First-Party Data: The Need is Real for Brands

I read with interest Suzanne Vranica’s article in the Wall Street Journal, “Big Tech Privacy Moves Spur Companies to Amass Customer Data.” I’m heartened to see a range of CPG brands getting serious about developing a first-party data strategy. It’s been a long time coming.

Over the past four years I’ve seen a lot of lip service given to the importance of first-party data, but not a lot of action. The talk began in 2018, when GDPR first went into effect, and continued with the implementation of CCPA. When Apple, Mozilla and Google announced their browsers would no longer support tracking, we saw a spate of editorials urging marketers to hone their first-party data strategies, but Google’s announced delays gave them a respite.

Then came Snap’s earnings call in late October 2021 and reality began to sink in. The social media company warned investors it had failed to meet revenue expectations for the third quarter, largely due to Apple’s App Tracking Transparency (ATT) privacy feature, which blocks an app from tracking a user across apps without their consent. Finally, brands got the message that tracking bans can have a serious impact on their revenue. 

Against this backdrop of the consumer-privacy rebellion is the emergence of DTC-first brands, founded by people adept at piquing consumers’ imagination and engaging in two-way conversations. This first-party data generation was the envy of legacy CPG brands, and many went on buying sprees, paying as much as $1 billion for a successful DTC company.

Here’s a tip: You don’t need to pay that kind of money to have direct relationships with consumers. As the brands highlighted in the WSJ demonstrate, you just need a clever, fully transparent approach to asking consumers for their data, and a bit of patience. Rome wasn’t built in a day, after all.

How to Ask Consumers to for Their Data

Big data, massive scale, DMPs, data lakes … the buzz words of the aughts reflect the industry’s belief that brands must Hoover up, analyze and store every last scrap of data, needed or not. Is anyone surprised by the level of distrust we’ve earned? In 2010, if you visited a brand’s website, you received a catalog a few days later. It was creepy.

Brands now have little choice but to build marketing and advertising initiatives around first-party data that consumers freely opt to share. But there are rules – and I’m not referring to GDPR, CCPA, CPRA or any other privacy law. The rules center on establishing trust.

First and foremost, don’t ask for consumer data without offering a value exchange. Consumers have proven over and over their willingness to share information, as long as they get something they want in return. And they’re not always looking for a monetary incentive; many may simply want a product recommendation. Some just want a few minutes of entertainment or to test their knowledge.

To wit: According to a PwC survey on the customer experience, 63% of consumers say they’re more open to sharing their data for a product or service they say they truly value. What’s more, our internal research shows that when consumers readily see a value exchange, they’ll complete the survey, game or task.

Rule number two: Don’t be intrusive. We see this with website pop-ups asking for your email addresses in exchange for a discount immediately upon arrival. That’s a big ask. It’s akin to entering a department store and being confronted by a burly sales person asking for your SSN so you can get a store card for a one-time discount. If consumers initiate the interaction, they’ll be more likely to disclose.

Next, ask only for the data that’s absolutely necessary to know about the consumer. They never liked the constant surveillance. In fact, the biggest obstacle to trust is when brands ask for too much information. Consumers understand that things like household income are irrelevant when making a purchasing decision about OTC pain relievers or seltzer water, and they’re suspicious of brands that are too nosey.

What Consumer Data Do You Really Need?

Before you launch any initiative, ask: What are the 4-5 things your brand needs to know about consumers in order to provide them relevancy and value? There’s still this crazy overemphasis on demographics when in most instances, someone’s gender or age is highly irrelevant.

Which brings us to the next rule: Ask directly for any information you collect, and don’t use any bit of data they haven’t freely declared. We have a long way to go before consumers trust the ecommerce world with their data. The sooner we cease scraping and selling it, the sooner we’ll earn their trust back. Besides, declared data (or zero-party data) is much more accurate than data that’s proxied.

Finally, consumers must see the payoff promised for their information disclosed. Don’t launch a personality quiz or poll just for the sake of collecting customer data; ensure that the consumer receives and recognizes the benefit offered.

ASICS followed this approach when it came time to redefine its customer journey for new loyalty program members. They’re invited to answer certain questions, including their gender, running style and goals, and whether they need extra support and cushions. In exchange they receive sneaker recommendations that are appropriate for them.

Start Now 

Building a permission-based, accurate and quality dataset can move the needle for privacy-centric brands, but you need to start now. I’ve seen brands transform their customers’ engagements to two-way, value-based exchanges, which increased their customer files by as much as 50%. Some have received tens of millions of new and more accurate data points each year. We have the opportunity and the tools to do better going forward. It’s well past time we committed to it.

Pam Erlichman is CMO of Jebbit