What is zero-party data? Definition, benefits and examples

Widespread public concern over online data privacy has made businesses rethink their data handling practices.

With traditional data collection methods like third-party cookies losing favor as new privacy laws – spearheaded by GDPR – come into play, consumers are gaining more control over their data. The brands that don’t meet their privacy expectations are in many cases losing their customers for good.

Enter zero-party data, a new approach that bypasses strict regulations and addresses public concern – allowing businesses to continue to personalize their marketing while respecting user privacy. But how, exactly?

Here we explore how to define zero-party data, how it compares to other types of customer data, and ultimately why your business needs a zero-party data strategy.

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What is zero-party data?

Zero-party data is a term first popularized by Forrester and defined as “data that a customer intentionally and proactively shares with a brand”.

To make sense of zero-party data, it’s helpful to understand how it’s different from the other main types of customer data.

The main types of customer data

These categories help set the stage for why zero-party data is a game-changer in customer data collection and usage.

First-party data

First-party data is unsolicited customer data that companies collect directly from their users through their websites and apps. This often includes behavioral data like what pages were visited, items purchased and time spent browsing.

Users are generally aware that this data is being collected due to cookie notifications and privacy policies, and it’s used mainly for personalization and improving services.

Second-party data

Second-party data is essentially first-party data that a company collects and then sells or shares with another business.

The benefit here is that businesses can expand their understanding of customer behavior by using data from a trusted partner. However, the downside is that customers often aren’t aware that their data is being shared and haven’t given explicit consent for this.

Third-party data

Third-party data is collected by companies who aren’t directly interacting with users but aggregating information from various sources. This data is then sold to other companies and includes broader categories, such as demographics.

It’s often collected without the user’s direct consent, and because it’s aggregated from multiple sources, it’s often not the most accurate.

Zero-party data

The new kid on the block: zero-party data, also known as solicited data.

Zero-party data differs from the other types of data we’ve mentioned because, by definition, the customer or individual has knowingly given the data to the company that will use it. The customer gives the data actively, ‘above and beyond’ the passive first-party data sources like browsing and purchasing behavior. But why is that? What makes zero-party data so special?

The customer intentionally gives zero-party data to the company because its use will benefit them in some way, such as to make recommendations based on their product preferences, to deliver personalized content or to adhere to communication preferences. It’s a kind of quid pro quo or value exchange arrangement.

How zero-party data can benefit your business

Labeled ‘the new oil’ by Forbes because of its huge potential for new kinds of personalization, zero-party data refers to information that consumers voluntarily provide. As well as being better for consumer privacy, voluntarily supplied information promises several benefits over other data types – particularly third-party data.

It’s more trustworthy

When a customer provides personal data willingly to a business, they are more likely to tell the truth about themselves, their preferences and behaviors. That’s because when you know how your data is used, there’s less temptation to falsify it to gain access to a service.

By moving towards zero-party data, you’re meeting customers’ expectations of privacy and increasing their trust in your brand.

It’s explicit, not implied

With zero-party data, you know an individual’s preferences because they have told you about them. Other types of data, like first- and second-party, infer consumer intentions, preference and attitudes from their behaviors. But these inferences are not very accurate.

For example, you can assume that someone is interested in soccer because third-party data shows they have visited several sports websites, and make predictions about their purchase intentions based on that assumption. In reality, however, that person might have no interest in soccer, but they lent their device to a soccer-mad family member or shopped for a gift for someone who is.

It’s more accurate

Simply put, customer data that has come directly from the person who owns it has less chance of being inaccurate. It hasn’t passed through multiple systems, been aggregated or reproduced, so it’s less likely to be out of date when it reaches you.

It leads to better personalization

When businesses and their customers are on the same page about how personal data will be used, there’s a greater chance that the results will be high in quality and value. It becomes significantly easier to tailor experiences (especially if you have a customer data platform to leverage insights) and create unique pathways for visitors and customers.

Using zero-party data to personalize experiences and content differs from using the large volumes available with, for example, third-party data. With zero-party data, there’s less of it, but it’s higher in quality and more complete. The fidelity of the data to an identifiable person is much stronger and therefore more effective.

Why has zero-party data become so significant?

One of the main reasons why zero-party data is such a hot topic is because tech leaders are moving away from surreptitiously tracking customer behaviors.

Apple has tightened up its anti-tracking stance, adding stronger data protection features on its software, and Google has announced plans to eradicate third-party cookies from its Chrome browser, a change timetabled for 2023.

Where Google and Apple go, the rest of the internet tends to follow. And with some experts ringing the death knell for third-party cookies, businesses are understandably looking for ways to future-proof their personalized campaigns and content and make sure they provide a positive experience for website visitors and app users. To many, zero-party data looks like the best way forward.

Since the stringent new regulations don’t apply to zero-party data, it’s seen as a promising alternative for online marketers and businesses that still want to use consumer data to shape decisions around their marketing strategy.

