a first-party data strategy unlocks a host of use cases that can help you unlock long-promised business goals like digital transformation. Let’s take a look at what first-party data can enable your company to do when you pair the right technology with the right people and strategy.
We’ll only cover a few new capabilities, including scalable customer acquisition, a single view of the customer, improving time to insight, and governing data according to customer consent. Depending on your industry and CX/Marketing needs, your first-party data strategy may focus on other goals.
Benefit 1: Scalable Customer Acquisition
Collecting first-party data is the first step— an email, a social media handle— but getting them to become customers is another hurdle. As consumers bounce between touchpoints, companies need to be able to reach across channels in real-time.
By integrating all of your data sources into a vendor-neutral customer data supply chain, you’re better able to analyze and engage an individual users’ actions. Down the line, this provides an opportunity for personalized marketing that turns consumers into customers. One of the ways you can do this is through lookalike marketing. You know what your high-value customers look like and how they act.
Turning that first-party data (purchase and behavior data) into targeted campaigns to convert other like-individuals into high-value customers (whether that data comes from first or third-party) is now possible. By using first-party data to craft highly targeted ads to directly target consumers that are displaying intent and affinity to become high-value customers, you not only generate higher lifetime values but save money by reducing unnecessary ad spend.
Benefit 2: Improve targeting precision
To achieve true addressability and targeting efficiency, marketers need to shift away from cookie-based tactics toward strategies that leverage a brand’s own first-party data to identify real people across devices and channels. An addressability is a form of personalization that optimizes relevance and timing to deliver effective brand engagement at scale.
It’s a way of connecting your product, content or offer with the people who’d be most interested in it, at the exact time they’re almost ready to hear from you. It combines data and business infrastructure with a deep understanding of the customers’ needs to create a tailor-made experience. First-party data from multiple channels, including website browsing history, social media, surveys and purchase history, now give marketers the ability to design brand messaging that’s specific to individual audience members.
This reduces waste in marketing budgets and means you no longer have to choose between the personalization of email or direct mail and the scalability of a platform like television. Addressability allows you to spend your ad dollars on content that is only shown to audience members who meet very specific parameters. First-party data helps marketers enhance accuracy and relevancy, reduce ad waste and, ultimately, drive ROI.
Benefit 3: Improve Time to Insight
First-party data is great, but there is so much data in so many places that generating high-quality insights can be slow and laborious without the right strategy in place. With a vendor-neutral customer data supply chain, you can reduce the time-to-insights needed to generate revenue. If you can identify and engage consumers from the first moment instead of seven days later, then you’ve got a much better shot at striking while the proverbial iron is hot.
Time to insight depends on your ability to capture high-quality data and correlate it to individual profiles in real-time— also known as identity resolution. With a Customer Data Platform, you can use any one of multiple identifying data points for visitors as the north star through which to stitch all of that valuable first-party data together. From there, data can be analyzed at the individual level and put to work on various channels to provide better experiences or deliver personalized messaging.
Benefit 4: Map the customer journey and create a single view of the customer
By integrating and accessing first-party data from one customer identity asset, marketers can map the buyer journey, discovering the different steps that consumers take on their path to conversion as well as the order in which they take them. This, in turn, helps marketers deploy the right message at the right time and place, informing strategies to pull customers back on the road to conversion.
Each customer is represented by multiple individuals, anonymous profiles as they engage with a brand offline and online across the web, mobile apps, email, brick-and-mortar stores, call centers, and other touch points. Merging these profiles into a single customer view allows marketers to understand what inspires customers to take action across different channels, devices, and platforms.
“The ability to view the customer through a single lens enables critical measurement, optimization, efficiency and personalized use cases. The Signal Customer Identity Platform is helping empower us to understand the panoramic customer journey.”
Jason Niemi, Associate Director, Digital Engagements & E-Commerce, Kraft Foods Group
Benefit 5: Govern Data Use According to Customer Consent
One of the inherent challenges of third-party data is managing the complexity of consent and various overlapping regulations. The same goes for first-party data, though you’ve cut out the middle man (which is very helpful).
When consent is captured on your website (via those ever-present banners), the opt-ins and opt-outs must be tied to a profile and acted upon. Because there are a variety of things to opt-in or opt-out of, managing what data needs to be shut down and what data can continue to be collected gets tricky. With a Customer Data Platform linking consent data to the customer profile (which is tied to all of your data sources) the labor involved with complying with regulatory privacy legislation is drastically reduced, making data auditing and traceability scalable.
Let’s say that this customer has said that they only want to opt-out of your personalization cookies and data collection, then the customer’s data will not be added to on-site (personalization/display), yet could still be added to social/email. Without a single point of data control through the CDP, companies run the risk of acting against the customer’s wishes because the preferences have yet to be disseminated.
