zero party data

Forrester on the ‘The Zero Party Data Revolution’

‘Zero Party Data’, a term coined by Forrester to describe information that consumers intentionally and proactively share with brands

“They know they’re going to get a better experience based on that zero party data versus something that’s been sniffed out about them on the web.”

Organizations may have gone a little overboard with data collection, Fatemeh Khatibloo VP and principal analyst at Forrester told attendees on a recent webinar, The Future Of Data – Earning It Through Trust.

Fatemeh presented an example of a typical publisher’s website, explaining that it’s not uncommon for over 500 ad requests and 54 trackers to be hoovering-up user data. Not only do such practices harm user experience, she explained (adding 20 seconds of load time in the example), but they can seriously impact consumer trust.

By Michael Fisher

Forrester research shows that 71 percent of U.S. adults are aware that apps and websites collect their information and activities, and 65 percent think it’s wrong for brands to track them across devices in order to tailor ads. That’s not because consumers don’t want relevant ads but because it happens without their permission, which is seen as somewhat creepy and intrusive.

77 percent are therefore using at least one online privacy preserving tool. This includes the 43 percent of people who are clearing their internet browsing history and clearing their cookies on a regular basis AND the 21 percent that are blocking information through a device’s settings.

As people become much more data privacy conscious, resulting behavioral change is clear; DuckDuckGo, which is a privacy preserving competitor to Google, has seen a 65% year over year increase in traffic for example.

It’s time for organizations to rethink their approach to data collection and Fatemeh laid out three questions organizations need to ask themselves:

  1. Is the data we’re collecting really relevant to our business?
  2. Is it actionable?
  3. Can we make sure we’re using the data in a way that’s not discriminatory or unfair?

‘Zero Party Data’, a term coined by Forrester to describe information that consumers intentionally and proactively share with brands, was introduced. This is the data that’s earned by “being trustworthy and by giving consumers real value for their data.”  We refer to this type of data as ‘Earned Data’. Fatemeh nicely described it as “intrinsically permissioned” information that could validate assumptions.

So for example, if an organization has observed somebody’s online behavioral activity and made an inference, such as that they’re about to decorate their home, they can verify and use that zero party data by asking the right questions in simple, easy interactions. This requires motivating people to interact through, “really rich and branded experiences that customers willingly engage with”.

“I told you before that customers just don’t trust us. And now I’m telling you to go and try to get more information from them. I can see why this would be a little bit of a challenge or paradox”, acknowledged Fatemeh. Indeed, not many have cracked it. “Think about all of those terrible cookie consent banners that you see on the first page of a website. They take up two thirds of the page with a forced cookie banner. It’s ugly, it’s not on brand and it’s frustrating”.

Fatemeh gave three guiding principles as the starting points to facilitate mutually beneficial engagements that really encourage consumers to willingly provide data.

  1. Transparency: Customers want clear expectations of the data that’s collected and how it’s to be used. That means not letting the legal team or compliance teams create ‘how we use your data’ pages. Experiences have to be human-understandable and human-readable.
  2. Contextually appropriate: Aiming for data minimization that doesn’t break, but adds to the experience means asking only for data that helps organizations genuinely provide a better experience. It’s better to have a beautiful, clean data pond than a giant, polluted data lake.
  3. Fair value exchange: Value is subjective. Making sure the trade-off is balanced and fair is absolutely vital. Exchanges must be simple and meaningful. It’s also about passing the ‘reasonable expectation test’. If the average person, who isn’t a marketer, would be shocked or dismayed by how the data is being used, then it’s probably not the right thing to be doing.

Marc Rosenstock, Head of Marketing and eCommerce at HoMedics (an FKA brand), also spoke during the webinar. He emphasized the importance of creating “more relevant relationships with consumers based on information they’re giving because they know they’re going to get a better experience based on that zero party data versus something that’s been sniffed out about them on the web.”

Acknowledging the importance of adhering to increased legislation, Marc said the biggest value to be gained through earned data was building long-term relationships with customers that go beyond simple transactions.

A big part of this, he explained, is about getting the timing right. “There are two kinds of value exchange: one is when you actually get the data, are you presenting a value exchange right at that very moment? And two, as you use that data over time, is that relationship – the way that you’re using that data – valuable to consumers as well? If you wait three years to use a piece of data, then the consumer is not going to get tremendous value. If you use it right away, “Hey, I asked you where you’re suffering from chronic pain,” and that same day give recommendations on ways to help, that’s going to feel very relevant. If you wait to make that recommendation, it’s not going to be very helpful at all.”

HoMedics is in the process of building out an earned data approach which involves the creation of opportunities for consumers to willingly share data in appropriate value exchanges. Marc believes this is particularly important at the beginning of new customer relationships, where useful data helps lay the groundwork for long-lasting and fruitful relationships.

He made a very important point, saying that he often hears from peers that their organizations already have established approaches and are not looking to change. But he recommends spinning up an earned data approach alongside pre-existing approaches. “That’s what we’re doing with 3radical. We didn’t stop everything else we’re doing. As a result, we’re getting the experience and learnings as we go. There’s a big learning curve associated with this approach; so we do it in parallel and use it to drive change through your organization.”

Marc adds, “as a result, we’re getting data that you can’t find anywhere else.”

Ultimately, this is a new approach to data collection and requires a change in thinking. Fatemeh made the important point that brands need to shift “from a relatively passive data capture pasture to a proactive one”. Marc sees the shift as “a bit like getting back to an old principle, which is built around consumers, ensuring value exchange and focusing on interactions (rather than transactions).”

Both are great ways of looking at it. While approaches to data collection need to evolve, we should always be adhering to a fairly simple principle: connect with consumers in a way that’s most helpful to them.

For more on this topic, watch the webinar: THE FUTURE OF DATA – EARNING IT THROUGH TRUST

michael fisherMichael Fisher is CEO of 3radical and is a board member at TheCustomer.

Photo by Austin Neill on Unsplash.

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