Demystifying First-Party Data & First-Party Data Strategies

January 31, 2023 - As regulations like GDPR and CCPA, and the increase in customer sentiment usher in a new era of data privacy, third-party data is quickly becoming antiquated. Browsers are already restricting third-party cookies to protect user information and in the future they’ll be banned altogether. 

To remain compliant and create meaningful connections with consumers at scale despite signal loss, brands need to develop, and utilize a first-party data strategy. 

This probably isn’t the first time you’ve heard how important a first-party data strategy is especially in the wake of third party cookie deprecation.  But do you know what first-party data is? Or what a first party data strategy is?  We’ll answer all of these  questions below.

What is first party data?

First-party data (FPD) is information your company collects consensually directly from its audience. It’s unique to your business, and collected and compiled through software and systems your company owns. This data itself is owned by your company. It’s data you already have! 

Used correctly, first-party data is a valuable tool for brands to foster meaningful connections with their customers and maximize the impact of their advertising. It’s an invaluable resource that can deliver immense value when used responsibly. 

Last year Boston Consulting Group (BCG) released a study that found that “brands using first-party data for key marketing functions achieved up to 2.9X revenue uplift and a 1.5X increase in cost savings.”.

There are 2 types of first-party data: 

Knowing who your audience is, what they are  like, and how they behave can be key to successfully targeting them.

1. Declarative data

Simply put, declarative data is just self reported data, or data voluntarily collected from your audience (site visitors, customers, social media followers, store visitors, etc.). It’s stuff people tell you about themselves, that gives you insight into who they are.  For example, if a user fills out a form on your website where you ask for their name, Job title, phone number – this is all declarative data. Other ways to collect this type of data include surveys, newsletter signups,  polls,  gated content, shipping and billing  information, user registration, Customer feedback, reviews, CRM data, etc.  

2. Behavioral data

Behavioral data is basically things people do when interacting with your brand, and is the key to unlocking a deeper understanding of your website performance and user habits. By using tools like Google Analytics, brands can track how site visitors interact with their webpages. Which provides valuable insights into what areas are working well and which may need adjustments for optimal effectiveness. From discovering popular content pages, to measuring product engagement metrics – behavioral first-party cookies offer comprehensive insight that helps build successful campaigns tailored around consumer interests. And, adding first- party data from other sources within the business (eg: CRM data) enhances the value of the behavioral data from GA even more.

A common misconception is that first-party data is just marketing and customer data. As shown in the image above, in actuality, FPD can be found across the business –  products, supply chain, CRM, store locations, etc. 

Both descriptive and behavioural  data are valuable by themselves, but the biggest value add is in the synthesis of this declarative data and behavioral data. When you put these two together, you get  a combined view that’s more than the sum of its parts. You start to see connections and insights you wouldn’t otherwise. It’s all about capitalizing on the latent value of the data you own. 

What is a first-party data strategy?

Despite how often you hear people talk about a first-party data strategy and how important it is, there really isn’t much discussion about what this actually is, or how to build one. 

The definition itself is pretty simple, a first-party data strategy is a designed plan to support the collection and application of first-party data in order to create value. 

To get you started here are 5 basic steps to consider. IMPORTANT! You can’t do this successfully in a vacuum, you need to start conversations across organizational leadership, and get key marketing, data owners and partners involved.

1. Define your business objectives, organizational goals and use cases

Defining your business objectives or what your business is trying to achieve in precise, measurable ways is the first, and really the most important step. Without taking the time to clearly define your business objectives, the rest of the steps won’t be tied to anything, and your strategy will ultimately fail. 

Once your business objectives are defined, you need to define your organizational goals. These are goals the organization is trying to achieve to support the business objectives.

With both of these important pieces of information clearly defined, they can be used to build your use cases – lists of actions or event steps required to meet your goals –  which help the organization meet the business objectives. 

2. Define your target audience, customer lifecycle and audience segments

Developing an effective customer lifecycle strategy is the next step.  Do this by mapping out the different stages when visitors interact with your product or service so you can identify the most efficient channels and techniques used to target them. To ensure success in this area, it’s important to collect, relevant first- party data from various sources like web analytics tools, mobile apps, your CRM, and all of the other sources shown in the image above; then use these insights to segment customers and prospects into groups based on their demographics, purchase history, online behaviors etc. ., to allow for a personalized marketing approach.

3. Define your data sources

Unlocking the potential of first-party data can be an intricate task, but it’s worth it. In Step 2 you’ve identified your target customers and their lifecycle journey — now let’s explore how to best use these insights through creative combinations of data points across channels for improved experiences. 

With this combination process, every touchpoint in-between holds unseen opportunities for better segmentation and optimization; maybe even uncovering new ‘aha!’ moments you hadn’t thought of. Unlock the power behind each piece by taking matters into your own hands; from understanding what particular metrics are needed to inform decisions, identifying valuable sources & methods to acquire them, or finding other ways around if unavailable.

4. Define, test and learn to determine activation

By analyzing which FPD is most impactful for you, and defining how it will be collected and managed, your focus can shift to using this information to enhance customer experiences. Instead of aiming for costly one-to-one personalization strategies right away, testing different customizable levels across various groups allows you to quickly pinpoint what works best in achieving your goals.

Keep in mind, every insight you gain carries the potential to drive a more intelligent, relevant customer experience – but only if it’s put into action. Use insights wisely and effectively so they don’t become useless discoveries that go unutilized… or worse yet, forgotten in reports lost long after their relevance.

5. Define, refine, and validate your measurement

Designing an effective measurement strategy can be overwhelming, but breaking it into manageable steps makes it much easier. 

1. Start by considering what reporting tools and platforms to use, 
2. make sure you’re allocating appropriate resources, 
3. take time for periodic check-ins with stakeholders and 
4. collect qualitative feedback from those receiving reports or measurements.
5. To discover what data points to use for judging success, define how your understanding of the customer from earlier steps can be applied through analysis. 
6. Tracking and monitoring progress is essential to ensure you meet targets and stay on track with goals.

Activating Data Across the Org Chart

While it is true there is a huge possibility for marketing output for this kind of work, your data strategy needs to look at more than just marketing. 

There is value in this data well beyond the marketing silo. 

Discovering and communicating this value is one of Napkyn’s differentiators. When we talk about a data strategy, we’re not just talking about activating for your marketing team, we want to talk to your user experience team, your IT team, etc.

While there’s clearly value to be had in leveraging first party data for Marketing outcomes, our experience shows that companies can get the most benefit by engaging with other parts of the organization as well.  Helping each function (eg: user experience, product, IT) understand how first party data can help them gain greater insights and improve outcomes ensures buy-in across the org chart.  This in turn leads to a more robust overall strategy that encompasses the key characteristics of a solid foundation.

It’s about thinking bigger than just the tactics of marketing. 

Conclusion

It’s important to balance the steps of your first-party data strategy with an approach that keeps privacy, regulatory constraints and customer desire principles top of mind. Remember it’s these regulatory and technical pressures that are driving you toward  a first party data approach to begin with. It’s also important to look past the marketing silo not just for FPD sources, but for activation as well. Data is a team sport and companies that bring all departments to the game are the companies that are going to win.

If you want to build a solid first-party data strategy but don’t have the necessary team or expertise to do so, reach out, we would love to help.