What is zero-party data? Definition, benefits, examples`

With major browsers moving away from allowing third-party tracking and the growing focus on consumer privacy, zero-party data is becoming increasingly important. Thankfully, there are many advantages. Let’s explore its benefits and how to use it.

It’s called "zero-party" because it comes directly from the customer without any intermediary. Zero-party data refers to information that customers intentionally and explicitly provide to your business. Customers share this data directly through interactions in which they know the company collects information and why. 

For example, you might learn that a company wants to collect your preferences through a straightforward survey asking about your favorite products and communication preferences. The survey would clearly explain how the information will enhance your experience with the company.

The types of data collected can vary, but common examples include:

• Preferences: general preferences for products, services, and communication channels. 

• Communication preferences: a preference subset dedicated to how customers prefer to be contacted, including preferred times and methods of communication.

• Feedback and opinions: responses to surveys, quizzes, and feedback forms.

• Purchase intentions: information about what customers plan to buy, such as wishlist items or upcoming purchase plans.

• Interests: topics or areas customers are passionate about or want to learn more about.

• Communication preferences: how customers prefer being contacted, including when and the methods of communication.

To help you better understand zero-party data, let's compare it to other types of data your business may use:

Although first-party data still plays a significant role in many business operations, there are distinct advantages to supplementing it with zero-party data. This is especially true when building new processes or adapting old ones around this new data. 

Some of the things that make zero-party data such a powerful tool include:

It's more trustworthy.

In today’s privacy-conscious world, consumers are keen on knowing when their data is being collected and how it’s used. Zero-party data builds trust because it is requested directly and transparently by companies. This open approach allows you to explain the benefits of sharing information, reassuring customers, and strengthening their confidence in your brand, unlike first-party or third-party data, which often lacks this level of clarity.

It's explicit, not implied.

Zero-party data stands out from first-party data because it is intentionally provided by the customer, eliminating the need for assumptions about their preferences and behaviors. This directness ensures the data is not just implied but precise and reliable. When customers choose to share their information, they tend to be more honest and precise, resulting in higher-quality, actionable insights.

It's more accurate.

Zero-party data differs from first-party data, inferred from passive collection methods, and third-party data, which often risks being outdated or inaccurate. Because it is given directly by the customer, it is significantly more likely to be reliable. You can further enhance the quality of this data by clearly communicating the benefits of truthful responses and encouraging customers to share valuable and dependable information.

It leads to better personalization.

Nobody wants to feel like just a number, but that's what can happen when communication is cold and impersonal. Personalization allows you to build a better relationship with customers and increase their lifetime value through more accurate recommendations. With zero-party data, you can accurately collect the data you need, no matter what type of personalization you're aiming for, simply by asking the customer for it.

Gathering zero-party data can be significantly helpful in several areas that require customer data. Other data collection types simply can’t beat zero-party data’s accuracy and flexibility, giving it many use cases:

Personalization in marketing

Since customers provide zero-party data, it is highly accurate, making it perfect for personalization efforts. For example, you can create customized product recommendations based on product categories the customer has expressed interest in. You might even offer customers discounts on those items to encourage a purchase. 

Improving customer experience

Zero-party data is excellent for gathering information to improve the customer experience. For example, direct feedback about user experience is zero-party data. Using this data, you can address concerns, more accurately tailor your customer journey to user preferences, and understand common pain points. Hence, your support team is better equipped to help customers who reach out.

Targeted and relevant marketing campaigns

Segmenting customers and creating buyer personas is a big part of a successful marketing effort. Zero-party data allows you to collect precise customer information to ensure accurate personas and segmentation. If you want to segment customers based on unique data points, zero-party data will enable you to request and gather that information directly. For example, you can ask customers about their preferences, purchase intentions, or personal values, allowing you to create more targeted and personalized marketing strategies.

To effectively collect zero-party data, you need to engage with customers in a way that encourages them to share their preferences, interests, and personal information willingly.

Use interactive content

• Surveys and quizzes capture specific details about customer preferences and behaviors.

The preferences sections on your website

• Allow customers to update their interests and preferences (typically shown during onboarding when a user first signs up).

• Ensure the process is quick and easy to skip to avoid creating friction.

Loyalty programs

• Gather customer preferences through rewards programs.

• Use the data to offer loyalty rewards that customers will value.

• The promise of rewards increases the likelihood of customers accurately completing surveys and quizzes.

To ensure the best customer experience and demonstrate a serious commitment to privacy, give ample attention to the following:

Data security and protection

While explicitly collecting customer data is a positive first step, there’s more work to be done even with zero-party data. By implementing strong security measures and complying with all relevant privacy regulations, you can uphold your customers' trust and reduce the risks of handling data.

Transparency and control for consumers

One significant benefit of zero-party data is that you can explain to users why you're collecting the data. While a privacy policy can do this, very few customers read these. Zero-party data can explain it when the data is collected. In addition to this extra layer of transparency, you should make it easy for customers to update their preferences or opt out of data sharing. (This will increase their willingness to share data and increase their trust in you).

Zero-party data—information users willingly share—enables effective personalization. 

For instance:

E-commerce sites use customers’ preferences and purchase histories, collected through surveys or profile settings, to recommend products tailored to their tastes, making shopping more relevant and enjoyable.

Streaming services analyze data like viewing habits and genre interests to create custom playlists, enhancing user engagement by offering content users are more likely to enjoy.

Patient portals can analyze data such as patient-reported symptoms and treatment preferences, healthcare providers can customize communication and follow-up care plans, ensuring the care provided aligns with each patient's health goals and concerns.

Third-party cookies are being phased out and will eventually be eliminated. As this shift progresses, other data collection and targeting forms will need to evolve to fill the gaps left behind.

Impact on data collection

Third-party cookies have long been a key tool for tracking user behavior across the web, enabling targeted advertising and providing valuable audience insights. As they continue to decline, businesses will face new challenges in collecting and using data. Adapting to this change by focusing on zero-party and first-party data is crucial. Laying the groundwork now for a comprehensive zero-party data collection strategy will ease the transition when third-party cookies are finally gone.

Alternative solutions for personalized marketing

First-party data can be used instead of data more typically collected through a third party. After implementing a system, first-party data is easy to collect on a large scale. Zero-party data provides the most accurate and transparent way to gather data. In marketing, there is likely to be a shift back to the older method of contextual advertising. For example, advertising educational material on websites that consistently produce educational content effectively reaches a targeted audience without relying on trackers or data collection.

Collecting zero-party data is just the beginning; effectively using it is where the real value lies. While we've explored how to gather this data, it's crucial to focus on how to analyze and process it to drive meaningful outcomes.

Tools like Dovetail are essential for transforming zero-party data into actionable insights. Dovetail streamlines the entire process by centralizing feedback from diverse sources, allowing you to tag, categorize, and analyze data efficiently. This integration ensures that every bit of data collected from surveys, quizzes, and direct customer interactions is systematically organized and ready for strategic decision-making.

By incorporating Dovetail into your feedback process, your business can manage data more effectively and uncover valuable insights that enhance customer experience and drive targeted marketing efforts.

Related: What is an omnichannel customer experience?