This is the second of a four-part series on the North Star goals that set category leaders apart from their peers. The first part (one-to-one, omnichannel personalization) can be found here.
Today’s customers have two, sometimes opposing needs. They want to receive highly personalized content, offers and experiences while maintaining a high level of data privacy. Enhancing the customer experience and acting as good stewards of customers’ private information is a win-win for brands.
My latest book, “House of the Customer,” outlines four North Star goals that every brand should strive for, no matter how aspirational they may seem. In the previous article in this series, I discussed the first of these goals — providing a truly one-to-one, omnichannel personalized customer experience.
In this second article in a four-part series, I will discuss having a truly first-party customer view that protects customers’ data while allowing the brand to incorporate accurate insights to provide great experiences.
Why is first-party data so important?
For those less familiar with this topic, you might be wondering what the fuss is all about. After all, you have a CRM in place and obtained permissions and opt-ins for your email marketing. So, let’s discuss a few reasons why first-party data is so important.
The industry is changing
I’ll discuss government regulation next, but the marketing technology industry itself is making big changes — in some cases amounting to self-regulation. Some of these changes include:
- The deprecation of third-party cookies — with Apple and Microsoft taking the first steps and Google to follow in the months ahead.
- Less invasive mobile device tracking.
Additionally, the traditional use of third-party cookies to target advertisements is getting disrupted by privacy-focused data clean rooms, which trusted parties only share.
With this approach, publishers build their own advertising networks (or partner to build value in their networks) and other solutions. This gives marketers and advertisers greater confidence in their ability to reach their audiences in a way that is mindful of consumers’ growing desire for data privacy.
Dig deeper: Why we care about data clean rooms
Regulatory and compliance needs
More changes are coming in the industry, some of which are driven by regulations. The world is shifting toward greater transparency and oversight of consumer data privacy.
The European Union’s GDPR leads the way, followed by others in California, other states in the United States and other countries worldwide.
This shift requires that companies of all types and sizes:
- Secure customer data.
- Understand how their customer data is sourced and used.
- Responsibly utilize it to provide personalized experiences to stay competitive.
Dig deeper: Why we care about compliance in marketing
Personalization
First-party data is important because better, more relevant and accurate data are needed to provide highly personalized experiences.
By now, you have surely read the statistics on how greater relevance helps create more customers, loyalty and word-of-mouth referrals. Even though some claims on personalization driving revenue are overstated, plenty of evidence supports the claim.
Clearly, the time for brands to adopt first-party data strategies is now. While the above reasons are all compelling, so is the fact that your competitors are likely focusing and investing in these areas as well. This is even more reason to move quickly.
Dig deeper: What is personalized marketing and how is it used today?
What are the components of a first-party data strategy?
Now that we understand the importance of a first-party data strategy, let’s talk about what goes into creating one. To do this, we will explore the three major components.
1. Unified customer views
The first component involves creating a single view of the customer across all channels and platforms where you might be storing information about them.
Tying marketing, advertising, CRM, customer service and other data together into a single cohesive view provides us visibility across our business and the customers’ journey before, during and after the sale.
2. Consolidated tools
The second component to discuss is sometimes a natural byproduct of the first. A need to unify the view of the customer brings with it a need to consolidate the tools used to collect, manage and analyze that data.
With a customer data platform (CDP) at the core, seamlessly integrating disparate systems or removing overlapping platforms provides a sustainable way to keep a robust first-party view of customers. This also helps you to take actions based on this view, using tools like customer journey orchestration and a next-best-action approach.
3. Data governance
The last component of a first-party data strategy is customer data governance. Fragmented data poses a risk, and inaccurate or incomplete data causes customer dissatisfaction.
How you collect, manage and update customer data greatly impacts your customers’ trust in your brand.
Data governance isn’t just a one-time initiative, either. It requires consistent maintenance and training of the teams entrusted with valuable customer data. Thus, guidelines and how customer data is utilized must be regularly reviewed and updated to ensure best practices and compliance with regulatory requirements.
