By Vlad Gozman, serial entrepreneur and the founder and CEO of involve.me. Follow @vladgozman on Twitter.
Big data has been a fixture in the business world for years. Claims that “data is the new oil” or “the new electricity” are ubiquitous, appearing in presentations, articles and board meetings across the globe.
Yet in all the talk of data’s power and potential, one type of data has been largely overlooked: zero-party data. In part, this is because the term was defined by Forrester Research only in 2020.
Zero-party data, as Forrester defines it, is data that a customer “intentionally and proactively shares with a brand.” Contrast this with third-party data, which is data collected from external sources, often without the customer’s knowledge or explicit consent. While data laws like the General Data Protection Regulation (GDPR) have made third-party data less desirable, they’ve also made zero-party data more important.
Zero-Party Data Versus Third-Party Data
While the king of the data hill has long been third-party data, zero-party data is quickly becoming a challenger. Brands that want to stay ahead of the curve should start paying more attention to this overlooked type of data.
One of the key benefits of zero-party data is that it’s more trustworthy than third-party data. Because customers share it willingly and know that it’s being used by the brand, they’re more likely to trust the brand with their personal information. Another benefit of zero-party data is that it’s more accurate. Because customers supply it directly, there’s less opportunity for errors or inaccuracies. And finally, zero-party data is more engaging. Brands that use it can create more personalized customer experiences, which leads to higher engagement rates and longer customer lifespans.
As consumers become privacy-aware, brands will need to rely more on zero-party data to create trusted, personalized relationships with their customers. Further, Apple’s move to block cross-app tracking and the trend of browsers toward tracking prevention may make traditional tracking models obsolete.
How To Collect Zero-Party Data
Third-party data collection tools run the gamut from clickstream data to survey data to data gathered from social media. However, collecting zero-party data is a bit different.
Accessible no-code tools can help brands collect zero-party data with interactive funnels, including quizzes, surveys, calculators, forms and more. We’re in an age where nontechnical employees are able to collect data directly from their customers in a fun and engaging way.
Zero-party data isn’t just for big brands, either. Any business can benefit from collecting data directly from their customers. By using interactive funnels, businesses of all sizes can gather data that’s reliable, accurate and engaging—at every step of the customer journey. Traditionally, the approach to collecting zero-party data would be wrought with manual processes, tracking and data entry. In a modern-day world, this is either no longer possible or downright prohibitive.
In a post-pandemic world, consumers have more digital interactions with businesses than ever before. As the number of devices (and interactions) continues to grow, the need for accurate and compliant zero-party data will only become more apparent.
The Future Of Zero-Party Data
The web is clearly moving toward greater interaction, greater personalization and a more participatory experience. Companies like Meta (formerly Facebook) aim to take advantage of this trend by offering users new ways to interact with the web and, most notably, with the metaverse.
Zero-party data will be a critical part of this new interactive paradigm. In the metaverse, too, users will want to share their data with other users—and brands—in order to create more engaging experiences. If the same data scandals that have rocked the web in recent years were to occur in the metaverse, they would be even more damaging, as users would be less likely to trust companies with their data.
Fortunately, with the advent of zero-party data, users will be more likely to share their information with brands they trust. In other words, we can use zero-party data to solve the trust crisis that has plagued online data sharing. With zero-party data, users will be more likely to share their information voluntarily, and this information will be more reliable and trustworthy than ever before.
Brands that make use of zero-party data will be able to create more engaging customer experiences, and they will also be better positioned to compete in the new era of the metaverse.
Zero-Party Data For AI
Just as conversations around “big data” have largely overshadowed “small data,” in spite of the growing importance of the latter, so, too, has the term “third-party data” overshadowed “zero-party data.” However, the latter may become far more important to companies looking to harness the power of artificial intelligence (AI).
As an article (registration required) in Harvard Business Review explores, small data can play a big role in AI, as many organizations have “vast reserves of untapped expertise” in the form of small data. Zero-party data is a key part of this, as it is high-quality, relevant data that can be used to train AI systems, even for organizations that don’t have huge troves of customer data.
In order to make use of zero-party data, companies will need to employ new AI methods that can effectively extract insights from it. Fortunately, as AI technology continues to evolve, this is becoming becoming possible. Firm-supplied synthetic data can help to bridge the gap, providing a way to train AI models on large data sets without compromising privacy.
In the future, then, zero-party data will be an even more important part of AI-driven business strategies. By making use of this data, companies can train their AI systems to become more accurate predictors of customer behavior. As a result, they can improve their marketing and sales efforts and create a more personalized experience for their customers.
Ultimately, the importance of zero-party data will only continue to grow in the years ahead. As data privacy become more stringent and as customers become aware of the risks of third-data, brands will need more to party, based on data that they can trust—and that is only zero-party data.