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3 MIN. READ
Traditionally, businesses use data from three parties, first, second and third. But a fourth collection method, called zero-party data, is rapidly gaining traction as a preferred channel for marketers. So what's the difference between all of these different data types and which is the most effective and accurate? In this article, we will discuss all four forms of data-party types so that you can make the best choice for your company.
First-party data is information your company collects from your audience of customers and prospects. You can gather this data in several ways:
● Conversing with customers
● Conducting surveys
● Recording data gleaned from your website visitors
● Tracking social media followers
Your business may opt to collect a wide variety of information:
● Demographics of your contacts
● Actions taken by visitors to your website, applications or product posts
● Conversations or comments on social media
● Subscription choices (such as product newsletters)
● Statistics on sample requests
● Survey responses online, by email or at the point of purchase
● Positive or negative customer feedback
● Customer purchase histories
● Transcripts of online chats
When you collect first-party data, you have no concerns regarding editing or spin. With that confidence, you can use the information to retarget unsuccessful campaigns or change the thrust of your business. Unfortunately, increasing privacy concerns can cause customers to be more hesitant about providing information directly. That hurdle is causing many companies to move away from first-party collection strategies.
An entity outside the business collects second-party data. A company may choose to work with a trusted partner, such as a reseller or distributor, and purchase the collected data. The information gathered is similar to what your company might collect itself but often less targeted to your specific customer base. Thus, when you use a second party, you may have to sift through irrelevant data, wasting time, effort and money.
A business with no direct link to your prospects or customers collects third-party data. It encompasses a broader scope but involves collection methods, such as surveys, similar to first and second-party data. It does, however, utilize random sample sizes drawn from anyone disposed to filling in a form.
If your company purchases third-party data, it will generally receive more information than it could collect itself. Sadly some of that data will be irrelevant to your actual business. Your return on investment may well be less than you hoped.
As defined by Forrester Research in 2020, zero-party data is data that a customer “intentionally and proactively shares with a brand.” Companies can collect it using quizzes, targeted surveys and even calculators. A post-pandemic world in which most customers are comfortable with digital interactions offers a wealth of data-acquisition opportunities.
This type contrasts sharply with third-party data, which your customers may not be aware was collected and may regard as an intrusion of their privacy. Privacy laws like the General Data Protection Regulation (GDPR) can make third-party collection less desirable, particularly for expanding overseas. Historically, brands don’t excel at requesting customer data. As privacy concerns increase, the potential marketplace impact of zero-party data grows.
A chief benefit of zero-party data is that you can trust it. Since customers happily give it to help improve the brand, they have little motive to lie. Since brands receive it directly from customers, zero-party data is also more accurate. You don’t have to worry about algorithm glitches or sampling errors. Collecting zero-party data is also more likely to engage the customer. They’re contributing to the improvement of a favored brand. That interaction presents a win-win situation. Customers are also more likely to stick around, to see how their chosen brand evolves.
In response to privacy concerns, browsers such as Chrome and companies such as Apple are moving to limit cross-app tracking. These restrictions will eliminate methodologies substantially used for third-party data collection. Those limits, however, are unlikely to impact zero-party data. Since customers give it willingly, the collection doesn’t require intrusive methods. Zero-party data thus has a greater ability to move smoothly into the future.
IndustrySelect provides a cornucopia of data ranging from locations and industry segments to all-important decision-maker email addresses. After this discussion of data collection methods, you might wonder how IndustrySelect fits in.
MNI, the company that powers IndustrySelect, has been serving businesses for 110 years, long before a swipe or link was imagined. It is a trusted brand with a team of researchers who gather reliable data directly from manufacturers by either phone or email questionnaire. Businesses give information willingly to the source that delivers the service they value. Their input makes IndustrySelect a competent and readily available data provider that delivers critical data points on industrial companies, acquired firsthand by real people. A range of sales, marketing, and business development professionals use this data to power their sales and marketing efforts. Try a free demo today to take your prospecting from zero to full speed ahead.
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