Ange Dunn, Senior Business Director at Perceptive, shares strategies for making the most of your first-party data and how to use it to gain insight into customer behaviour and preferences to gain a competitive edge in today’s digital landscape.
It’s no secret that it’s getting harder to deliver effective digital advertising. New privacy laws and policies, combined with changes in digital ad platforms, is making it difficult for brands to successfully target and optimise their campaigns for the right audience.
Despite this stormy forecast, it’s not all doom and gloom.
A recent APAC study on the impact of privacy on first-party data adoption found that 65 percent of respondents expected advertising revenues to fall due to the rise of privacy. However, 73 percent of respondents believe that using first-party data would mitigate the impact of the rise of privacy.
And they’re right. First-party data offers a way through the murk. With it, brands are not only delivering more effective advertising, but are enhancing their strategies and making better informed, customer-centric decisions.
But to make sure everyone is on the same page when it comes to the potential of first-party data, let’s revisit the essentials.
What do I mean by “first-party data”?
First-party data is the data you collect and own. In the business and marketing world, this is usually customer information in the form of a customer database. These databases could be just a name and email at their most basic while at their more complex they can contain information such as demographics (i.e. region/location and age/birthday), transactions (i.e. what their last purchase was, how often they buy, how frequently they buy, their customer lifetime value etc.), customer loyalty programmes, and brand interactions (i.e. what pages they browsed on your website).
However, first party data also extends beyond a business’s customer database. It can also include sales data, customer survey data, customer feedback—think Net Promoter Score or Customer Effort Score—along with behavioural data collected through your website, app, and product use.
To summarise, first-party data is everywhere. And, as you have probably guessed, there’s a lot of it.
Which brings me to my next point.
The problem with harnessing first-party data isn’t the lack of first-party data
It’s actually the opposite. There’s a misnomer in the business world that it is expensive and/or complicated to create first-party data, but the truth is you probably already have loads of it. From marketing emails, transactions and website analytics to online and POS transactions, chances are you’re sitting on a gold mine of untapped data that you already own.
So why are businesses struggling to make use of it?
There’s no one simple answer. Rather it’s a combination of many barriers, including:
- too much data – businesses get overwhelmed.
- poor data quality – for example, when first-party data is not usable in its initial format (e.g. it requires extensive cleaning) or is not relevant.
- maintenance and storage – the perceived cost storing and maintaining (cleaning) the data as well as ensuring it remains safe and secure.
- organisational buy-in – not everyone sees the value in leveraging first-party data and, as mentioned earlier, there are misconceptions about the cost of set up and the ongoing resources it requires.
- knowledge – from a lack of understanding on what first-party data is and how it can be used to enhance business strategy and marketing to limited knowledge and expertise in working with first-party data to uncover insights.
Some of these barriers are easier to overcome than others, and often that is largely dependent on your business. However, for me, the last barrier—knowledge—is the cornerstone to the rest. Overcome this, and the rest feels becomes far more achievable.
So let’s talk knowledge. Specifically, let’s talk about the potential first-part data offers.
How to leverage first-party data
There are numerous ways businesses can leverage their first-party data, however, they tend to fall into three distinct groups or benefits.
1. Enhanced customer understanding
2. Enhanced targeting
3. Enhanced strategy
Enhanced customer understanding
Over the last decade, customer centricity has become a major focus for businesses around the world. And with research showing customer centric companies are 60 percent more profitable than non-customer centric companies, it’s no surprise as to why.
What makes first-party data so powerful in this space is it gives you direct, concrete data on your who your customers are, how they behave, and how they and interact with your brand(s). From customer loyalty programme data to sales, email, social media and website traffic data, you have a lot of information about how your customers’ engage with and respond to your brand, its products, and its promotions.
However, the most powerful way customer centricity and first-party data intersect is through customer experience programmes. The most effective programmes are those that are centred around a core customer experience metric, such as Net Promoter Score (NPS), CSAT or open customer feedback.
