How a first-party data strategy makes your customer experience strategy future-proof
“To win in today’s market, you need to understand and engage your customer through data,” said Matt Parisi, director, product marketing at Tealium, during his talk at Transform 2022. “But there are some trends in the market and some regulations and changes in technology that are going to impact how we’re allowed to use customer data, not only already right now, but looking ahead into 2023 when there are going to be some major changes that come down the pipe. If you’re not prepared, you might be stuck playing catch-up with fewer options than you have right now.”
Most of the changes center around how companies are using customer data and permissions, such as GDPR in Europe and CCPA in California, which dropped the hammer on how companies were allowed to use customer data. Then there’s the new regulations from Google and Apple, putting tracking restrictions in place around how the data that flows through business tools can actually be leveraged. Apple is giving consumers control over how their data is collected and used, and Chrome has jumped into the fray, announcing that they will be restricting the use of third party cookies by 2023.
“This has placed a premium on trust,” Parisi said. “If you’re a business thinking about how to adjust to this, it feels like it’s hard to catch up with. If you can catch up, how are you going to stay in front of it?”
But it doesn’t need to feel that way, he said. A more responsible first party–centric approach, leveraging the data you have gotten explicit permission for, offers a longer lasting and more future-proof strategy in how customer data is used over time.
The deprecation of data
Most of these trends are focused on deprecating third-party cookie data — Parisi calls it the “black market of data trading.”
Third-party cookies essentially get traded behind a customer’s back without knowledge or consent, while first-party data comes out of a direct relationship with the customer. It’s owned, reliable and unique to your company, so it’s differentiated — and the experiences built on that data are also differentiated. And there are far fewer restrictions, since it’s a direct relationship.
But data deprecation goes beyond third-party cookies — it’s any restriction in tracking data due to regulatory, browser, walled garden or consumer actions. Consumers use ad blockers, regulations are evolving, browser technology changes and walled gardens put restrictions on how data from the walled garden can be shared into other places, even though you’re purchasing that data.
“Data deprecation is a big deal. If you’re managing only one channel and you think you can get around it, this trend really impacts a lot of departments across the company,” Parisi explained.
For advertising, it limits the ability to use data to target consumers intelligently. From an analytics perspective, it limits how well you’re able to attribute performance data, analyze the performance of your audiences and keep tabs on the customer relationship. And it dramatically limits your options around customer experiences overall, especially around personalization, which today’s consumers expect.
The first-party data strategy
First-party data can close the gap. And while marketers like to be creative, and find workarounds, trying to sneak around your customers’ preferences means your strategy has a statute of limitations.
“It’s important to honor the customer relationship. Don’t give up. Don’t look for workarounds,” Parisi said. “Start to take a first-party driven approach that respects the customer’s choices.”
Shifting into a first-party data strategy requires strategic and technology changes. On the strategy side, consent and value exchange are foundational. Consent is the front door to the customer experience. If a customer opts out from the very beginning, the rest of their customer experience is going to suffer for it. The customer needs to understand that it’s mutually beneficial for them to share their data — understanding they’ll gain a better experience throughout their relationship, and ultimately creating more value for both of you.
Based on how well you do at getting consent, you must then adjust the targeting mix. The more you’re able to target with your first-party data and the intelligence that comes out of it, the better the performance. But if you only have a small pool of first-party data, you’ll need to figure out how to make up the rest of the gap with untargeted efforts.
Lastly, maximizing first-party data assets is essential, because that’s the differentiator. No other company has that first-party data. It’s how you build a customer profile, which becomes the foundation of your first party-centric approach. It’s not only about the data points that come from each individual channel, but how you blend those data points to define categories like VIPs, or group customers into fans of specific products or services, to provide a better experience across your entire tech stack.
Supporting strategy with technology
Your first step here is to become browser independent — audit your technologies to determine which are using third-party cookie data, where you’ll be losing that intelligence, and what departments it will impact. From there, collection and unification becomes key, following customer identity across channels. Every system uses a different data point as a way to target the customer. For instance, an email system uses an email address. A CRM system might use the customer’s name. A personalization system might use a user ID.
Unifying data collection goes a long way toward solving the fragmentation of intelligence across the business, which leads to deeper customer insights and makes ML-powered predictive analytics even more effective.
“Something that connects the dots between all of those is very important as it relates both to collecting the data and also activating the data, whether you’re activating it to power some experience or engagement, or sending it to an analysis tool,” Parisi said.
Real-time functionality is also very important. That includes integrated automation throughout the data process, and and leveraging machine learning — with so much data pouring in, a computer assist becomes essential.
“The more you can figure out how to use that first-party data to provide an experience that’s relevant and consistent and timely, the better your strategy is going to work, and the better the performance you will see as a result,” he said.
Learn more about how first-party data can be the backbone of your most powerful customer experience strategies, and catch up on all Transform sessions by registering for a free virtual pass right here.