A CMO’s advice: You won’t miss third-party data once you start collecting Customer-First Data™
Marketers have become reliant on third-party data, but with consumer privacy taking center stage, updates from Google1 and Apple2 mean third-party tracking is going away.
On top of that, it’s not easy for ecommerce marketers to keep feeding the top of the funnel through paid ads. You have to find the right people and sell them on your value proposition repeatedly, all while acquisition costs skyrocket.
As marketers, we need to refocus on what’s under our control: our Owned Marketing channels. In a post-third-party-data world, an ecommerce business needs to grasp two concepts to succeed.
The first is something I call “flip the funnel.” Flipping the funnel means making top-of-funnel investments a much later focus of the marketing strategy and focusing on creating meaningful experiences for our customers from the bottom of the funnel up. By flipping our focus, we can improve retention and feed the top of the funnel more through word-of-mouth and referral programs.
Putting more attention at the bottom of the funnel, we can use personalization to create better experiences for our customers. And the best way to scale personalized experiences is the second piece of the puzzle: Customer-First Data™.
Once you start powering your business with Customer-First Data, you won’t even miss third-party data.
What is Customer-First Data?
Customer-First Data is data sourced directly from a prospect or customer. It includes both zero-party data (information someone gives to you proactively, like their email address, phone number, or birthdate) and first-party data (information observed by a brand about someone on their owned properties, like what products they clicked on or links they visited from an email).
Unlike third-party data, first-party and zero-party data are consent-driven, whereas third-party data is not explicitly opted-in to—or at least hasn’t been until recently. Plus, the ambiguity around how advertisers collect data has made consumers distrust the process altogether.
When brands start powering their businesses with first-party and zero-party data, it requires a mindset shift to do it effectively. Brands need to prioritize customers to be successful. So, a more appropriate term for this is Customer-First Data.
What Customer-First Data to collect
It’s time to create experiences customers want to opt in to and to personalize them at scale. To do this, you need to collect the right Customer-First Data.
Behavioral data is the most useful
Behavioral data — information on how people interact with your business—often tells a more useful story than demographic or psychographic data. By tracking behavior, you can determine what marketing messages are most effective, where people get stuck in the customer journey, what products people would be most interested in, and who is most likely to convert—whether that’s making a purchase or subscribing to an email or SMS list.
While demographic and psychographic data (like gender or people interested in meditation) can help determine if certain groups are more likely to purchase a product, it isn’t all that useful for making business decisions. Demographic and psychographic data can’t predict who in your audience is most likely to convert. If someone isn’t in the market for your product, they’re not going to buy whether or not their characteristics fit. You want to capture the people who are most likely to buy.
Using behavioral data, you can segment by what customers and prospects actually do—like those who haven’t made a purchase, those who are highly engaged in emails that promote blog content, or customers with a habit of buying during gift-giving holidays. You can use this behavioral data to personalize how you interact with customers and prospects, ultimately creating a more loyal customer base.
Behavioral data eliminates the guesswork, so you can make informed decisions about what will resonate with your audience at any stage of the customer lifecycle.
Psychographic and demographic data give context about your customers
While behavioral data helps you target the people who are likely to take action, it often doesn’t tell you who your customers are or why they’re taking certain actions. Collecting relevant psychographic and demographic information can help personalize messages based on customer preferences, location, lifestyle, and more.
An artistic décor shop, for example, can target a segment of home decorators with inspirational content or those who made purchases as gifts during gift-giving holidays.
Recently, sporting goods company CROSSNET pounced on an opportunity to use geo-targeting. When San Francisco basketball team the Golden State Warriors lost in the NBA playoffs, they texted their SMS subscribers in the area, “Sorry about your loss, Warriors fans. Make it better by taking $50 off of CROSSNET.” The message made sense coming from a sporting goods company, and it was locally relevant.
How to segment customers using Customer-First Data
Segmentation isn’t something you should do manually, so use a marketing automation tool—like Klaviyo—that specializes in ecommerce and can be used by marketers without the help of a developer. Scale your personalization efforts by bringing data from your website, owned marketing channels (like email and SMS), and customer service platform into one place. Then, segment your audience by their patterns and behaviors.
Track behavioral cues
Tracking customer behavior is a way to listen to customers and meet their needs without them saying anything.
Here are four ways to segment your customers by behavior:
- Purchasing trends: There are many ways to slice this pie, and you might consider all of them. Track purchasing trends based on how customers were referred to your brand, purchase month, order frequency, average order value (AOV), lifetime value (LTV), first product bought, and any other identifiers your customers have given you.
