Understand the Importance of First-Party Data

Learning Objectives 

After completing this unit, you’ll be able to:

• Discuss how personalization is raising the bar for customer relationships.
• Explain how the path forward for commerce has changed.

Data Drives Personalized Experiences

Not too long ago, companies had to guess at how to target their customers—where to open their brick-and-mortar locations, and where to place their ads. Now, businesses have access to first-, second-, and third-party customer data that allows them to target customers with the right messages, about the right products, at the right locations… and at the right time.

Let’s compare these data types.

• First-party data: Data that a company collects directly from customer interactions. As primary data, first-party data is the most accurate and most valuable.
• Second-party data: Another company’s first-party customer data that it shares with others.
• Third-party data: Data that is collected and aggregated from other sources that don’t have a direct relationship with the customer.

First-party data is powerful because it allows businesses to understand and respond to their customers and personalize their interactions like never before. Just look at the recent trends.

Shopping has become a streamlined experience, and personalization reigns.

Fast-moving, relevant direct-to-consumer (D2C) brands have grabbed market share quickly by being responsive to their niche audiences. Whether they’re selling clothes, toys, or soap, these companies are captivating target audiences with tailored messages and new customer experiences based on customer data inputs.

It’s raising the bar for everyone. Today’s digital-first customers expect brands to know them, to help them, and to delight them across every interaction and touchpoint. And data gives companies that sell online the ability to draw meaningful insights that create better customer experiences and improve the bottom line.

The Times They Are a-Changin’

Digital experiences are transforming the way customers shop—and they’re also affecting how businesses succeed. Let’s see how this has evolved.

Historically: Big Beats Small
In the past, TV channels, store shelves, supply chain, and manufacturing controlled messages and access to consumers. Digital experiences and online purchasing was in its infancy. This reality perpetuated the growth of mass-appeal brands. Big brands became bigger, and smaller ones struggled to gain a foothold.

Current: Fast Beats Slow
In the here and now, customers surf fragmented channels—in-store and online—and enjoy a wide selection of products. They have more access to the supply chain and manufacturing channels (think direct-to-consumer) than ever before, weakening the previously unquestioned appeal of big brands.

Next: Agile and Relevant Wins the Race
Relevance has begun to enter the picture in a big way, especially online. Are a company’s products showing up on the channels where its customers browse? Are the most attractive products recommended to customers when they are most apt to buy? To achieve this, companies need to gain a deeper understanding of their customer needs, and the companies that can do this the best will enjoy growth and success. Companies who stick with the old way of doing business will be left behind.

When companies value customer data, they can meet customers where they already are with content and product offerings tailored to the customer’s needs and expectations. These companies can build lasting customer relationships, the true differentiator for customers.

Until recently, customers typically bought their products through retailers—making it a challenge for companies to form a direct relationship with consumers. But now, when more companies are selling online, first-party data enables them to meet consumers’ high expectations for great experiences. First-party data can also show them how their company and consumer needs change over time.

In the next unit, we examine how to use first-party data to deliver personalized experiences and more impactful commerce interactions.