Why you need to be collecting First Party Data
If you’ve ever seen an episode of Mad Men, you’d know that Don Draper, the main character and genius marketer, relies heavily on charming his potential clients in person. Hand-shaking, getting drinks, small-talk: these all add up to one thing: An exchange of information. Don gets to know his customers’ needs and strategises accordingly.
Essentially, Mr. Draper gathers first-party data from his clients and uses it to maximise the appeal and impact of his services. First party data is not new, and doesn’t only exist in fictitious TV shows. It is a tool that marketers have been utilising for decades. Digital marketers are now going old school when it comes to collecting customer data. They might not be lighting up a cigar and having lengthy conversations in smokey bars with their clients, but they’re beginning to, once again, lean heavily on consensual first-party data collection.
Policy changes and cookieless browsers are forcing marketers to adjust their strategies, and they aren’t always thrilled about it. But first-party data is arguably a huge advantage, and marketers need to start treating it as such. A joint study from Google and Boston Consulting Group found that:
Companies using first-party data in key marketing campaigns saw an increase in revenue of up to 2.9 times (compared to those that didn’t) and saved up to 1.5 times in costs.
So what is first-party data in the first place, how are marketers gathering it, and why should you get on board?
What is First-Party Data?
First party data is information that a company collects directly from its customers. The company, being the ‘first-party’, utilises different channels of engagement to gain insight into a customer’s profile. This can include:
- Demographics (age, gender, education, income)
- User location
- Purchase history
- Visited websites and interactions
- Time spent on websites
… and much more! Companies employ many different methods to gather such information, such as online surveys, emails, chatbots and customer service chats, online behaviour like website visitation, mobile apps, client feedback and in-person events.
Most importantly though, customers own their data and willingly agree to provide it directly to companies. This guarantees data accuracy, that which hasn’t been altered by 3rd parties and is ethically clean.
So how does first-party data differ from 2nd and 3rd party-data?
First-Party Data versus Second and Third-Party Data
We know first-party data is great, but in order to properly appreciate its benefits, we need to understand other data collection methods and how they differ.
- Second-Party Data: Second-party data is data that is acquired by a partner. A partner company will utilise the first-party data collection method to gain customer information. It will then simply pass this information onto a company with whom it has a mutually beneficial relationship. This is in fact pretty much identical to first-party data, just acquired by a partner, and helps companies fine tune and scale their data collection efforts ethically.
- Third-Party Data: Third-party data is data acquired from a data aggregator. Data aggregators collect customer data from many different companies and compile it into one big data set. Because the quantity of data sources is large, it isn’t always very clear where the data comes from or how accurate it is. Furthermore, you cannot be sure it was collected in accordance with privacy regulations. Companies use third-party data to help scale their efforts, but it may not comply with global data protection laws.
Putting First-Party Data To Good Use
First-party data is a more direct, consensual and ethical way to collect data. But why is it so beneficial and what is it used for?
Essentially, marketers use first-party data to personalise the customer experience and develop accurate customer profiles. By paying attention to your customer’s desires, needs, and behaviours, you can tailor messaging and communication that applies to them and keeps them engaged.
With more knowledge, companies are even developing niche campaigns that cater directly to customers’ demands, maximising the potential of lead conversions and customer loyalty.
With increased pressure to comply with privacy laws, companies know they cannot rely solely on buying customer data from 3rd-parties. Collecting data themselves, and through their own channels solves this issue and gives them an advantage in the field.
Not only is first-party data more ethical and accurate, it serves to develop impactful marketing that benefits the organisation at large. Let’s all take a tip or two from Don Draper and invest our efforts into first-party data collection.
It is absolutely worth it.