Why is data so important for personalization?
Creating personalized experiences has become one of the non-negotiables of a robust digital marketing strategy. Think about a brand like Spotify. They built their success on collecting zero and first-party data: what genres you like the most, which artists you listen to most often, which songs you’ve starred and added to playlists. They then use that data to do things like sort your music into special mixes based on genre, or to predict what kind of new music you’ll love. They even make a fun game out of serving your own data back to you at the end of the year, with Spotify Wrapped. It’s a pretty amazing example of a personalized experience - and it all starts with data.
The first step to creating a personalized experience like this is understanding your customers, and to understand your customers, you need data. What kind of data varies brand-by-brand and depends largely on your specific goal with personalization, but data is the key that will allow you to unlock the personalization puzzle.
Understand zero- and first-party data
The kind of data that Spotify uses to run its personalization engine is called zero- and first-party data. Watch the video below to learn more about zero- and first-party data, and why you should be prioritizing these data types for your personalization strategy.
Understand different types of data
Zero and first-party data should always be your focus when designing a personalized messaging strategy, but to fully understand the data landscape, it’s important to understand what second and third-party data are and how they are collected.
Zero-party data
What is it?
Zero-party data is data that your prospects or customers voluntarily share with you.
In order to obtain this data, you need to make sure that your terms of service and privacy policy are updated and you are explicit about what you will use customers’ data for.
Examples:
- Email address
- Phone number
- Pet’s name
First-party data
What is it?
First-party data is data that is collected by your business using first-party cookies on your website or app.
In order to obtain this data, someone needs to opt into non-essential first-party cookies when they visit your website.
Examples:
- Email open and click metrics
- Placed order metrics
- Klaviyo’s predictive analytics
Second-party data
What is it? Second-party data is essentially another business’s first-party data. They share the data directly with you, for a fee or as part of some other kind of collaboration, like co-marketing.
In order for you to obtain this data, the data subjects need to have provided their consent for their data to be shared with the original company’s partners.
Examples:
- Paying for the engaged email list of a brand you’ve co-created a product with
Third-party data
What is it?
Third-party data is data that is collected by a business that has no direct connection to your own business or customers.
In order for you to obtain this data, the data subjects need to have provided their consent for their data to be shared with a third party.
Examples:
- Buying data from a third-party provider about the online shopping habits of consumers in your target market segment