Shawn Lim
May 20, 2024

Will zero-party data restore consumers' trust in brand value?

Allowing individuals to willingly and conveniently share their data in exchange for better experiences can be a win-win. But as Campaign discovers, certain conditions and challenges must be met for all to benefit.

Will zero-party data restore consumers' trust in brand value?

As marketers prepare for the impact of cookie deprecation, there has been a growing interest in zero-party data (ZPD).

ZPD is the information consumers willingly and directly share with companies in exchange for specific benefits or values, such as personalised offers and services, as they understand how their shared data will enhance their interactions with a brand.

Let’s take James, for example. He is an avid traveller who visits a website to plan his next adventure. By proactively indicating his travel preferences, James provides the travel company with invaluable insights into his specific interests, a prime example of ZPD.

Unlike other forms of data, ZPD is characterised by its accuracy and consensual nature, making it a precious source for businesses seeking more profound insights into their customers.

ZPD stands out as a beacon of trust and accuracy in a complex data environment. As data privacy regulations like the GDPR and CCPA tighten, businesses can rely on consented and accurate data sources like ZPD to reduce legal risks and dependence on external data pools.

Campaign explores how fostering direct communication channels with consumers with ZPD enables companies to personalise experiences and whether they can do so effectively, thereby actually enhancing customer satisfaction and loyalty.

The shift to ZPD

A Twilio study, ‘When Consumers Control Data: How to Build Trust and Succeed in the New Digital Era,’ found that 92% of marketers in APAC are already collecting zero-party data, primarily through surveys (58%), social media polls (52%), and email campaigns (51%).

Glenn Gore, the chief executive of data platform Affinidi, notes in today's data-driven marketing landscape, the insights derived from ZPD are emerging as a critical differentiator in pinpointing new opportunities for enhancing consumer experiences through personalisation.

In addition to providing precision and relevance in understanding customer preferences, needs, and expectations with ZPD, Gore says the direct relationship between the brand and its audience can revolutionise the marketing funnel, leading to the discovery of new market niches or new products, fueling growth and market competitiveness.

“The data empowers businesses to curate highly relevant brand awareness campaigns, establishing immediate trust and emotional connections with consumers," explains Gore. "Through this authentic, interest-aligned communication, brands can cultivate more meaningful relationships with their targeted audiences.”

He adds that ZPD bridges the gap between awareness and loyalty. Built on trust and transparency, personalised recommendations and exclusive offers will accelerate conversion rates, reinforcing earlier-than-usual brand affinity.

Affinidi is working on a holistic identity framework that utilises ZPD data and gives individuals more autonomy over their data. Such platforms allow individuals to collect, store, and manage their information, choosing what they are willing to share and with whom in exchange for personalised values, offerings, or perks.

“In the post-purchase journey, brands can use zero-party data to maintain relevance, develop loyalty, and foster advocacy. This will lead to satisfied consumers sharing their positive experiences and becoming brand advocates,” explains Gore.

ZPD value

Ben Tuff, chief product officer at UM, suggests measuring open rates, engagement rates, or the conversion to a sale through a direct-to-consumer platform will support ZPD value.

However, he cautions not every consumer will respond to every engagement with a purchase.

“The communication can, however, manage weekly frequency (or whatever period is deemed suitable) with an interested consumer base. This is critical in a category where consumers may have choices from several vendors,” Tuff explains to Campaign.

Agreeing with Tuff, Liz Adeniji, area vice president for Asia Pacific and Japan at Twilio Segment, shares the example of how, in Singapore, the Health Promotion Board incentivises consumers to share their health and fitness data collected through the Healthy 365 application by offering discount coupons from participating merchants upon completing health challenges.

“Our survey shows that trust is a far more powerful incentive. Nearly three-quarters of consumers who are otherwise unwilling to share their personal information said they would be more inclined to do so if they trusted a brand,” explains Adeniji.

“Almost six in 10 consumers (57%) are more willing to share their data when brands maintain honest and transparent policies. This shows how trust underscores all interactions between a brand and its consumers. It can be the most compelling deciding factor in determining whether—and how much—a consumer is willing to disclose to a business.”

For brands in the FMCG space, Suzanna Chaplin, CEO of ESBconnect, says a tried-and-trusted approach is not just to give away free samples inserted into delivery boxes of another partner or on the street corner, as they will not collect any usable data.

“Use them as a sign-up incentive, an easy way to gather postal addresses and understand where your consumer lives, and a way to collect emails,” explains Chaplin.

“You can ask questions like where people usually buy from or if they have bought these products. The likely conversion from click to lead is 20-40%.”

Can ZPD restore consumers’ trust in brands?

According to the Twilio study, 92% of marketers in the region believe that phasing out third-party cookies can help strengthen consumers' trust in advertising in the long run.

