Zero-Party Data: Personalization and Privacy Can Coexist

As companies build up their stockpile of zero-party data, it is essential for their marketers to explicitly inform customers how their information will be used, experts agree. Most companies will spell this out at sign-up, which is generally considered sufficient.

Xanthopoulos cautions, though, that the explanation needs to be kept simple, without any exclusions, like provisions for sharing the information with affiliated companies that are not clearly branded as part of the same organization.

WORK TO BE DONE

But for all the benefits it can provide, not everyone is sold on zero-party data.

“We avoid collecting zero-party data or first-party data at all costs,” says Alex Austin, CEO of Branch, a provider of cross-platform linking and attribution solutions. “In this day and age, any personal data you have about someone can be more of a liability than a benefit. There can be a lot of problems with the security of the data. No matter what you do, there can be holes. Someone in your company could be the victim of a phishing scam—then you could be liable. You don’t want to collect that information unless you want to take that risk.”

Austin also points out that his company has turned down business if it didn’t fit with his company’s privacy policy. “I’d rather turn down business than have the additional risk,” he says

Marketers need to fully scrutinize every piece of information collected about customers and then weigh the value of the data versus the risk. If data is not likely to contribute significantly, then it’s not worth the risk, Austin says.

Data security is certainly a concern to many other marketers as well, particularly amid the tightening regulatory environment following the roll-out of the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). These rules, along with others pending around the world, have heightened concern over personal data collection and usage.

Disney, Ulta Beauty, and other companies that have excelled with zero-party data have gone to great lengths not to sell the information outside of their companies and to keep the information secure. While additional customer information can help improve personalization, the conventional wisdom among marketers and security experts is to avoid collecting data that will not be used. Marketers certainly don’t need customers’ credit card information, for example.

“All customer information needs to be treated with respect and integrity,” Raj says.

And if marketers are going to ask consumers for information, they should not neglect it. “If you ask for information, it implies you’re going to act on data,” Heitzig says. “I’m often disappointed, for example, if I don’t get a king-size hotel room bed. Years ago, we wanted a convertible on a vacation, but we got to the rental counter and there were none available. So, we didn’t have a fun car for vacation.”

But the data usage issue can rear its ugly head in other unexpected ways. Heitzig recalls a problem that arose from the joint account he and his wife had with Amazon. Everything worked well until they saw each other’s gifts before Christmas Eve. Amazon has since rectified this with the “improve your recommendations” feature, but this is probably a good lesson for other companies.

As with other types of data, marketers also need to keep their zero-party data current, Heitzig adds. For example, people who were married the last time they provided information could now be divorced, so marketers need to ensure that information is up to date. Companies don’t necessarily have to update their information every 30 days, but it doesn’t hurt to periodically check in with customers to see if there is any information they want to change. Some websites offer that suggestion for returning customers when they log in to the site.

While there are some detractors like Austin, most marketers expect zero-party data to become table stakes, particularly as cookie tracking and other methods of obtaining customer data fall out of favor. Marketers also expect artificial intelligence and machine learning to increasingly be used with zero-party data to more finely personalize customer offers. But they will also need to keep a watchful eye on privacy law developments to see how those could affect the future use of zero-party data. 

Phillip Britt is a freelance writer based in the Chicago area. He can be reached at spenterprises@wowway.com.