First-party data strategy

What is a first-party data strategy?

A first-party data strategy details an organization’s plan to collect data directly from customers across the many online and offline channels they use and activate that data to improve the customer experience. 

Marketing teams and organizational leaders should review and refine the strategy regularly to reflect new customer channels or marketing technologies and address evolving privacy regulations. 

What is first-party data?

First-party data is any prospect or customer information an organization collects directly from that individual. Organizations completely own and control first-party data, and it is often highly reliable for creating personalized outreach.

Examples of first-party data

First-party data is any information about a customer, their interests, their preferred engagement channels, and their purchasing behaviors. First-party data includes basic contact details to valuable insights about the challenges they need a solution to help them overcome. 

Examples of first-party data and how companies use it include the following:

• A retailer collects first-party data whenever a customer makes a purchase. The retailer can use a customer’s product preferences and previous purchases to suggest complementary products through email marketing and social media advertisements. 

• A theme park can use first-party data to identify customers who typically purchase multiple tickets each year and then promote season pass tickets or offer them access to exclusive park events or experiences.

• A sports team can use first-party data to promote ticket bundles, like offering customers a ticket and free food item or discounted merchandise if their purchase history suggests they frequently buy food when they attend games.

• An internet provider can use customer sales calls to gain first-party data and segment customers based on their internet needs. For example, the provider could identify which prospects require high bandwidth for gaming and send targeted email and text messages that spotlight those capabilities. 

• A B2B software company can host a webinar about how artificial intelligence can improve accounts payable processes. People who attend the webinar can then receive more content about using AI for finance needs. 

First-party data vs. second-party data vs. third-party data

There are several customer data types, each offering unique advantages or disadvantages:

• Zero-party data is provided directly by a customer through a survey, on social media, or during a customer support interaction. Zero-party data is highly reliable and often viewed as first-party data.

• First-party data is collected by the organization directly from an individual, making it the most trustworthy data with full organizational control.

• Second-party data is acquired from an organization that has a direct relationship with the prospect or customer. Second-party data is typically trustworthy, however organizations have little control over this data and it may have quality issues.

• Third-party data is purchased from a source that has no relationship with the individuals. Third-party data typically presents significant quality and compliance concerns. 

What does a first-party data strategy include?

Organizations typically rely on tools like customer journey maps to understand the many ways that customers engage the organization during their buying process. A comprehensive first-party data strategy will maximize the organization’s potential to capture valuable insights and apply those to shape the customer experience.

A first-party data strategy should address the following elements:

• User consent - Ways to gain approval from customers to collect and use their data.

• Data collection - How the organization will capture data across customer touchpoints and channels.

• Data storage - Where the customer data will live (typically a data warehouse) and steps to clean and standardize the data as it moves from its source to the storage location.

• Data activation - How the organization applies the data to create audiences, craft marketing campaigns, and deliver personalized experiences at scale.

• Data security - How the organization will protect customer data from breaches.

• Auditing - Ongoing review and maintenance to identify new first-party data opportunities  

Why do organizations need a first-party data strategy?

Organizations across industries develop a first-party data strategy to optimize their customer data management and customer data activation. This maximizes their ability to attract new buyers, increase the lifetime value of existing customers, and develop more accurate business forecasts. 

Customers expect highly personalized shopping experiences, and will even spend more money with brands that fulfill this expectation. First-party data is essential for quickly learning about customers and delivering relevant messages that inspire them to take action, whether that’s to make another purchase, leave a review, or simply engage with the organization’s content. 

The shift away from third-party cookies

Adding to the urgency for a first-party data strategy is the continued decline of third-party cookie access. 

For decades, organizations have relied on third-party cookies to track users across the web. However, privacy regulations including the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have limited how businesses collect and use customer data. 

Although Google announced it is no longer ending third-party cookies altogether, users will have the ability to block them, and industry experts expect at least 60% of users to opt out. 

What a first-party data strategy allows organizations to do

A first-party data strategy empowers marketers to improve the customer experience and effectively target individuals with relevant messages. The strategy helps an organization:

• Identify which channels customers use to engage with the organization

• Create mechanisms to track and capture customer insights

• Integrate data into a single view for each customer (known as customer 360)

• Apply customer data across all tools to support business processes

• Optimize data sharing across teams

• Reduce the dependence on unreliable data sources

• Build customer trust by protecting their data and giving them privacy controls 

Who is involved with first-party data strategies?