While these three components may contain a lot of individual pieces, they provide an overview of the scope of your first-party data strategy.
How does this change your marketing approach?
Although you may have some or all of the above elements in place, an excellent first-party data strategy is about more than just the right pieces. Its effectiveness lies in how you use those pieces. Let’s explore a few ways it may change how you perform some of your marketing.
It’s time to plant your brand garden
This may not be a big change for companies cultivating their first-party data for years.
But if you have an intermediary selling your products or if you have been heavily reliant on third-party data for advertising, start building a robust infrastructure to communicate and sell directly to your customers. Or, as some refer to it, a brand garden.
Don’t just ask more questions — ask the right ones
It could be easy to interpret the need for more first-party data to mean you need to start asking customers many more questions. But that isn’t always the case. Customers want to ensure they share information that feels relevant to your brand and will provide you the ability to tailor their products and experience better.
If you ask many questions that don’t seem to have anything to do with the products or services you offer, you risk losing your customers’ trust. So make sure to keep your requests for data relevant and clearly demonstrate the reward customers get for sharing more.
Consider a cooperative approach
Is a brand garden not right for your business? Don’t have enough opportunities to ask customers questions directly?
Then consider finding complementary brands and use a cooperative approach of sharing first-party data to broaden your ability to reach customers and personalize your offers, messaging and experiences.
This approach can include shared customer data clean rooms and other joint efforts. Just make it absolutely clear to your customers what you are doing, who you are partnering with and why it benefits them. After all, customers are already wary of their data being shared by unknown parties.
Even if you are mindful of only working with parties your company trusts, ensure your customers understand your process of vetting trusted partners.
While aspects of your marketing may remain unchanged, having a greater focus on collecting, utilizing and safeguarding your customers’ data might change some parts of your marketing but will improve and safeguard your brand and its future efforts.
How do I get started?
Even though dates such as Google’s third-party cookie deprecation still seem in flux, it doesn’t mean starting immediately isn’t critical. Here are a few ideas if you haven’t started on this yet.
Determine the current state of your first-party data
You can start by better understanding where your organization is on a journey to greater customer data maturity. You may be further along than you think, even if there may be many dots to connect to have a true first-party data strategy.
Evaluate your third-party usage
Next, you should better understand where you rely on third-party data and what impacts there will be as the industry evolves. Create a gap analysis so you can start planning immediately.
Create a first-party data strategy to fill the gaps
Once you have the first two steps in place, you can then build a strategy and implementation plan to:
- Shore up your first-party customer data gaps.
- Compensate for any shortcomings your marketing infrastructure will have if you minimize or discontinue the use of third-party data.
- Build for the future personalized customer experiences your audiences crave.
Strike the right balance in your first-party data strategy
As you can see, having an effective first-party customer data strategy means that you can balance two sets of customer needs.
- First, you will have the capabilities to support a more personalized experience.
- Second, you will have greater control over your customer data to maintain the highest levels of privacy.
In the third article in this four-part series, I will discuss the need for brands to embrace a customer lifetime value model and the benefits it can bring both the customer and the business.
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Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.
About the author
Greg Kihlström is a best-selling author, speaker, and entrepreneur, currently an advisor and consultant to top companies on customer experience, employee experience, and digital transformation initiatives as Principal and Chief Strategist at GK5A. He is also the host of The Agile Brand with Greg Kihlström podcast. He is a two-time CEO and Co-Founder, growing both companies organically and through acquisitions, and ultimately leading both to be acquired (one in 2017, and the other in 2021). As a strategist, digital transformation, and customer experience advisor, he has worked with some of the world’s top brands, including AOL, Choice Hotels, Coca-Cola, Dell, FedEx, GEICO, Marriott, MTV, Starbucks, Toyota, and VMware.
