Zero-party Data: Use Cases and Personalization Benefits

This is part 3 of a 4-part series titled Understanding Zero-party Data.

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In the first part of this series, I described the characteristics of first-party data and zero-party data, as well as touched upon what causes confusion between the two and which party owns what data. And in part two, I covered the subtypes of zero-party data and first-party data. 

Part three here answers two key questions pertaining to zero-party data:

• What are some common use cases of zero-party data?
• Why is zero-party key to building hyper-personalized audience experiences?

Time for some answers, let’s dive in.

Use cases for zero-party data

Since zero-party data is shared by audiences directly or explicitly, it’s deemed to be more accurate than first-party data that’s collected indirectly or implicitly. That said, collecting accurate data is no good if not put to use across the audience journey. 

Let’s explore the most important use cases for zero-party data beyond personalization. I don’t like to consider personalization to be a use case for any specific type of data since data of every type enables some form of personalization. When it comes to zero-party data, it enables several personalization benefits that I’ve covered in the next section.

Improve data quality

Unlike first-party data, zero-party data is shared by the end user directly and is therefore more accurate. At the same time though, zero-party data is more difficult to collect and store in a structured manner.

Moreover, zero-party data is not a replacement for first-party data — it’s complementary. 

Zero-party data helps improve the overall quality — accuracy, freshness, reliability, and completeness of a brand’s audience data.

A simple example is deriving a website visitor’s location implicitly via the IP address for, say, language personalization. If a brand takes this data for granted and doesn’t explicitly ask the visitor for their language preference, they risk losing that visitor completely.

And when that happens, the brand will end up attributing that loss to some other factor, while maintaining inaccurate data about the user because they didn’t bother asking them for their language preference in the first place.

While this sounds like a no-brainer, Facebook, which is known for its sophisticated data practices, is guilty of this — it assumes that everybody speaks and reads their regional language in a country with 22 major languages.

The same is also true for professional info acquired from an enrichment vendor — the data is often outdated and not asking the user explicitly where they work and what their role is can be such a missed opportunity for B2B brands.  

Understand product relevancy 

Product here is an all-encompassing term to describe B2B and B2C products and services, including newsletters and other information products.

Today, it’s not so hard to get someone to give away their email address in exchange for a freebie like a template or an ebook. However, it is foolhardy to assume that the individual is actually interested in your product just because they’re interested in your content.

Irrespective of whether one sells a productized service, a premium newsletter, or enterprise software, one has to find out who is a prospective buyer and who’s never going to be one (but might still be a valuable contact).

So, what is the best way to find out, you ask? 

You ask! 

Is there a better way than asking your audiences directly whether or not they’re interested in a particular product, which products are they most likely to buy, and what features are they likely to use or not use and why? I certainly don’t know if there’s a better way but if you do, I’d love to know. 

Upon asking, brands can not only deliver better recommendations and offers, but also use the data to inform product development efforts (B2B) and optimize inventory (B2C). 

I won’t talk about the software companies that built seemingly brilliant features that their customers never used. I will, however, mention that Calendly is one company that does a fantastic job at building what their customers really need. 

Adhere to privacy

It’s mind-boggling that with such punitive privacy regulations as the GDPR, so many brands choose to not invest enough effort to make sure they don’t slip up and violate privacy laws.

In fact, I maintain a list of brands, including some of the most established names in tech, that are in violation by sending emails that one hasn’t explicitly opted in for.

The list also includes companies where demand gen, product marketing, and sales run concurrent email campaigns targeting every email that enters their respective systems without a clue about whether or not the individual is a prospective customer. 

I don’t even find it surprising anymore — I have myself been on teams where hitting internal KPIs and fulfilling a personal whim are prioritized over improving the end user experience and adhering to privacy laws. It’s unfortunate.

For companies that are serious about complying with regulations while also offering a superior audience experience, an important first step is to let audiences explicitly specify the types of emails and notifications they’d like to receive and easily opt out of the ones they’re not interested in — while also making sure that all communication tools used across the organization are kept in sync with that preference data.

And this should be non-negotiable for companies that wish to build a brand that people trust and want to hear from.

Build better relationships with your audiences 

The first step in building better relationships is knowing your audiences — understanding their needs and workflows, respecting their priorities and preferences, as well as empathizing with their constraints and limitations. 

I know that’s a lot but in order to stand out from the crowd, brands have to completely rethink how they build and manage relationships with their audiences. 

Knowing why someone shared their email address with your brand, for instance, can unlock opportunities to find out why that individual came in the first place, where they came from, and what is it that they expect from you in exchange for their email.

This information is sufficient to figure out which audience that individual belongs to (better segmentation), how they first learned about your brand (better attribution), how to engage with them going forward (better engagement), and how to fulfill their needs (better retention).

