Data has become vital for modern businesses. Broadly speaking, it refers to information about consumers. That can range from basic demographics to more personal preferences. Dig a little deeper, however, and you’ll see that data also varies by how it’s collected.
by Michael Fisher
Two of the most commonly confused types of data are first-party and Earned Data. Knowing the difference between the two can give your organization the edge when it comes to connecting with customers. In this post, we discuss the difference between the two and how they relate to another type of data – zero-party.
What is first-party data?
First-party data refers to information that a company collects directly from consumers. In many cases, this is collected automatically through their websites as customers browse, buy and create accounts. It includes things like their website activity, purchase history, product interactions and email engagement behavior. However, it can also extend to the customer feedback they provide and support services they use.
And zero-party data?
On the other hand, zero-party data is intentionally submitted and shared with a brand by the customer. The term was actually coined by Forrester Research, who explain how this data comes straight from the source, including customers’ preferences, intentions, personal context and how they want to be recognized.
Rather than being based on their behavior, which is arguably monitored without their knowledge, it’s based on the information they want to submit.
So, what about Earned Data?
Earned Data has some similarities with zero-party data, in that the data itself is knowingly and willingly submitted by consumers to companies. The difference is that Earned Data has a much broader scope with a long-term approach that gives both organizations and consumers more back over time.
Rather than simply collecting data, Earned Data comes from a two-way conversation, where every interaction and every piece of data collected contributes to the overall audience journey. That journey is adapted and changed with each engagement, creating an ongoing relationship that gets better and more rewarding at every step, for everyone involved.
Earned Data vs first-party data
The next question is how all of that compares to first-party data. In many ways, it doesn’t. It’s more of a contrast. While it does have its own purpose, first-party data doesn’t contribute to any sort of relationship with a customer. It’s a one-way stream, where companies get an insight into how their customers are browsing, buying and reacting to interactions.
Another key difference is how that data is perceived. All too often, first-party data is talked about as being ‘owned’ by a business once it has been collected. Earned Data is more about taking care of that data. After being collected, data isn’t managed with profit in mind, it’s used to strengthen the business-customer relationship.
All that said, Earned Data can combine both zero-party and first-party data. By creating ongoing engagement and interaction, companies gain more opportunities to collect first-party data from customers – as well as more occasions where zero-party data can be willingly submitted.
An example of Earned vs first-party data
The best way to understand the difference between each type of data is to see them in practice. A good example is our project with Foxy Bingo, a client in the increasingly regulated and competitive gaming industry. With onboarding regulation making it harder to acquire new customers, they wanted to increase retention rates and keep existing customers interested.
The key to doing this was improving their offering to customers by creating a more immersive experience. As above, this is an area where Earned Data comes into its own.
Like all gaming operators, Foxy Bingo has to collect sufficient onboarding data, otherwise known as zero-party data. The UK Gambling Commission requires players to submit and verify their name, address and date of birth as a minimum before they can start playing.
First-party data can also be used to gain an insight into how customers act on their site, with a view to tailoring game recommendations to their activity, for example.
Here’s the Earned Data difference. Rather than simply collecting or asking for data, we created a daily retention game based on a board game mechanic, where players received a roll of the dice each day. Moving around the board, players can collect tokens and eventually unlock prizes, prize draw entries and other rewards.
If they want to earn extra dice rolls, players can complete further tasks such as answering survey questions or providing self-reported data. This data can then be used to continually optimize and customize each player’s journey.
What about the results?
Because it’s based around a two-way value exchange, Earned Data can deliver impressive results that standard first- and zero-party data struggle to deliver.
Using the example above, more than 60% of customers engaged with Foxy Bingo’s board game format on five or more days. That led to thousands of customers completing a ‘How Foxy are You’ survey, which may have otherwise had a poor response rate.
We’ve already mentioned how first- and zero-party data are too centered on direct profit. But that doesn’t mean they excel in this area. By focusing on long-term engagement, Earned Data can actually provide better results. Foxy Bingo saw players repeatedly engaging with not only the game but their other offerings. That translated to an increase of 30% in daily active wagering player volumes.
Even better, Earned Data is the gift that keeps on giving. For starters, every player that played in month one also played in month two. This sustained a rich stream of engagement data, which allowed Foxy Bingo to continually customize player journeys, build stronger relationships and personalize future marketing activity.
Find out more about Earned Data
Data is changing. Both in the way consumers provide it, and how companies use it. At 3radical, we’re strong advocates of Earned Data and how it can transform the business-customer relationship. All of this and more is explained in our Earned Data Playbook, which is available to download online.
Michael Fisher, Ed.D, is CEO of 3radical. He is also a board member at TheCustomer and a frequent contributor to this site.
Photo by Lucas Davies on Unsplash.