- Website activity: Product clicks indicate interest. Views to key signal pages, like your return policy, a subscription cancellation page, or account page, can help you predict actions like returns, cancellations, and upgrades so you can act proactively.
- Email and SMS engagement: Track clicks by email or SMS type and other factors to create segments. Then send the right kinds of content to your most engaged subscribers. Brava Fabrics segments their thank you emails based on if a review was positive or negative.
- Contacts to customer service: Frequency and reasons for contacting customer service can predict things like customer churn or highlight the need for more customer education in the post-purchase flow.
Use this data to predict future behavior and communicate with customers proactively to improve retention. Or to reach out at just the right time when they might be ready to purchase from you again.
Ask your customers
Asking your customers to consent to give you specific kinds of data is a win-win. You gain valuable information for richer personalization, and they get relevant content and product recommendations without it feeling creepy.
Here are three great places to ask your customers for information:
In addition to an email address or phone number, take advantage of this opportunity to ask new subscribers for information that will help you personalize the content you send. This is especially helpful for new site visitors you don’t have a lot of behavioral information on yet.
If you sell travel backpacks, you could ask a new subscriber what their next destination is. Or, if you have an eco-friendly store, you could ask what their biggest challenge is in being eco-friendly.
You can even ask subscribers how often they want to hear from you, what kinds of content they’re interested in, and more. Just keep it to 1-3 simple questions. You don’t want to create a barrier to engagement.
Quizzes are an effective way to help people find the right product and also gather information about a new prospect. Use this information beyond an initial product recommendation to fuel personalized communication with customers.
A skincare brand can ask a prospect about their skin type and primary concerns. Then they can send relevant content like a guide to effective pimple treatment or a morning skincare routine for people with dry skin.
Immersive game brand Hunt A Killer uses their onsite quiz to find out if quiz takers plan to play alone, with friends, with family, or with a date. The quiz helps them recommend the right game and also gives contextual information to segment customers and target them with the right messaging, imagery, and timing. For example, they can target a segment of people who plays games with friends with an email before Labor Day when people are likely to gather.
This is a great time to get a person’s reason for buying something. A furniture company could ask about the context of someone’s purchase, whether it’s for a move or remodel. An athleticwear company could ask about the types of activities a person does — running, yoga, weightlifting.
Link this data back to your marketing automation tool along with your behavioral data so you can personalize at scale. All your data needs to live in one place for it to be useful; if your customer information is stuck in individual systems, your communications won’t be cohesive.
All this data gives context you can use to deliver more relevant messages to your customers. Now that you’ve gathered this contextual data from them, use it to optimize your marketing efforts long-term and build customer relationships that last.
Adapt your strategy to your business
Transitioning to a world with no third-party data poses different challenges depending on your company.
Established digital ecommerce brands already have an online customer base, so much of this implementation will be relatively easy. But if you’re an emerging brand or a brick-and-mortar shop transitioning to digital, you rely on third-party sites to build your audience.
Without third-party data, you need to get creative to bring the right people to your site so you can start collecting the Customer-First Data you need to build relationships with your audience.
- Emerging brands: Without an existing audience, your challenge is to build one without third-party tracking. Test different channels that will be less of an investment than digital advertising. Podcast ads are often cheaper, and some will take an affiliate commission instead of a flat fee. Partner with a bigger brand to put samples or postcards in their packages. Or collaborate on a giveaway to build your email list. Focus on aligning demographic and psychographic information to get your name in front of the right audience.
- Brick-and-mortar brands transitioning to digital: You have an existing audience—they’re just not online yet. So think about how you can bring your real-life customers to your online store. Send out mailers that encourage people to shop online. Offer omnichannel experiences like local delivery, curbside pick up, and accept returns for online purchases in-store. Make your website digital-first with a smooth checkout process and all the information customers need to make purchase decisions online.
- Established digital brands: Don’t wait until privacy changes take full effect. Build the infrastructure now to collect, analyze, and act on your Customer-First Data from the bottom up. Segment customers by behavior and figure out the most relevant psychographic and demographic data to ask your customers for, and when and how to ask for it. Connect your data across all your systems with a marketing automation tool to scale personalization. You’ll be ahead of the pack, and you won’t be scrambling to adapt when the time comes.
As consumers demand more control over their data, they’ll appreciate brands that use it respectfully. The brands that learn how to use Customer-First Data effectively to prioritize their customer’s experience will come out on top.
Still biting your nails over the data privacy changes? Get our guide to moving on.
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