Multiple business stakeholders should be involved when developing an organization’s first-party data strategy, including representatives from all customer-facing teams who rely on this data.

A few key roles and responsibilities for the first-party data strategy include:

• Chief data officer or members of the data team, who will help with data modeling and ensure data integrity and security is preserved as it moves across systems. 

• Chief technology officer and engineers, who can integrate the many organizational tools that leverage customer data and advise on tech requirements. This could include customer data platform (CDP) product managers or admins, which larger organizations may have.

• Chief marketing officer and marketing leaders, who will often guide the organization in developing the first-party data strategy and oversee its day-to-day execution.

• Chief sales officer and sales leaders, who will inform the strategy and advocate for the sales team when considering how to build the data strategy. 

• Customer experience director or CX leaders, who can use customer journey maps to identify ways to best collect and leverage data throughout their journey. 

• Legal counsel or compliance officers, who can advise on customer privacy regulations and ensure safeguards are in place to ensure the legal access and use of customer data.

How to create a first-party data strategy

A first-party data strategy should evolve as the organization grows and customer needs change, empowering any organizational team to activate data in valuable ways.

The following best practices will help create or refine a first-party data strategy. 

Align team and organizational goals

By having a clear understanding of the business goals and a benchmark for the organization’s current performance, teams can identify new goals — such as increase customer retention or lifetime value — and then identify how first-party data can help accomplish those goals. 

Identify the customer data sources

Using customer journey maps as a guide, organizations should identify the many channels customers use to engage with the organization. Within each channel, identify what customer data the organization can collect and whether that data is helpful for tailoring the customer experience. From there, teams will also need to determine how those data sources can be collected, stored, and centralized in a data warehouse. 

Review and refine the martech stack

Once an organization understands its customer journeys and the associated data at each step of those journeys, it’s important to review the martech stack. This helps the organization understand how customer data is stored and activated across marketing, sales, and business intelligence tools. 

Enforce data quality and compliance

Create guidelines around how customer data is collected, formatted, stored, and updated. Confirm with the security and data teams that the implementation is compliant with all security and privacy regulations. It’s also critical to audit for potential vulnerabilities.

Begin collecting and activating data

With the foundation set, the organization can begin collecting data or performing data ingestion, in which customer data is moved into a data warehouse. It is then activated to execute campaigns across channels and tools.

Refine over time

Continually revisit the first-party data strategy to ensure it best positions the organization to make full use of its data collection and activation opportunities. 

Technology needed for a first-party data strategy

Several solutions exist to support first-party data collection and activation, and they can greatly accelerate an organization’s success with leveraging first-party data. 

The optimal stack enables teams to collect audience insights and deliver personalized content across channels, including email marketing, social media, push notifications, advertising, and more. 

Consider the following technologies to support a successful first-party data strategy:

• Cloud data warehouse - A cloud data warehouse is essential for collecting and storing customer data in a single location for all systems to access. A cloud data warehouse or alternate data storage solution (such as a data lake) is integral to a first-party data strategy. 

• Consent management platform - Consent management platforms help organizations gain and manage user consent to ensure data privacy law compliance. 

• Customer data platform (CDP) or composable CDP - A customer data platform is a type of first-party data platform that helps centralize data sources to create a single customer view and activate campaigns based on that data. Composable CDPs are especially powerful because they sit on top of unified customer data in a data warehouse and create intelligent customer segments that teams can quickly activate across marketing tools, without needing to transfer or copy data.

• Customer relationship management (CRM) - A CRM helps sales reps and marketers manage their interactions with prospects and customers. CRMs act like a dynamic address book that keeps track of customer communications. Ideally, teams use a composable CDP to activate data from the data warehouse to the CRM.  

• Data modeling - Data modeling tools transform data after ingestion so it can be used by a composable CDP or other data platform.

• Event collection - Event collection solutions like MetaRouter enable real-time data collection and route that data to the data warehouse. 

While these tools can set an organization up for success with its first-party data, it’s critical to avoid these common pitfalls of activating first-party data.