Brands must acknowledge and adapt to the fact that people live in an age dictated by the privacy-conscious consumer.  

Growing data privacy concerns have made consumers particularly sceptical about how their information is being disclosed and used, and they will favour brands that can demonstrate good data protection and governance.

Ultimately, Adeniji says brands need to empower customers to feel more in control of their information. If consumers are assured that they are determining the terms of engagement, they are more likely to interact with the brand.

“This is where zero-party data comes into play and can be a game-changer in building brand trust. By relying on data sourced directly from customer interactions and voluntary sharing, brands demonstrate transparency and respect consumer privacy,” explains Adeniji.

“This is in addition to the efficacy and depth of insights provided by zero-party data—which outweigh that of third-party data. Zero-party data enables brands to gain a clear and precise vision of how their customers engage with their brands, including their needs, preferences, and pain points.”

Adeniji continues: “Brands can turn insight into action by leveraging this data to personalise—and even individualise—customer experiences based on each consumer’s expectations.”

This, in turn, feeds into a customer engagement flywheel where brands use first-party customer data to tailor and deliver excellent customer experiences, which builds customer trust and incentivises them to continue engaging with the brand.

It creates a long-term connection, with both parties continuing to deepen their relationship with each new interaction.

Eleanor O’Dwyer-Duggan, head of customer experience and research solution strategy at Qualtrics for Southeast Asia and India, explains when using customer insights to drive effective engagements, the key is the same regardless of whether it is based on zero-, first-, or third-party data – Brands have to demonstrate they are listening to the feedback being shared and ensure you take meaningful and precise action on it.

O’Dwyer-Duggan suggests that brands must make customers feel heard. Listening to and acting on their feedback is one of the most influential and sustainable ways to drive higher engagement rates and capture further insights.

In contrast, failing to take action will erode trust and negatively impact customers' willingness to share their direct feedback.

“Using modern customer experience technologies powered by AI, brands can now understand the emotion, intent, and effort behind every engagement, from resolving billing issues to sharing positive feedback on an in-store or online engagement,” explains O’Dwyer-Duggan.

“This level of deeper insight is helping organisations understand and respond to their customers' needs like never before. The potential to improve experiences through these technologies and broader regulatory change is enormous.”

Challenges when integrating ZPD

There are a couple of common challenges in transitioning from third- to zero-party data.

Firstly, businesses may still need to reinforce privacy and security measures in data collection. Since zero-party data relies on direct input from consumers, companies looking to make that shift need to think about gaining customers’ trust enough to share their data willingly.

For many businesses and brands, this process starts with looking inward and thinking about how they can reevaluate their systems to incorporate consumer privacy and establish elements of data governance across their talent, methods, and technologies.

Brands may need help navigating security considerations such as hyper-selective data collection, comprehensive encryption, user-permission controls, and data masking while keeping abreast of developments in data privacy regulations. This may seem daunting, hindering brands from taking the first step.

After brands establish processes that allow them to collect zero-party data, another challenge remains – ensuring that that data is clean and usable. Where third-party data often comes from various sources and may be filtered for specific purposes, zero-party data may vary widely in quality, accuracy, and integrity.

“Ensuring the reliability and quality of zero-party data can be complex and time-consuming. It requires a brand to streamline its data collection processes, maintain an internal data ‘storehouse’ that can adequately keep that data clean, and ensure that all employees across the business use the same central, single source of truth,” explains Adeniji.

“Companies can tap on tools such as customer data platforms to help them achieve all of those goals while at the same time turning all of that data into actionable insight that allows them to drive business outcomes, such as tailoring their marketing strategies and customer engagement activities for better customer acquisition and retention.”

However, O’Dwyer-Duggan notes that customer feedback habits are evolving. Fewer people share feedback directly with a company compared to two years ago, and consumers are almost split on whether they prefer to engage with brands via human interaction (54%) or self-serve (46%), according to research by Qualtrics.

“Organisations need a complete view of their customer experience. Doing this well requires technology that enables them to listen to all feedback shared with them on a single platform, including direct feedback through surveys and feedback from other sources, such as call centre transcripts and online reviews,” explains O’Dwyer-Duggan.

Anders Lithner, CEO of Brand Metrics, compares making accurate and trusted predictions to self-driving cars.

“While the predictions in ad tech may be perfect, genuinely understanding them is as complicated as understanding why a self-driving car brakes or turns left - it becomes more of a trust issue than a rational evaluation,” he explains.

Achieving ROI from ZPD

When implementing ZPD strategies, brands should focus on the inherent and long-term benefits and returns.

Harnessing  ZPD allows businesses to elevate customer experience and build more profound and long-term relationships, investing in improved customer acquisition and retention in the long run.

