Topic: Preference Mgmt
Original Article: TotalRetail.
By Jeff Jarvis
Consumers have a bigger voice today, enhanced by a plethora of information sources and endless opportunities to voice their opinion on social media. As a result, modern businesses and their marketing arms are realizing they need more customer-centric approaches that create more direct relationships through engagement and more personalized experiences.
In order to do this, businesses need a more direct pathway and visibility into each individual customer’s behaviors, needs and preferences. Organizations have traditionally depended on third-party data to reach their customers, but changing regulations and the recognition that this type of data cannot provide the reliable insight into personalized preferences has left businesses looking for better options.
Businesses are now generating strategies to gather this personalized data through direct interactions with their customers, known as zero-party data or explicit first-party data. As a result, this process will result in better trust between the customer and business and will cultivate more longer-lasting, mutually beneficial relationships.
For years, businesses favored the use of third-party data because they thought it was a more expedient and efficient way to reach consumers. However, consumers have indicated their willingness to provide personal information with businesses they recognize as trustworthy. This means that trust has become a top business strategy for today’s modern businesses.
Companies that establish a line of trust with their customers will be able to collect highly personalized, unique information on each customer, and will build their own datasets for each customer — rendering their older third-party datasets useless or secondary to zero-party data. These modern businesses will quickly realize they have a clear competitive advantage within the markets they reach.
There are many reasons why this shift is taking place. As a result of thousands of data breaches that have plagued businesses of all sizes, customers have become concerned with the way in which companies use and mishandle their personal data. This has led to stricter regulations, such as the EU’s GDPR, California’s CCPA, and many more, that impact how businesses are allowed to use their customers’ data. Many leading companies are now taking measures to change the way in which customer data can be collected, utilized and shared.
This has resulted in huge changes in data privacy, a byproduct of which includes companies building more personalized relationships with their customers in the name of trust.
Driven by today’s e-commerce and mobile device landscape, the most useful data a modern marketer or business can have comes straight from customers themselves. Personalized information shared directly from a customer to an organization is referred to as “zero-party data.”
Zero-party data is highly personalized insight a customer intentionally, directly and proactively provides to a brand because they’ve built a strong level of trust with that company. This personalized insight may include preferences, insights, profile data or consents, and how the individual wants the business to engage them.
Why are customers willing to share such personal and private details with companies? Because it results in a better, more personalized experience with a brand. Think of a beauty products maker that can send emails, texts and promotions that directly speak to the unique needs of a customer who has specific allergic sensitivities to his or her skin. These types of newer marketing promotions illustrate to the customer that the company is really listening to their needs, and in return that customer will show a higher level of engagement to the marketing messages. Like a snowball rushing downhill, once this company can showcase that it’s truly listening to this customer’s unique needs, the customer builds trust with the company and is willing to continue sharing even more of their data over time.
Customers become more satisfied because the brand is doing a much better job of meeting their needs, and they reward the brand with loyalty, advocacy and bigger purchases. Each time there’s a successful data-value exchange between the business and customer, it positively reinforces the relationship and incrementally strengthens customer trust, which increases their propensity to share more data. And the cycle continues.
These modern brands recognize the powerful voice customers now have today. They also recognize the quickly changing regulatory environment and are rapidly adapting to the new ways of customer engagement through trust and personalization. These modern brands will take a leadership position — no matter the size of their company — and shape the way entire omnichannel-driven industries work in the future.
As PossibleNOW’s senior vice president of strategy and consulting, Jeff Jarvis provides thought leadership related to the deployment and utilization of zero-party data (customer consents, preferences and insights).