Accelerate Zero and First Party Data Collection with Loyalty Programs
Customer data is the cornerstone of businesses today. It feeds into many actions and supports business decision-making, from marketing to budgeting, including customer loyalty, email communication, and many others. However, the growing number of privacy laws and crackdown on third-party cookies has forced companies to rethink their data strategy. While third-party data tracking will never go completely away, businesses will eventually need to change course and find new ways to get zero and first-party data – and next-gen loyalty programs could be the perfect way. to do it.
What is first-party data and zero-party data?
Before delving into today’s landscape of customer data, privacy, and cookie abandonment, it’s worth defining what types of online data are currently in use.
- Zero part data is information that customers voluntarily or proactively share with you. This type of data is self-explanatory and covers a wide range of topics that are difficult to predict, such as product preferences, preferred brands, future purchase plans, and satisfaction with products and services.
- First party data is information that you collect through your own channels, including your website, mobile app, point of sale, etc. It is considered the most reliable and accurate type of data, and privacy concerns are minimal.
- Second party data is the first party data of another business that you can buy directly without a middleman. The combination of first and second party data enables machine learning algorithms to create more complete customer segments and accurately predict customer behavior.
- Third party data is information acquired through large data aggregators. The source and accuracy of this data is often questionable, but the sheer volume of information allows companies to discover new audiences and target customers in completely different ways.
The real power of a company’s data strategy is its ability to combine different types of data, acquired from different channels, which will change dramatically in the near future.
The changing data capture landscape
The way businesses collect and use data has been severely affected by a growing number of privacy concerns. The European Union has introduced a series of data protection laws, such as the ePrivacy Directive and the General Data Protection Regulation (GDPR), allowing website visitors to choose their preferences for tracking data on site.
On top of that, browsers have gradually removed third-party cookies, ending the questionable practice of tracking user activity after users have left the original website. Google recently fought this battle by deciding not only to ditch third-party cookies, but also swearing to provide no alternative.
Third-party cookies slowly disappear. However, it’s important to stress that data aggregators and offsite data tracking won’t go away completely. They simply won’t be as reliable and available as they once were. Image source: Shutterstock
Marketers must innovate
As the aforementioned initiatives take shape, companies around the world fear their current data strategies may be at risk. According to a GetApp survey, 41% of marketers think their biggest challenge will be their inability to follow the right data.
A Gartner survey shows that 54% of business decisions are influenced by marketing analysis – which means the stakes are too high to bet on unreliable data. Instead, businesses should shift gears and accelerate first and zero-party data collection, then find new ways to harness the information they collect in more powerful ways.
In 2021, many digital and marketing conferences focused on the topic of owning your data, removing friction from data collection, and capturing valuable first-party data. Image source: https://www.martechalliance.com/events/anti-conference
Zero-Party Data Capture Through Loyalty Programs
Loyalty programs offer a great benefit in that they change customer behavior by rewarding desirable interactions. And incentive is the keyword when it comes to capturing zero-party data.
In short, this type of data is collected through surveys, questionnaires, feedback forms, customer profiles, and other methods. But customers usually ignore them, either because they don’t like the idea of sharing their information or because they just don’t want to spend the time doing it. Let’s see how you can encourage their participation:
1. Zero-Party Data is the Key to a More Relevant Experience
This attitude can be changed by putting a reward on the line. But not just any reward, mind you. According to Accenture, 54% of buyers said they are open to sharing their personal information and purchasing preferences with merchants in order to receive personalized offers.
Their favorite incentive says a lot about the expectations of modern customers. Customers are looking for meaningful rewards that are relevant to them and are no longer happy with generic discounts.
Delivering personalized loyalty offers takes time because you have to evaluate the data correctly, which is even more difficult when your loyalty program is just getting started. As an alternative, award loyalty points for party zero data, but make sure members can spend their points on something exciting and meaningful: experiential rewards. While the direct reward for completing a survey is not remarkable, the prospect of getting closer to a desirable perk, such as early access, member-only products, VIP rewards, or TVN – makes engagement attractive to modern customers.
2. Completion of the incentive profile: collect new data and increase registration
One of the primary ways businesses collect data from third parties is during registration and, potentially, in the user profile area after registration is complete. The rule of thumb is to ask as few questions as possible on the registration form, so that the initial experience does not put people off. By only getting the essentials (name, email address, location), you can prevent impatient customers from leaving, ensuring higher signup rates.
Don’t worry, shortening the registration form won’t rob you of valuable zero-party data, as all remaining questions can be asked in the user profile. The best way to ensure that new customers make the effort to share their data is to offer bonus points (or other personal bonuses) when they reach 100% profile completion.
It’s also a great call to action: A loyalty program welcome email can be much more relevant and actionable, if you tell new members they’re 20% off and will receive benefits. “Free” for having answered all the questions.
Emirates Skywards is a great example of how to leverage the information gained from profiles. As customers submit in-flight preferences, the airline’s system allocates tickets accordingly.
3. Surveys: a fun and gamified way to find out more about customers
Modern customers love gamification because it breaks the monotony of the digital experience they’ve come to know. Instead of asking a bland list of questions, gamified polls present questions in a more engaging way, using visuals, sliders, and a more personal tone.
These types of surveys (which should also come with a reward) are essential for uncovering a new layer of customer information and collecting valuable data including product preferences, hobbies, brand opinions, lifestyle, favorite brands, etc. They also provide direct customer feedback, which can be combined with first-party data for better personalization.
There are several ways to design an attractive survey: you can use a “like / dislike” method to collect impressions, use images instead of words, or incorporate multiple choice questions.
Make better use of first-party loyalty data for more personalized communication
Having a loyalty program in itself provides more touchpoints and a greater amount of first-party data to collect and leverage. For example, if a customer is at an intermediate level of your loyalty program, you know that they are a loyal and loyal customer. Additionally, if a customer is at risk of losing weight, you can review their coupon history to see if a low value coupon will be enough to reactivate them.
This rich layer of loyalty data can be integrated into your marketing activities in a number of ways. Predicting profitable attrition is just the start, as first-party loyalty data also opens up new possibilities for personalized emails. Here are some examples:
- Surprise and fun birthday emails, where the reward is determined by customer level or overall purchase volume
- Reminder emails for customers who are about to level up, recommending that they make a purchase to level up
- Friendly notification emails when points or tier membership are about to expire
- Monthly summaries of member progress
With a little customization and design, even a simple automated message like a level expiration notification can look special.
Maintain your data strategy with a loyalty program
In the face of online privacy laws and changing trends in data tracking, first-party and first-party data is your only source of reliable information. Loyalty programs not only help capture this information, but also use it. You just need to make sure there is the right motivation and communication, so customers are excited to tell your organization even more.
For more information on the types of rewards to offer as part of your loyalty program, download our ebook.