Basics of Zero-Party Data and Privacy in Loyalty Marketing
Collecting zero-party data through loyalty programs is the future of digital marketing. More than ever, customers value their online privacy and the protection of personal information they share with brands. Third-party cookies, traditionally used by marketers to track customer data, are going away, and privacy regulations continue to remind brands of the importance of protecting customer data.
Although customers value privacy, they also enjoy personalization, which requires having some data about your customers. While there’s no silver bullet to the new data challenges marketers now face, the best way to obtain data about your customers’ behavior is via zero-party data (ZPD) through your brand’s loyalty program.
- What is Zero-Party Data (ZPD)?
- Why is Zero-Party Data Important?
- Online Privacy and Zero-Party Data
- Privacy and Personalization
- How to Use Zero-Party Data from Your Loyalty Program
- Loyalty Program Data Collection Examples
- Common Mistakes Collecting Zero-Party Data
- Loyalty Program Data Collection Examples
- Learn More About Collecting Loyalty Zero-Party Data
What is Zero-Party Data (ZPD)?
Zero-party data (ZPD) is data that a customer intentionally and proactively shares with a brand, usually in exchange for something the customer values, such as a personalized user experience or exclusive content and discounts. It contrasts with third-party data typically collected via cookies, often without the individuals’ permission or knowledge.
The term ‘zero-party data’ was coined by Forrester Research in 2018. They give the following definition of zero-party data:
“Zero-party data is that which a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize [them].”
Zero-party data can include personal identifying information (PII), purchase preferences, preference center data, demographic information, customer interests, and more.
Why is Zero-Party Data Important?
Zero-party data is quickly becoming the most effective way marketers can obtain actionable data about their customers. Traditionally, marketers have relied on third-party cookies to gather data about their customers. However, that era has come to an end. With the disappearance of third-party cookies, the importance of zero-party data comes front and center.
The increased value placed on online privacy and the advent of internet privacy laws have changed the landscape of digital marketing. Consumers continue to take more measures to protect their privacy with user privacy and data protection laws. Although Google has delayed the death of third-party cookies until the end of 2024, marketers shouldn’t delay changing how they collect data and interact with their customers. The trend of data deprecation is bigger than Google: Apple, Safari, and other browsers have already phased out third-party cookies.
Brands with a loyalty program are particularly well-positioned to collect and use zero-party data. In one survey, 63% of US online adults stated they were motivated to share personal information with companies for perks like cash rewards, loyalty program points, early access to new products, and other value. This allows marketers to collect data while also building brand loyalty.
Online Privacy and Zero-Party Data
In this new era of digital marketing, brands need to be transparent with customers about obtaining and protecting their data in order to build loyalty and trust.
According to a study of consumers across six countries, the individual value of online privacy continues to increase. In the study, consumers described targeted ads that targeted them using third-party data as “creepy”. However, the study participants had no issue with brands who transparently asked for information or data, especially in exchange for a value to the consumer.
The new priority for all digital and loyalty marketers must be learning new ways to collect data without violating their customers’ privacy and losing their loyalty. The best way to collect data without infringing on your customers’ privacy is through your brand’s loyalty program. When brands prioritize their customers’ privacy and the security of their personal data, they can reap significant loyalty from their customers.
Zero-party data is the most effective replacement for traditional third-party data and offers transparency to customers that builds brand loyalty.
Privacy and Personalization
Loyalty programs provide an intrinsic value exchange with its members. An example of a value exchange is when consumers voluntarily trade data and preferences for a personalized loyalty experience, something they value. Marketers can personalize their programs and establish emotional connections with customers, making their loyalty solutions powerful tools for collecting zero-party data.
Brands can use zero-party data from their loyalty programs to better understand their customers. This data can then be leveraged to drive emotional connections between consumers and your brand.
“The ability to use data to drive meaningful personalization is critically important. Brands are amassing an immense amount of zero- and first-party data, but many struggle to use the data to drive personal connections with customers and meaningful engagement across touchpoints. The trick is to use the data in ways that make the customer feel understood, appreciated, and special.” —Elisabeth Keller, Brierley Chief Client Officer
How to Use Zero-Party Data from Your Loyalty Program
Brands are able to obtain zero-party data through loyalty programs that they can’t collect elsewhere. Marketers can use this data to build out customer experiences. Loyalty programs let brands learn more about their customers’ behavior, provide an optimal personalized experience, and remind consumers that the brand values their privacy and loyalty.
The following are examples of how marketers can take advantage of zero-party data collected through their loyalty program:
- Enrich the customer experience.
- Increase emotional loyalty.
- Drive sales and revenue.
It is critical brands use their customers’ data accurately. When used correctly, brands can track customer sentiment and emotional loyalty, learn more about the behavior of your specific customers, and use the data as a benchmark to improve performance.
Loyalty Program Data Collection Examples
As mentioned, your brand’s loyalty program is one of the most important and effective ways to collect zero-party data from your customers. Sometimes referred to as zero-party data micro-experiences, the following are examples of methods used to collect zero-party data through brand loyalty solutions:
- Exclusive content
- Preference quizzes
- Contests, sweepstakes, and giveaways
- Questions for coupons and discounts
When collecting data using these methods, brands can create win-win scenarios with their customers.
Common Mistakes Collecting Zero-Party Data
Marketers should use their loyalty solutions to collect zero-party data from their customers, but it’s important to avoid the frequent pitfalls of data collection. Forrester recommends marketers follow these three rules:
- Only collect data you will use. Remember, more data is not necessarily better, especially if it provides no insights. If you aren’t going to take any action or gain any insight from the data, you’re wasting your customers’ time.
- Use and track the data to deliver relevance. Again, don’t waste time or data. Take actions based on insights from the zero-party data you collect. You can track data over time to ensure you are optimizing the customer experience.
- Reward loyalty customers. Don’t forget to reward your loyalty program members with something of value in exchange for them volunteering their data. Examples of rewards include loyalty gamification elements like badges or points or exclusive discounts. If customers don’t receive some reward, they will stop providing answers.
By following these rules, you can both collect actionable data and deepen the emotional relationship between your customers and your brand.
Learn More About Collecting Loyalty Zero-Party Data
Moving forward, collecting zero-party data (ZPD) will be a key element of digital marketing. If brands aren’t yet collecting zero-party data, they aren’t taking full advantage of their loyalty programs. Brands should prioritize being more transparent with consumers about what data they collect and why.
To learn more about collecting zero-party data through your loyalty solution and how to effectively use it, Brierley’s loyalty data experts are waiting to speak with you. For over 35 years, Brierley has created award-winning customer loyalty programs for major brands around the world.
Contact us today to learn more about how our team can help you increase your loyalty profitability by collecting zero-party data prioritizing your users’ privacy.