B2B brands, in particular, deal with multiple audiences, and understanding the needs and preferences of each of those audiences is key to building strong relationships with them.

Good relationships with prospects, partners, and advocates serve as the foundation brands need to build thriving communities. 

In summary, beyond the obvious use case of personalization, zero-party data results in better data quality, better products, better privacy practices, and most importantly, better relationships with one’s audiences. Now let’s look at the personalization benefits of zero-party data, including some non-obvious ones.

Personalization benefits of zero-party data

Leveraging zero-party data for personalization workflows is a no-brainer. But what does it mean to build personalized experiences? Surely it’s more than just using liquid tags in event-based emails or delivering offers disguised as birthday greetings. 

Users, especially the savvy kind, are able to tell when personalization is done well. And they also understand that true personalization requires them to explicitly let brands know who they are and what they need. 

The benefits of zero-party data in terms of personalization are plenty but I’d like to focus on the ones that brands just cannot ignore anymore.

Onboarding optimization

An onboarding survey asking new users their primary use case for the product and the expected outcome, as well as professional (B2B) and personal (B2C) info is the most reliable way to personalize the in-app experience and deliver relevant communication. This is not something that can be deciphered accurately based on usage data (event data that’s collected implicitly).

And not asking what one intends to use the product for or what their goals are is such a missed opportunity. Moreover, onboarding is not a one-time, set-it-and-forget-it activity. 

Collecting preference data early in the audience journey and giving users the ability to keep their responses updated helps brands understand the changing needs and priorities of their diverse audiences. And doing so is key to delivering experiences that remain personalized through every stage of the journey.  

Engagement via relevant content and communication

Leveraging zero-party data in conjunction with first-party data for personalization efforts is a lot of work, but it’s also a proven method for hyper-personalization.

Here are a couple of everyday scenarios:

B2B Scenario

In B2B, a power user is quickly assumed to be a prospect for an upsell. However, that power user could also be using the product on behalf of her clients, making her an ideal candidate for a channel partner. 

Proactively finding out her use case and labeling her as a prospective partner in the CRM (or even onboarding her as one) helps deliver content and communication designed for partners, leading to a truly personalized experience. 

That’s not all though — excluding her from engagement campaigns meant for power users who are actual prospects for an upsell positively impacts the outcome of those campaigns. 

B2C Scenario

In B2C, it’s almost always assumed that if someone buys a certain product, they’d be interested in buying more of that product. It’s taken for granted that everything you buy, you buy for yourself — how many brands even ask whether the product you’re buying is for your own consumption or for someone else?

After all, it’s not uncommon for people to buy things for others (as a gift or otherwise) that they would never buy for themselves. 

Therefore, asking the buyer deliberately whom they bought a certain product for, and whether or not they’d like to buy a similar product again not only helps deliver relevant content and communication, but also minimizes wasted effort on campaigns that only take past purchases into consideration.

These are just two of the many examples where collecting data explicitly from the zero party or the end user can lead to much better personalization.   

Identity resolution

You might ask what zero-party data has got to do with identity resolution, to which I’d say “resolving identities using data collected explicitly from end users is more accurate than relying on algorithms powered by first-party data that’s collected implicitly as a result of user activity.”

Here’s an example that’s rather common in the B2B world:

I use a popular productivity tool where I used my personal email address to create the account. Due to the popularity of the tool, it’s also adopted by the organization I work for and I receive an invite on my work email to join my organization’s account. Upon joining, I’m put through the onboarding meant for new users even though I’m actually well-versed with the product since I’ve been using it for my personal projects.

Sounds familiar? Notion and Make come to mind first but there are many such products. 

If only at the time of onboarding I was asked if I’d already used the product before, my experience could have been tailored to the needs of someone who has been using the product in single-player mode and is familiar with the core features, but is now going to start using the product as part of a team and will have access to collaboration features that they might not be familiar with.

Assuming the above was actually implemented in the onboarding flow, the brand now knows that I’m an existing user and all they need to do to resolve my identity is to ask me for the email address I use for my personal account. In fact, they also have the opportunity to go a step further and proactively ask me if I’d be interested in contributing to their community or joining their partner program.

Conclusion and what’s next

Incorporating zero-party data in your workflows is sure to bolster personalization efforts while also giving more control to the end user — giving them a seat on the decision table and letting them decide how much personalization they’d want.

I know implementing the above is not always straightforward but neither is finding a true advocate for your SaaS product. 

Moreover, brands that are spending ridiculous amounts of money on building and maintaining data infrastructure can surely allocate resources to such initiatives that truly and significantly improve the end-user experience. 

When it comes to activating zero-party data, the freshness of the data is key and in the next part of this series, I’ve laid out common B2B and B2C scenarios that depict the importance of keeping zero-party data fresh. Check it out!