As companies far and wide strive to deliver highly personalized marketing campaigns, resulting in enhanced customer experiences, the importance of effective data strategies cannot be understated. According to Forbes, companies that prioritize and leverage customer analytics are 49% more likely to outperform their competitors when it comes to the bottom line.
But with the introduction of new, groundbreaking advancements in technology at a continuously increasing rate, customer privacy and security concerns are seemingly following a similar pattern. The ability to balance appropriate privacy policies while delivering personalized experiences and tailored content continues to pose a long-standing challenge that is often considered unattainable to execute flawlessly. While there is a universally-known fine line between beneficial data collection and the exploitation of personal consumer data, it has become increasingly common for businesses to teeter on the edge of, if not over-step, this line when it comes to traditional third-party data collection.
The Slippery Slope of Third-Party Data
Many businesses have traditionally relied on third-party data to target personalized ads to their customers at the right time and place. Since third-party data is collected from external entities, it is often considered relatively easy and cheap to obtain when you think about the amount of time, effort, and resources required to reach customers as effectively when collecting the data yourself. So cost-effective and accessible in large volumes; what's the catch?
Here's how third-party data is commonly collected:
- With little transparency, often leading to a breach of trust between businesses and their customers
- From a variety of sources with little to no relation to your specific company, providing inaccurate and often irrelevant customer information
- By relying on external companies' data collection strategies with the hope of appropriate privacy policies and compliance
These points are only a small fraction of the drawbacks of third-party data collection for businesses and everyday consumers. In a 2023 cyber safety insights report, 80% of adults say they are concerned about their privacy, with 69% claiming they are more apprehensive than ever before. That's why it's time for businesses worldwide to explore new strategies and alternatives that enable them to connect with their customers in a manner that meets them halfway—and that's where first-party data comes in.
How Does First-Party Data Work?
Accuracy is one of the most important success drivers—if not the most important—for personalized marketing campaigns and customer experiences. What's more accurate than customer data uniquely owned and controlled by each company? Absolutely nothing compares. That's why the rise of first-party data, among other third-party data alternatives such as zero-party data, contextual targeting, and biometrics, is providing more insight into customer behavior than ever before, all while being safe, secure, and highly effective.
Put simply, first-party data provides businesses with the ability to collect data directly from their customers through interactions such as website visits, purchases, or survey responses. By obtaining this data directly, companies can gain a more comprehensive understanding of customer needs and preferences in relation to their specific brand, as each piece of data is unique to every individual business. Because first-party data is collected directly from your customers, it is the most accurate, reliable, and valuable approach to discovering your target audience, attributing their brand engagement, identifying their purchase processes, and capitalizing on the best ways to reach them. For example, using first-party data to optimize customer engagement might involve using your customers' purchasing history to recommend newer, similar products that are more likely to lead to additional purchases and loyalty.
The Role of First-Party Data in Hyper-Personalization
With a better understanding of customers directly related to your business, companies can tailor their messaging and offerings to each customer or segment with complete confidence and transparency, increasing the likelihood of conversion and customer loyalty. Using customer segmentation, which divides customers into groups based on similar demographics, behaviors, interests, and the like, allows for highly targeted marketing campaigns with the potential to drive engagement and notably increase revenue. When 80% of customers are more likely to make a purchase when brands offer personalized experiences, and 45% of customers are likely to take their business elsewhere if brands fail to deliver personalized experiences, hyper-personalization provides the key to driving profits and ensuring customers stick around for the long run.
Without personalization, businesses frequently risk sending out generic marketing messages that fail to resonate with their customers, resulting in disengagement and lost opportunities to make a sale. With hyper-personalization in the mix, this approach to customer engagement has effectively reduced acquisition costs by as much as 50%, lifted revenues by 5-15%, and increased the efficiency of marketing spend by 10-30%. These numbers underscore the immense value that accurate data holds for businesses. When it comes to using customer data to target the correct audience, instead of swinging and hoping for a home run, begin marketing your brand with full confidence from the get-go.
Bringing First-Party Data to the Forefront
Without fail, we have witnessed how customer data has emerged as a fundamental pillar in delivering enhanced customer experiences throughout the entire journey. A Google and Boston Consulting Group (BCG) study reported that brands using first-party data for essential marketing functions could achieve a 1.5X increase in cost savings and nearly 3X revenue growth. At Fobi AI, we aim to make it easier than ever for businesses to connect with and serve their customers in unprecedented ways. By leveraging the power of automation, AI, and real-time analytics, our solutions are primed to help you unlock advanced marketing insights that enable the delivery of hyper-personalized customer experiences.
Here are just a few ways Fobi can help you build out your first-party data strategy:
- Access to 100% of every transaction detail, providing real-time insights into customer demographics, spending patterns, basket composition, and more
- Two-way, direct-to-lock-screen communication with customers using wallet pass technology, enabling real-time customer surveys and polls
- Advanced segmentation capabilities for detailed measurement and attribution of customer engagement
- Aggregation of data from online and offline sources, including POS systems, with detailed reporting of omnichannel performance
By leveraging Fobi's real-time analytics and insights platform for your first-party data strategy, companies can easily transform traditionally complex customer data into easy-to-understand insights that better inform their data-driven decisions. As a result, you'll set yourself up for success by making the smartest business decisions that drive hyper-personalization, deliver unparalleled customer service, and propel your organization beyond the competition.
Hitting the Data Goldmine, Safely & Soundly
Ultimately, adopting new data strategies to collect and use customer data safely and accurately provides customers with the comfort of trusting your company with their personal data. In turn, not only does first-party data enable your business to build deeper relationships with your customers, but you'll also be able to deliver more personalized marketing campaigns that create a lasting competitive advantage overall. So when it comes down to it, businesses that are able to build strong, trusted relationships with their customers are those best positioned to make informed, data-driven decisions that help them create personalized experiences that lead to increased satisfaction, loyalty, and long-term success.