[Insert graphic of the NPS question we use in the NPS benchmarks]
Using a survey sent to customers, customer experience programmes build exceptional understanding of your customers and their recent interactions with you. They also provide insight into how customers view and experience your brand(s). Most importantly, they uncovers what customers need and expect from your business while also identifying common pain points. All of this, enables you to build seamless customer journeys, increasing not only the likelihood of converting customers to a sale but also the likelihood of repeat shops and positive word of mouth.
In short, if you want to ensure the customer is always front of mind in your business, a customer experience programme is powerful tool to have—and all it takes is a survey platform and a customer email list to get started.
Recently, Salt, a New Zealand recruitment company, leveraged first-party data via their CX programme to help them stay connected to customers as they scaled into a global business. You can read more about their journey here.
Leading on from enhanced customer understanding is enhanced targeting. There’s a lot of overlap between these two spaces. The better your customer understanding, the better your ability to craft messages that resonate with your ideal customer(s).
Marketing personas, for example, are a popular tool that helps businesses manage this. Using a combination of customer research, segmentation and first-party data, such as customer feedback, sales data and demographic data, personas are fictional characters that represent your customer segments. Designed make your segments life-like, they help marketers create messaging that tailored to that persona’s goals, challenges and needs.
However, marketing personas and the improved cut-through they bring is just one side of the targeting topic. There’s also retargeting and lookalike audiences, both of which are created from customer lists and online interactions. Multiple social media and online advertising platforms have the capability to retarget people who have visited your website or previously engaged with one of your ads or watched one of your social media videos. This kind of targeting increases familiarity with a brand by showing people your messaging multiple times, reminding them of your offer, product or promotion.
Similarly, various ad platforms can build and target lookalike audiences—i.e. audiences that share similar traits to your current customers, using your customer list.
All these of these enhanced targeting strategies rely on first-party data to work, and as such, they lead to highly targeted campaigns with higher cut through and conversions.
First-party data can have far reaching impacts on your marketing strategy too, particularly when mixed with data science. Recency, Frequency, Monetary (RFM) data modelling on customer transactions, for example, allows you to segment your customers according to their spending behaviours and value to your business. This kind of segmentation allows you to rank your customer types by most to least valuable and then formulate a strategy to move customers ‘move up the value chain’ to become part of a more valuable segment.
This is precisely what Burger King did in 2020 with its BK App.
In 2020, Burger King used transaction and sales data from their BK App and Point of Sale system to run RFM modelling on their app users. From this, Burger King not only gained a clear picture of app user spending and their customer lifetime value, but also a clear strategy on how to increase overall app-generated revenue either by running promotions to encourage segments to visit more frequently or spend more per visit.
The result was a 90 percent increase in app-generated revenue, turning the BK App into major income stream for the company.
You can read the full story here.
First-party data makes the world your oyster
The power of first-party data is in its flexibility. While I’ve focused mostly on its application in the marketing sphere, this is by no means the limit. More and more, we’re seeing businesses use first-party data in new, creative and incredibly strategic ways to improve customer experience, engage new audiences, and drive value for their brand and business. For the Netflixes and Amazons of the world, this has become second nature, so it’s no surprise they are at the top of the game. The good news for businesses just starting out, you don’t need to rival the best-in-class brands to reap the benefits of leveraging first-party data. However, you do need to be doing something. Even if that is simply sorting out what you have and planning forward. The biggest factor in first-party data success is not how much you’re prepared to spend or the quality of your data, rather, it is the decision to start using it.
Interested in reading more about making the most of your first-party data? Check out the March/April 2023 edition of NZ Marketing magazine by subscribing here.
 Deloitte Consulting Pte. Ltd, 2022. Customer trust and first-party data: The keys to succeed in APAC’s new privacy era. Available at: https://www.thinkwithgoogle.com/intl/en-apac/future-of-marketing/privacy-and-trust/build-customer-trust-first-party-data/
 Deloitte, 2016. Wealth Management Digitalization changes client advisory more than ever before. Available at: https://www2.deloitte.com/content/dam/Deloitte/de/Documents/financial-services/Wealth%20Management%20Digitalization.pdf