Every business needs data to understand its customers, develop new products, and improve marketing efforts. Most businesses use third-party data, such as data collected by social media platforms and data brokers.

However, third-party data has several limitations and privacy issues. That’s why most companies are moving to zero-party data. Zero-party data are the information customers voluntarily share with a company, including names, email addresses, and purchase histories.

Let’s explore zero-party data, and how it helps you grow your customer base and revenue.

Understanding Zero-Party Data

Zero-party data is data that customers intentionally share with a business. For example, data collected through customer surveys, loyalty programs, account creation forms, product reviews, and live chats.

Zero-party requires customer consent and prioritizes privacy, making it more reliable and accurate than third-party or first-party data collection.

Examples of Zero-Party Data

• Personal info– A customer’s name, email address, and phone number that they provide when creating an account on a website.
• Customer purchase history.
• Preferences/Interests indicated in a customer survey.
• Feedback on a product or service customer review online.
• Customer Live chat with support agent for inquiries, complaints, or feedback.

How Zero-Party Data Differs From First-Party and Third-Party Data

Unlike first-party and third-party data, zero-party data is collected directly from customers, with their consent. Here are more reasons zero-party is more accurate and reliable than other types of data:

• Customer’s Control over their Data

Customers have complete control over their zero-party data, as they can choose what to share with the business. It’s not the same with first-party data, businesses can customer data without their explicit consent. 

It’s even worse with third-party data, as businesses collect it from other sources without their knowledge or consent.

• Reliability and Accuracy

Typically, zero-party data comes straight from customers, and it’s very accurate. First-party data is also a bit reliable, but you need more data quality control measures to ensure the data accuracy.

Third-party data is often the least accurate and reliable type of data, as it is collected from a variety of sources and may not be up-to-date.

The Rise of Zero-Party Data

• Evolving Data Privacy Landscape: privacy laws like the GDPR in the EU and CCPA in the US are making it hard for businesses to collect and use data from third parties.
• Consumer Awareness and Concerns About Data Privacy: With customers realizing the potential risks of sharing their data online, they are becoming way more selective with the companies they trust with their data.
• Shift in Marketing Strategies Towards Transparency and Consent: Companies are moving towards transparency and consent in their marketing. This includes asking for customers’ consent to collect and process their data, as well as giving customers more control over how their data is used.

Benefits of Zero-Party Data

• Improved Personalization and Customer Experience

Zero-party data allows you to segment your customers based on interests and preferences. This allows you to target them with relevant marketing messages, leading to higher conversion rates and more sales.

For example, you can use zero-party data to provide personalized recommendations or offer targeted discounts.

• Building Trust and Loyalty Through Transparent Data Collection

When you are transparent about how you collect and use data, customers are more likely to feel comfortable sharing their data with your company. It also builds stronger customer relationships and brand loyalty.

• Empowering Customers to Control Their Data

Zero-party data gives customers control over the information they share with your business and how they want their data to be used. This empowerment allows you to build trust with customers and create a more positive brand image.

How Formplus Can Help With Zero-Party Data Collection

With zero-party data collection, customers have to give you their data voluntarily. Here is how Formplus helps you create secure, interactive, and engaging forms to gather zero-party data:

• Data Collection: Formplus offers prebuilt form templates that allow you to collect zero-party data with surveys, quizzes, registration forms, and more. 

Formplus also has several features that make it easy to collect zero-party data. For example, all forms automatically ask for respondent consent and allow customers to opt out of data collection.

• Data security: Formplus encrypts all its form data from collection to storage, and is GDPR compliant to protect user information.
• Product development and optimization: You can use the zero-party data collected with Formplus to identify customer needs and pain points to develop new products and services.

Collecting Zero-Party Data Effectively

Here are some strategies and steps to help you seamlessly collect zero-party data:

(1) Communicate and be Transparent

Communicate clearly to your customers how you intend to use their data and allow them to opt out at any time. You should also make sure you’re only collecting data for the reasons you’ve given them, and don’t forget to erase customer data when it’s no longer needed.

(2) Incentivize Data Sharing

One way to encourage customers to share their data is to offer them incentives in return. This could include exclusive discounts, early access to new products, or personalized recommendations.

Also, making the data collection process seamless,  and secure encourages customers to confidently share their information with you.

(3) Implement Interactive and Engaging Data Collection Methods

Using interactive and engaging data collection methods also encourages customers to share their information with you. You can use quizzes, polls, surveys, and games to collect data from customers.

You can also gamify your data collection experience to make it more fun and rewarding for your customers. For example, you could reward customers with points when they complete surveys or surveys, and then let them redeem those points for prizes.

(4) Leverage Preference Centers and Surveys

Create a preference center to allow customers to specify their preferred channels of communication, product categories, and types of content. Also, create surveys to collect data about your customers’ preferences, needs, and interests.

Utilizing Zero-Party Data

In today’s hyper-competitive marketplace, zero-party data is the key to building deeper relationships with your customers, delivering more personalized experiences, and driving more sales. 

