What is Zero-party Data and How to Collect It via Loyalty Programs?
One of the foundations of recent-days online advertising are cookie files gathered by our browsers – third-party data. Beware, though, as things are about to take a massive turn soon. Google announced the intention to drop third-party cookie files support in Chrome, presumably in 2023. Many experts say that a way out of this mess-to-be is establishing engaging loyalty programs, which will open the gates for companies to start collecting zero-party data from their customers directly. So what is it, and how can you use it to your advantage?
Since the matter is a bit more complicated than just Google banning cookies, I decided to dig in and bring you all the information you need about the coming change, its predicted consequences, as well as a promising solution.
Read along if you want to get answers to the following:
- What will be the consequences of Google's new approach to customer data?
- What is the definition of zero-, first-, second-, and third-party data.
- How does zero-party data differ from first- and third-party data?
- How can loyalty programs help overcome the results of banning third-party cookies?
To understand zero-party data, we should start with putting everything we know about all the other data types in some order. But, on a quest to find the difference between zero-party data and the rest, let's not forget the basics.
What is first-party data?
First-party data is the data users leave behind while interacting with websites, mobile apps, and such. For example, if a customer visits your online store and buys a bike, they will provide you with pieces of information, like their name, home, or email address. You can also gather first-party data via online surveys, newsletters, or by asking for feedback.
Tesco tried the first-party data approach, which turned out to be successful. Since they already had loads of data acquired via the long-lasting Clubcard program, they decided to monetize it by offering their customers more targeting options. So they've created Tesco Media and Insight platform. Its target is to use the existing data (provided by the customers) to understand them and their needs better.
First-party data stands out of the crowd because your company collects it directly from users, visitors, or followers, so it's most probably reliable and ready to use in remarketing or nurturing campaigns. In the zero-party data vs. first-party data competition, the latter will most definitely fall, but that doesn't mean it should be ignored – quite the contrary! But we'll get to it later.
What is second-party data?
Second-party data gathers all the data collected not by your company directly, but by your partners – let's say you've joined forces with influencers, who provide you with leads they acquired among their social media followers. Second-party data won't just appear in your database – it's usually a result of an agreement between two parties.
What is third-party data?
In short, third-party data are all the pieces of information collected and used not by the owner of a website that users visited but by someone else – most probably some data aggregator. To some extent, it's similar to second-party data, but the parties involved aren't usually trusted partners working together – in most cases, they don't even know each other. How does it work?
Third-party data is also collected by surveys, web or app interactions, and so on, but the research is conducted on a larger scale and audience, with a more random approach. Third-party data collectors don't focus on the relevancy of the data but on gathering significant portions of information to pass them through... for a price.
How about some cookies?
One of the most well-known examples of third-party data are cookie files. Users visiting the website for the first time have to agree now to have cookies stored on their computers or mobile devices, but it wasn't always like this. For years people were given cookie files without even knowing, but GDPR changed it (along with many other things) for privacy reasons.
Though cookies are usually harmless and don't affect the way people use the internet directly, they do keep information about users' browsing history. They thus can be sold to other parties as valuable data, which in the age of recurring leaks can be worrying.
No (third-party) cookies allowed – what will it change?
If you're on track with all data-related news, you probably heard that Firefox and Apple had already banned all third-party cookie files from their browsers years ago. From the user's perspective, the change maybe wasn't very noticeable. Still, it truly is a privacy-protection milestone… for almost a quarter of internet users worldwide (Safari holds about 19% of browser market share, while Firefox is being used by nearly 4% of users).
Whereas Firefox's and Apple's move was very significant, an even bigger change approaches: Google is about to restrict third-party cookies from Chrome, which is undoubtedly the most significant web browser, accounting for circa 65% of the global web browser market share.
Cookie files are still being used for plenty of advertising-related stuff: tracking visitors in and out of websites they initially visited, targeting ads, improving UX, and so on. Losing third-party cookies might become a severe problem for advertisers, especially those who still rely primarily on third-party data. Though, nothing like throwing away all the cookies is going to happen. Google announced phasing out only the third-party cookies in their browser, so all the first-party data collecting efforts will work just like they work now.
Google's move has already generated a lot of questions, such as "is phasing out third-party cookies just a step one of the more elaborate plan?" or "is it just about the user's privacy?". They will be answered no earlier than 2023 when the phasing out is scheduled.
One thing is sure, though: coming years will prove the usefulness of first-party data like never before, with a new so-called remedy: zero-party data. So let's dig into it.
What is zero-party data?
It's a bit late for bringing up the core of today's article, but here it is – what is zero-party data? Since it's a relatively young term, it doesn't have a dictionary definition yet. Still, it's simple to define – zero-party data consists of all the information handed out voluntarily by the users to your company.
