In the 21st century, data has become one of the most valuable assets for businesses across all industries, all around the world. The Cambridge Analytica scandal, for instance, revealed in early 2018, that from small to the biggest players firms and individuals are willing to pay millions of dollars to get access to data.
Why has data become so valuable and what can businesses do with it?
What is 1st, 2nd and 3rd party data?
Before diving into the world of benefits provided by data to businesses, we need to break down and understand the difference between first, second, and third-party data.
What is first-party data?
First-party data is information collected directly from customers (or ‘source’), which is why it is so valuable. Businesses usually obtain this data through CRM systems and platforms, subscriptions or registrations to events, as well as through newsletters, surveys, or social media profiles.
Differences between first, second and third-party data
What differentiates first from second and third-party data is the number of ‘steps taken between the ‘source’ and the end-user of that information.
For example, company X can acquire a data set from Company Z, and that would be considered to be second-party data.
Following the same logic, third-party data is information gathered by many different sources and then sold to businesses by a third party.
What’s the value of first-party data?
Because first-party data is collected directly from customers by a particular business, it is more likely to be accurate personal information. It likely includes details on their tastes, preferences, and behaviours.
Also, this data (as long as it meets the GDPR criteria) has the advantage of being collected easily, with the help of data management platforms. It’s often a low-cost process once user consent is obtained, offering a cost-effective option when compared with the purchase of second or third-party data.
How to use first-party data
So, how can businesses use first-party data and benefit from it? The answer, as usual in the field of marketing and advertising, is that it depends on the business strategy behind the data collection.
However, there is some agreement among marketers and advertisers regarding the possible uses and benefits of this information. Below you can find the three practical applications of first-party data for your business.
1. Understand the success of a campaign and consumer behaviour.
By gathering immensely detailed information about your consumers, you will be able to collect insights, better understand their preferences and adjust your marketing strategy and supply chain accordingly.
Also, understanding what customers prefer, where they click on your website, and how they buy your products and services, will allow you to better analyse and understand the performance of your marketing campaigns.
2. Given the personal nature of this information, first-party data may allow you to unveil or predict future trends related to the purchasing behaviour and preferences of your customers.
For example, let’s imagine that you sell candles. You offer black, dark grey, white, pink and green candles.
If, for instance, you realise that your customers are increasingly interested in the black and dark grey candles, you may start offering other dark options such as dark blue, or dark green candles to satisfy your customers and match their recent preferences.
3. Personalisation of offers, content, and messages is probably the most common use of first-party data by businesses.
For example, let’s say that you own a perfume shop and you are sending newsletters as part of your marketing strategy.
Using first-party data will allow you to personalise the content and message of your newsletters, depending on the preferences and previous purchases of those customers. You will be able to suggest specific perfume scents and new products aligned to those personal preferences.
So, now that you know how to use first-party data, what’s next? As specialists in developing strategies to improve B2B business marketing, we can help you gather data through digital-first campaigns, and use that information to boost your sales and awareness. Find out more about our connected packaging solutions and the campaigns we built for Tetra Pak and PepsiCo. Your brand can be taken to the next - let’s have a call!
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