Go to any marketing conference and you’ll see an agenda filled with sessions on data driven marketing. It’s been talked about so frequently that the need for lots of data has been accepted as fact, even though many marketers aren’t exactly sure what it means. And the marketers who do understand the value of data often don’t have the resources to actually collect or leverage it. Apart from clean and complete data, data driven marketing also requires an understanding of the different types of data and how to leverage them.
First Party Data
First party data is generally considered the most valuable form of data. Loosely defined, first party data is the information you’ve collected directly from your customers and visitors based on their interactions with your brand. Some examples of first party data include:
- Website registration – name, email address, gender, address, etc. Often deeper demographical details such as household income, employment status, hobbies/interest are also collected.
- Email data – Many times this is similar to website registration data as it captures name, address, gender, etc. But email data also includes other useful data such as emails sent/opened, link clicks, and successful conversions (when an email subscriber completed some type of transition).
- Website behavior – visits, minutes spent, referral traffic, products browsed.
- Purchase – Products purchased, abandoned shopping carts, dollar value, shopping frequency.
- Brick and mortar interactions – In store programs, warranty registration, beacons.
First party data tends to be the highest quality data, since it is collected directly from your customers. It is ideal because it is available to you at no cost, and avoids many of the privacy issues related to third party data.
As a best practice, it’s good to review all places where first party data is captured to ensure you’re making the best use of that customer interaction. It’s common when someone signs up for an email newsletter, for example, to capture basic details like gender and first name. A better data set might involve asking for income, interest, intent to purchase, or whatever other data is important for providing them the most relevant offers possible. The challenge is asking for more information, while not making it so arduous that the customer ends up not completing the form/signing up for the newsletter.
Third Party Data
Third party data is data collected by someone other than the original data source and is sold to a marketer. Third party data is less valuable than first party data since the quality can vary widely and has a cost associated with it. Some examples of third party data suppliers include Acxiom, Experian, and others.
Despite some of the negatives of third party data, it can provide a valuable way to enable better marketing campaigns. For example, think of an auto dealer who wants to market different models of cars to their existing email marketing list. Their list might include only basic information such as the email address, gender, name, and a home address. Adding third party data, it's possible to build a deeper understanding and profile of a potential customer and deliver more relevant and targeted marketing to them. Household income might drive whether the potential customer should be marketed an economy car or a luxury one. Marital status may be the difference between a campaign marketing a sports car or a four-door sedan. If they have small children, they may be the perfect audience to hear about a new minivan offering.
When working with a third-party data aggregator, it is important to understand how the data was collected and how fresh it is. Using the auto dealer example again, if the data driving your campaign is stale, the family you thought was perfect for a minivan may actually be grandparents on the market for a sporty convertible.
Second Party Data
Probably the least talked about, and newest, form of data is second party data. This data is, essentially, another’s company’s first party data that you've been granted access to use within your marketing campaigns. The best example of this can be seen in the travel industry. In this industry it’s common practice for airlines, travel sites, and destinations to share information about customers who have recently booked. By leveraging and sharing that information, it allows each of the vendors to better tailor offers as well as make cross product promotion.
With sites like Amazon and eBay, the use of second party data is becoming more and more common.
The Ideal Strategy
As stated at the start of the article, it’s often accepted as fact that the more data the marketer has the better. With more data you can make better more targeted offers, deliver very personalized marketing messages, and execute campaigns at the right time and frequency best suited for each individual customer.
The reality is that there is so much data available it’s hard to make sense of it all. Many times the data is old or inaccurate. A general market message is one thing, but many of us are insulted when a brand shows it doesn’t really know it’s customers very well by sending an irrelevant marketing message. Beyond quality, knowing how to use the available data to drive segmentation strategy, targeted offers, or personalized contents is beyond the reach of most marketers.
Platforms like ZyloTech provide a key role in not just ensuring data is relevant and clean, but helping marketers make the best use of it. These platforms don't just make data available, they also give deep insights about each individual customer. AI is enabling marketers to stop sifting through data and creating manual segmentation plans and allowing them to send more relevant and targeted offers to their customers.