The awesome thing about zero-party data is that people want to share them – they give your company something hoping that it would lead to them getting a better experience, personalized offers, and a more "local store" approach.
If you need some zero-party data examples, check this out:
In this scenario, MunchPak asks customers directly what their preferences are, so they get products that fit their needs. Sending a clear message lies in both parties' interest – customers will get the things they like, and the company will acquire happy customers.
The same pattern applies everywhere: there are some board game enthusiasts. They will be pleased more if the shop they usually order games from sends a newsletter containing information about upcoming premieres of the titles they were waiting for instead of random products. They will eagerly share their interest in cooperative or story-driven games to get personalized notifications. They hope that the more data they share, the better their experience with the store will be.
Skiing fans would love to get information about appropriate equipment instead of swimwear or kites from their favorite store. If they also love participating in sports events, they may want to share their location, which allows you to let them know whenever something interesting happens near them. The possibilities are endless.
If customers are willing to share something extra about themselves, like their expectations and purchasing preferences, it means they are already engaged with your brand. But that's the perfect situation, which most companies have to pursue for months (if not longer) with no success guarantee. So, to properly start with that, you need to learn how to collect zero-party data.
And that is when loyalty programs kick in.
How can loyalty programs help you gather zero-party data?
We all know that "information is money", but the more important thing is that consumers are also aware of it. They won't share any data without a strong belief that you'd give them something at least equally valuable in return.
Loyalty programs give you thousands of opportunities to reward users for all sorts of interactions with your brand:
What can you offer in loyalty programs in return for zero-party data?
- Free or discounted: subscriptions, products, or services.
- Personalized products.
- Free shipping.
- Free trial.
- Discounts of all sorts.
- Gifts (material rewards).
- Gift cards.
- Educational support (webinars, demos, 1-on-1 conversations).
- Early or priority access to new features.
- Access to a locked group.
- Referral program.
A well-crafted loyalty program creates a win-win environment for both you and your customers. Here's why:
1. Users may rest assured about their data security – joining a loyalty program gives your customers proof that you're going to at least try to build a relationship with them and that they will get rewarded for their dedication sooner or later (of course, the sooner, the better). A loyalty program also carries a promise that zero-party data they share won't get sold somewhere else – the loyalty works both ways.
2. You get a clear message – if users decide to sign up for a loyalty program, they most likely plan on sticking with your brand at least for a little while. It allows you to make the most out of it and win them over. It also shows their interest in your brand, offer, or both. If a new customer joins the loyalty program, they become an instant hot lead!
How exactly can you use loyalty programs in your business?
Loyalty programs are not all about data – it's a crucial part of it, obviously, but they are also helpful in building a friendly user experience which affects how the customers will feel about your brand and what they will say about it when asked.
You can encourage people to share their zero-party data with your brand in many ways, but remember that each of the activities can and should be adequately rewarded with a bunch of loyalty points:
- Sharing their email addresses.
- Creating an account on your website.
- Following your social media profiles.
- Placing their first order.
- Filling surveys or quizzes.
- Participating in competitions.
- Giving feedback or reviews.
- Sharing your posts.
- Telling you about their interests and preferences (for example, during onboarding).
- Joining your new communication channels (Slack, Discord, Facebook group).
Members of your loyalty program can get additional opportunities to earn points – as they did in Mizzen and Main. The company sent a quiz to their loyalty program members, asking their weight, height, and wearing preferences. The answers helped the brand in creating spot-on purchasing suggestions for its customers. Of course, all survey participants got their share of loyalty points in return.
Also: don't forget to give users the opportunity to spend their points – there are not many as disappointing things as collecting thousands of loyalty points only to discover there's nothing to do with them.
Create your loyalty program
In Voucherify, creating loyalty programs has no limits about the actions for which you may grant points to your customers – should it relate to the amount spent, number of products bought, or any other custom event.
The same goes for the rewards – you can treat your loyalty program members with discounts, gift cards, material rewards, but also you may grant them additional points during certain occasions (like their birthday or custom selected happy hours) – I'd say the sky's the limit, but in this case, API is the limit, which means basically the same thing, but sounds less cliché.
Also, Voucherify doesn't mess with your store's online presence – everything loyalty program-related happens in the background (we call that a headless loyalty program), ensuring that your users' experience is seamless and consistent.
But that's not the end of good news – if you're eager to prepare for the so-called Death of the Third-Party Cookies, you may try and create your loyalty program in Voucherify for free! That's right – we've launched our free plan, so you can check out how it will work for you at no cost.
Prepare for privacy changes now and create loyalty programs in Voucherify!