How to Build the Right Strategy: Think Data-First
First-party data, the data that defines your customers’ experience with your brand, is your most valuable asset. It’s how you understand your customers, how you improve their experience — it’s the benchmark for your entire company’s performance as a brand.
As data volume, variety, and velocity continue to outpace many teams’ capabilities, organizations face the challenge of collecting, transforming, and putting customer data to use while adhering to new and evolving regulations. That’s why we advocate for a data-first strategy, which depends on a real-time data collection foundation that’s vendor-neutral, governable, and built to scale.
With a data-first strategy, organizations can:
- Reduce wasted time and development resources spent in cleansing data and integrating data as well as deploying new technologies.
- Break down organizational data silos and deliver better customer experiences with more comprehensive customer data.
- Audit data flow and ensure compliance with data privacy regulations.
How do you approach this challenge as an organization?
A data-first approach built with first-party data in mind doesn’t happen overnight. You can incorporate first-party data with third-party data if that works better for your business. Many businesses will continue to operate with some level of third-party data because it is needed for additional reach and scale. A data-first data strategy is key to manage your entire event data flow. This approach means you get more out of your data, your data is better protected, and you’re better positioned to do more with that data in the future.
- Connects all data types (1st and 3rd party)
- Supports compliance (reduce risk and engage based on customer preferences)
- Works with the technology stack you have (or as it evolves)
- Delivers data in real-time (to deliver a better customer experience – right message, right time)
Building a Sustainable Data Supply Chain
Four Tips to Ensure the Sustainability of Your Data Supply Chain
- Get Buy-In Early Developing a first-party data strategy goes beyond marketing to impact many customer-facing departments. Identify the key stakeholders early on to get their buy-in on any new strategies or technologies, and to determine what data will be collected. Form a multi-departmental team to oversee the strategy long-term.
- Standardize, Standardize, Standardize Your first-party data is your own company’s asset. As such, your company should determine the standard naming conventions used during collection to ensure consistency and clarity.
- Review Regularly Put in place a process to validate data to ensure it is consistent, accurate, and usable. Consult your key-stakeholder team to ensure that the evolution of your tech stack is being integrated into your first-party data strategy. Don’t leave new data sources out.
- Activate Conscientiously Once your data is consistent, activate it across your different channels. But do so in a way that respects the wishes of your customers in how you use their data.
How Brands Are Putting It All Together
The evolution of how companies collect and use data in this era of consumer privacy has the interesting effect of leveling the playing field for once-disparate industries. Highly regulated industries like financial institutions and healthcare are developing the customer-centric policies and experiences that have been a hallmark of high-growth retail companies for the last 15 years.
On the other hand, those high-growth retail and travel companies are facing stiffer regulations on the way they use data— not yet at the level of HIPAA, but heading there. The companies that are taking their first-party data strategy seriously by investing in Customer Data Platforms, robust server-side and client-side data management, and machine learning capabilities are the ones leading their industries into this new era of privacy and personalization.
At the end of the day, whether you’re in healthcare, retail, travel, restaurants, technology, or even government, consumers expect the same thing: seamless customer experiences personalized to their own tastes, multiple channels through which to engage, and the ability to trust that their personal data is in good hands.
With the right customer data technology at the heart of your first-party data strategy, you’ll have the ability to adapt to new data sources, feed that data into advanced technology like machine learning, and scale for future growth. That technology— if you haven’t guessed it already— is the Customer Data Platform. While it does not stand alone, it is the cornerstone of a customer-centric approach to first-party data collection and use. It enables your personalization efforts while helping you meet the demands of privacy regulations
Create a roadmap for your first-party data
First-party data is the foundation for a larger, omnichannel marketing strategy that can help brands achieve lower-funnel objectives, such as customer loyalty, retention and upselling. Define your marketing and customer experience goals and objectives, the tactics and analytics required to execute on the strategy, and create a roadmap for how your cross-channel marketing capabilities will develop over time. Break down the long-term effort into smaller projects that show incremental ROI at each stage.
Determine the right data sources and data points
Audit your data sources to identify what data is being generated and how it’s being measured. Cross-reference your data sources and data points with the data requirements of the marketing and analytics use cases you plan to execute and make sure you collect the data that’s important to your objectives.
Demand more from your data
First-party data is critical for creating personal and meaningful customer experiences in any given context. Integrate offline and online data into a company-wide identity asset to drive customer-centric programs that align marketing, product, and service.
Benchmark and monitor over time
Continually evaluate your first-party data capabilities, monitor progress, and integrate what you’ve learned at each step along the way. Identify key success metrics for your solution, both in terms of operational capability and support for cross-channel marketing initiatives. Track data volumes, sources, processing speed, profile depth, and which data is activated for analytics and measurement.
Third-party data isn’t enough anymore. Brands are realizing the limitless potential of first-party data for driving marketing success. Most forward-thinking marketers plan to increase their use of first-party data, and they consider it the lynchpin of their data-driven marketing strategy for the future.