Here are some  major applications of zero-party data:

(1) Tailoring Product Recommendations and Content

You can leverage zero-party data to personalize product recommendations and content for customers using their data. For example, you can use customer’s purchase history to suggest new products to customers.

(2) Customizing Email Marketing and Communication

Zero-party data also helps you to customize your email marketing and communication. For example, you can segment users based on their activity or registration, so you can send them more personalized emails.

You can also leverage zero-party data to personalize the content of their email messages, such as product or article recommendations.

(3) Creating Hyper-Targeted Advertising Campaigns

A major benefit of zero–party data is hyper-targeted advertising campaigns. 

For example, you could use zero-party data to identify customers who are interested in a particular product category. Then target these customers with advertising messages about new products in that category, or special offers that are relevant to their interests.

(4) Enhancing Product and Service Development

Zero-party data also helps you develop better products, and optimize existing ones. You can do this by collecting feedback from customers about their products and services.

Challenges and Risks with Zero-Party Data

Zero-party data is the future of data collection, but it’s not without its challenges and risks. The following are common challenges and risks with zero-party data:

• Balancing Personalization With Privacy

One of the biggest challenges of zero-party data is balancing personalization with privacy. Sure, you want to leverage zero-party data to personalize the customer experience, but you also need to be careful, so you won’t invade customers’ privacy.

• Ensuring Accurate Data and Preventing Manipulation

You have to consistently prevent your data collection from fraud and data manipulation using survey fraud best practices. Collecting wrong zero-party data can mislead your product development and marketing strategies, and you’ll end up losing money instead of increasing revenue.

• Addressing Data Security Concerns

Zero-party data is sensitive data, so you need to have strong data security measures to protect customer data from unauthorized access, use, disclosure, modification, or destruction.

• Navigating Potential Regulatory Hurdles

Zero-party data is subject to a variety of regulations, including privacy regulations and data protection laws. You need to know the applicable regulations and ensure you collect and process data with compliance.

Best Practices for Zero-Party Data Management

Zero-party data is the highest-value data you can capture, but it is only valuable if it’s managed properly. Here are a few best practices for managing zero-party data:

(1) Data Storage and Protection Measures

You need strong data storage and protection measures to protect zero-party data from unauthorized access, use, disclosure, modification, or destruction. This could include data encryption, secure storage, implementing data access controls, monitoring unauthorized access to zero-party data, and more.

(2) Regular Data Consent Updates and Preferences Tracking

Make sure you provide customers with a privacy policy that explains how their data is collected and used. Also, obtain customers’ consent to collect and use their data with the option for them to opt out of data collection or to request that their data be deleted whenever they want it.

You can also update customers’ data by tracking their preferences and making it easy for them to update their preferences.

(3) Compliance With Data Privacy Regulations

Zero-party data is subject to a variety of data privacy regulations, such as the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the United States. 

You need to be aware of the applicable regulations to ensure you comply. One of the best ways to do this is to use a compliant and secure data collection tool such as Formplus.

(4) Collaboration Between Marketing, IT, and Legal Teams

Marketing and IT team to implement data storage and protection measures and to track customers’ data preferences. While legal teams need to work with marketing and IT teams to ensure that the business complies with all applicable data privacy regulations.

Real-World Examples

Here is a compilation of successful brands using zero-party data to build customer relationships and drive growth:

• Netflix: Netflix uses zero-party data to personalize movie and game recommendations. It suggests news shows to customers based on their ratings of the shows and movies they watch. This led to a significant revenue increase of 24% and a subscriber base increase of 37%.
• Amazon: Amazon leverages zero-party data to personalize its email marketing and communications. For instance, they ask customers to pick their favorite categories of products, then Amazon sends customers emails about new products relevant to their favorite categories.
• Google: Google uses zero-party data to create hyper-targeted advertising campaigns. For example, Google asks customers about their interests and hobbies and uses this information to target customers with relevant ads.

The Future of Zero-Party Data

As data collection continues to evolve, the following are some potential directions for the future of zero-party data:

• Improved Data Collection Process: With technology advancing, there will be new and improved ways of collecting zero-party data. For example, more businesses may start using gamification to make data collection more fun and rewarding for customers.

• Integration of Zero-Party Data With AI and Machine Learning: AI and machine learning allow you to integrate zero-party data with other sources of data, such as first-party data and third-party data. This allows you to create a more complete and accurate view of users. 

You can also use artificial intelligence (AI) and machine learning to automate the process of data collection and analysis.

• Anticipated Consumer Trends in Data Sharing: People are getting more and more aware of the potential risk of sharing their data, your privacy policy and terms of use need to be favorable for them to allow you to collect their data. 

Customers are also becoming more demanding of the value that they receive in exchange for sharing their data. So, you need to provide customers with clear and tangible benefits in exchange for their data.

Conclusion

Zero-party data has way more benefits than third-party because it is accurate, reliable, and first-hand. It is also the most privacy-friendly type of data, as it is collected with the customer’s consent, and compliant with privacy regulations.

Formplus is a powerful tool that enables you to effortlessly collect zero-party data from customers while protecting their privacy. Sign up with Formplus to effortlessly collect zero-party data!