Historically Loyalty Marketing has been fueled by behavioral data gathered over time from customer interactions. It serves as the foundation for promotional planning and analytical insights and originates in the “t-logs” of point-of-sale systems used in both online and brick and mortar retail.
“Wise” Marketers know that successful execution of loyalty program strategy requires that behavioral data be supplemented with qualitative data accumulated through member communications. The communications that occur between a brand operating an opt-in style loyalty program and the customers who join the program is a conversational exchange or “dialogue” which enjoys a halo of trust and sets future expectations. When the brand asks questions to customers about their preferences, needs and desires, the responses are immensely more accurate than those gathered through focus groups, exit surveys, and intercept studies.
In short, all of this data (and subsequent insight and program development) is vital to create programs that consumers want to participate in — and stay with.
A short while ago (circa 2018), both types of data that are fundamental to successful loyalty execution were given new names. Traditional behavioral data is now referred to as First Party Data (FPD) and the qualitative data gained through member communications was anointed Zero Party Data (ZPD). To my knowledge, Forrester was the first to float the term Zero Party Data, and the term has gained fame to represent the potential centerpiece of the future of digital marketing. It has also generated uncertainty and confusion in the marketing community.
As the marketing world adapts to the reality of cookies going away, government regulation like GDPR and others are gaining more momentum, and with a growing generation of data-savvy consumers tired of irrelevant, interruptive and pointless marketing, a new urgency has justifiably crept into the system.
SO, WHAT IS ZERO PARTY DATA?
ZPD is defined by Forrester as the “data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize them”. Those underlined words are a critical aspect of ZPD.
To add some detail, my view is that ZPD is that which is shared by a customer with a purpose. It is given to a brand knowingly and with the anticipation of enjoying better service and relevancy of response. It’s the notion of dialogue that is important, and the implied expectation of this exchange of intentions, beliefs, and values is key to the success of how ZPD should be used.
You may not be surprised to hear that ZPD is not something that customers are in a rush to share, but when you ask people questions in the context of something that interests them, with a clear understanding of why you are asking, then they become much more open to sharing.
To give the concept some life, here are two examples to help differentiate between Zero Party and First Party Data:
1) Browsing for shoes on a retailer’s website leaves behind a web search history classified as First Party Data. Interacting with a live chat window and providing the context of why you want to buy the shoes is likely to result in ZPD. When you let the brand know that you are going to an important family gathering and ask about building an entire outfit around the shoes, you are providing more personal context — which is the gold of ZPD. Likewise, if you advise that you like the shoes, but your reason for being on the site is purely to purchase a gift for another person, that ZPD tells another story, and requires a different relevant response.
2) Selecting a beverage at a Coca Cola Freestyle dispensing machine simply means you are making choices that are pre-planned by the machine. While this may be a source of market intelligence for Coca Cola., The customer is not sharing the context in which they are making choices, thus it is considered FPD. If the machine asked” How thirsty are you?”, “have you just come from the gym?”, “are you on a diet?”, or “diabetic?” That would be ZPD and might enable the machine to guide the most relevant and desired beverage selection. Consider how much more powerful that ZPD would be to Coca-Cola, from a product innovation perspective.
The key differentiator in classifying data as Zero Party is when a customer is willing to share more in expectation of better service or a more appropriate and personalized product. Context is added and a valuable source of transferrable data remains to inform future encounters. This enables the brand to go deeper and become more contextually relevant with the customer for the current and future interactions.