Strategically using ZPD allows them to strengthen their customer relationships through more personalised, meaningful interactions and higher customer involvement across different touchpoints.

“It is also an investment in having access to more outstanding-quality data, which pays dividends across multiple business functions, not just marketing,” explains Adeniji.

“Since zero-party data distinguishes qualitative and quantitative information, it can offer more nuanced insights into how customers feel about your brand and products and the different trends and topics they are interested in. This specialised data can benefit everything from sales to strategy to decision-making at a C-suite level.”

O’Dwyer-Duggan points out it is the same with any return-on-investment conversation—make sure it is linked to tangible business outcomes, with a clear view of the payback period, and presented in a way executive leaders can easily understand.

She explains that brands can accelerate ROI by reducing their reliance on incentivising participation—another area where listening and responding to feedback at the moment is vital.

“When customers see their feedback being acted on, it shows they are heard and valued by the brand,” says O’Dwyer-Duggan.

“This culture of action is the most impactful, sustainable, and efficient incentive for participation because it encourages and rewards customers who share feedback.”

In addition, Tuff notes measurement is critical in marketing but continues to be poorly delivered.

“Whilst there are obvious solutions that will show the long-term and short-term impacts, such as econometric modelling, more straightforward solutions such as click-to-open, use of a voucher or discount (for an immediate response), and longer-term changes in sales uplifts for your test ZPD group versus your control group are straightforward applications,” says Tuff.

How ZPD will evolve

With regulations developing globally, we will see a similar evolution in the role, impact, and importance of ZPD.

As privacy regulations evolve, businesses will be under increasing pressure to keep up with these changes and adhere to them.

David Nelson, co-founder and CEO at Limelight, notes that increased privacy regulations and the loss of third-party cookies have broken the connection between advertisers and consumers.

“ID-based solutions backed will likely run into the same issues as cookies. There is no single solution to precision targeting across domains. We will work with partners that offer privacy-first solutions that are sustainable, scaleable and ethical,” explains Nelson.

“We intend to focus on helping our clients curate their supply channels, adding valuable context to the demand side.”

In the Twilio study, companies in Singapore cited navigating the complexity of regulations as one of the most pressing challenges they will face in 2024, along with balancing security, customer experience, and data protection.

Adeniji predicts more businesses looking to unify zero- and first-party data through tools like customer data platforms (CDPs), many of which already integrate data privacy safeguards. For instance, some platforms have consent management tools that can also be instrumental in ensuring that organisations adhere to people’s preferences regarding their data.

In addition to these guardrails, Adeniji says CDPs can provide added benefits by empowering brands with a unified view of all their customers across multiple data touchpoints.

This, in turn, allows them to individualise their customer experience further and drive deeper, hyper-personalised connections.

“We will also see brands re-architecting their data-collecting processes to tap into more diverse methods of collecting zero-data, such as through online forms, surveys, and contests—alongside implementing best practices such as regular audits and risk assessments to maintain consumer trust and data privacy,” explains Adeniji.

“By integrating these processes, organisations can collect high-quality zero-party data while maintaining data quality and integrity and minimising the likelihood of security incidents that could risk customer privacy. Such comprehensive data collection allows brands to capture more nuanced, specific information across more consumer touchpoints while also ensuring data privacy and security are preserved.”

In an increasingly AI-driven world, the role of ZPD is fundamental as AI models and programs can only be as good as the data they are built and trained on, which requires high-quality, credible, and actionable data.

When AI models are fully enabled with the correct data, they are more likely to be optimised for the task at hand because they have a deeper understanding of what is happening, why it is happening, and what needs to be done to solve it. This will cultivate consumer trust, spending, and bottom-line growth.

“Organisations must also be able to listen to and respond to every piece of feedback they share, which requires them to combine structured and unstructured feedback. This approach will enable more profound insights that will be game-changers,” explains O’Dwyer-Duggan.

“Organisations will be able to understand and respond to their customers’ needs and expectations like never before, helping them overcome privacy concerns, personalise engagements, and identify unmet needs and points of friction,” she adds.

Ultimately, Tuff says ZPD is the most satisfactory solution to data privacy as it has strong legs if a fair transaction between parties and ZPD is used from a genuinely personalised perspective. 

However, he warns it falls over if consumers see their transaction turning into more generic programmatic advertising, either by using vast legalities in terms and conditions that hide a brand’s desire to subject consumers who have supplied data or by just appearing to have abused the transaction.

“On the flip side, ZPD does offer a much tighter brand-consumer relationship in a space that a consumer may be interested in,” explains Tuff.

“Brands will need to remember it is okay for consumers to unsubscribe (and understand why: loss of interest, change in life stage, poor quality engagement, etc.) and then deliver on that (by not delivering messaging). This is where ZPD comes into its own.”

Source:
Campaign Asia

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