How to collect zero-party data

Zero-party data collection can cover a wide range of sources. But regardless of the method used to collect data, the most important factor is that it feels natural and not forced. You want people to feel like they’re gaining something by giving you their information.

Businesses that don’t pay attention to the experience of capturing zero-party data are at risk of overwhelming their users with too many information requests – and opening themselves up to the risk of not collecting it at all. So, make sure you collect zero-party data in a personal context, using engaging experiences that are not too onerous to complete and are clearly linked to user benefits. Remember, it’s a transaction where personal data is exchanged for a personalized benefit. Make it a win-win, and you’ll nail zero-party data collection.

Here are some of the most commonly used collection methods, alongside some practical tips to help you get there:

• Surveys: Don’t just drop a generic survey; make it relevant to the user’s current experience. If they just made a purchase, ask them about it
• Quizzes: People love quizzes that tell them something about themselves. At the end, ask for an email to send their personalized results, and bam – you’ve got zero-party data
• Forms: Go beyond the typical ‘name-email-submit’ format. Maybe add a few optional fields asking about their preferences, so you can personalize their experience right off the bat
• Interactive tools and funnels: Think mortgage calculators for a home loan website or a skin type assessment on a beauty site. Tools like these not only offer real-world value but can capture details about user preferences
• Ranking and rating buttons and sliders: Use these in your product listings or in post-interaction surveys to let users actively tell you what they think
• Social media platforms: Run interactive polls or Q&A sessions. These not only engage your audience but can provide you with zero-party data directly from user responses
• Transactional data: After a purchase, capture info like ‘how did you hear about us?’ or ‘would you like to be part of our loyalty program?’
• New customers’ registration details: Mix up the classic registration form template with a few additional, optional fields like ‘what are your interests?’ or ‘how often do you shop for X?’

In many cases, the way zero-party data is collected segues naturally with the interactive nature of online life: it may be enjoyable and interesting for customers to take a quiz, fill in a personal profile or take a survey about things they like. Done the right way, collecting zero-party data can help customers feel listened to, known and valued.

It therefore makes sense to integrate zero-party data collection methods in a way that’s seamless and natural. Compared with first-party, second-party, and third-party data, zero-party data is more likely to be provided in the form of written and even spoken language, because it comes directly from your customers – often in their own words. Being able to process natural language to learn from zero-party data is an avenue worth exploring, and there’s every chance it will become an essential part of doing business in the near future.

Ultimately, the easier the experience is, the more likely customers will be to engage with your listening tools.

How to use zero-party data

You’ve collected the data, so the big question is ‘what’s next?’ How you use any dataset will always depend on the nature and quality of the data itself, but that shouldn’t stop you from planning for a game-changing use case when you start collecting zero-party data.

Let’s dig into four high-impact areas where this goldmine can be truly transformative for any business.

Crafting tailor-made promotions and deals

When customers specify their shopping habits, like preferring winter sales over summer ones for example, you’ve got an ace up your sleeve. By then sending them timely offers and promotions based on this data, you not only increase your chances of conversions but also make your customers feel truly understood.

Remember, personalization is not just about addressing your customer by name but offering them what they want, when they want it.

Creating content that hits the mark

If many of your users express interest in, say, budgeting and saving tips, that can unlock vast volumes of content ideas that have a high chance of resonating – from articles to infographics and webinars.

Doing this not only positions your brand as a trusted advisor but also increases the chances of your content being shared widely, because meeting the information needs of your audience directly translates to higher engagement rates.

Elevating customer service

If you find that your customers want monthly newsletters instead of weekly, or prefer notifications via SMS rather than email, honor that.

Adhering to proven customer preferences such as these can help to ensure that your audience stays engaged with your brand without feeling overwhelmed or spammed. It’s often close attention to detail that elevates a customer’s experience, making them more likely to stick with your brand and recommend it to others.

Innovating your product line

When a group of your customers consistently asks for a product feature or change – say a water-resistant version or eco-friendly packaging – take note. Gaining zero-party data that informs product development is like having a focus group at your fingertips, guiding you on potential best-sellers.

Catering to these openly expressed needs not only boosts sales but also shows your audience that you’re an attentive and responsive brand, helping to enhance overall trust and loyalty.

Unlock the full potential of your digital customer experience

While zero-party data offers a compelling edge, true digital excellence requires a holistic approach. With Qualtrics’ digital customer experience software, you’re not just collecting insights – you’re crafting exceptional online journeys.

Our platform equips you to understand each user’s unique path, capturing real-time feedback to pinpoint where you excel and where you can improve. It’s about fostering genuine connections, tailoring content, and elevating every touchpoint across your digital realm.

Ready to transform passive browsers into loyal brand advocates? Dive into a world where actionable insights meet seamless customer journeys.