How to collect First-Party Data to Own Your Customers in 2023

How to collect First-Party Data to Own Your Customers in 2023

Customer data ·

To achieve success in business, the starting point is knowing your customers. Without a thorough understanding of your customer base, developing the right product, acquiring customers, and building strong relationships becomes challenging. All these activities require a customer centric approach and therefore detailed customer data to succeed.

Gathering a comprehensive understanding of your customers is also the first step to offer them a valuable superior customer experience that for consumer goods companies is particularly important to increase retention rates and keep a strong communication with customers. 

Once upon a time, companies could rely on third-party data to gather valuable insights about their customers. This data was gathered through various methods such as cookies, tracking pixels, and other online tracking tools. However, the cookieless era has arrived, and this has brought about a significant shift in the way companies gather customer data.

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With increasing concerns over online privacy and data protection, many web browsers are now blocking third-party cookies by default. This makes it much harder for companies to collect data about their customers through traditional means. As a result, companies are being forced to rethink their data collection strategies and explore alternative methods for gathering customer insights. 

What is first-party data?

First-party data refers to information that a business collects directly from its customers, such as their behavior on the company's website or app, purchase history, and demographic and information.

First-party data is highly valuable as it offers critical insights into a company's customer base, enabling businesses to customize their products, services, and marketing strategies to meet their customers' needs more effectively. According to a survey, 91% of top marketers believe that using first-party data to continually understand customer preferences is a key factor for driving growth.

Additionally, owning first-party data enables businesses to control and protect their customer data, rather than relying on third-party data sources that may not be as reliable or secure.

This blog post will explain why and how to gather relevant customer data to increase the effectiveness of your customer-centric initiatives, improve your customer experience  and marketing strategy to ultimately boost your revenue. 

Why is it important to understand your customers? 

Gaining relevant information about customers is crucial for any company to enhance product relevance and customer experience. Here are 5 main benefits of getting to know customers better.

1. Personalization of the experience

Understanding your customers is essential to deliver a superior customer experience. 91% of consumers are more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations. To offer this level of personalization in the after sales period, gathering information about your customers is crucial. By collecting data on your customers, you can design a user journey that is engaging and fosters retention, ultimately leading to future repeat purchases.

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2. Increase effectiveness of marketing and sales initiatives

Gaining a deeper understanding of the target audience is crucial in designing effective marketing initiatives. This is where collecting data on demographics, preferences, and behavior comes into play. The insights derived from such data form the foundation of the marketing decisions made. More accurate and diverse data enables marketers to create targeted and effective campaigns, maximizing the impact of their marketing efforts.

Thanks to first-party data collection you can segment your audience into smaller groups based on common characteristics such as demographics, behavior, or interests. This segmentation enables you to be more precise with targeted advertising, resulting in a higher return on investment for your ad spend.

Understanding customers also allows for more relevant product recommendations, which can further increase sales by providing customers with product suggestions that align with their preferences and behaviors. By using data to understand the target audience's interests and habits, marketers can make personalized recommendations that will be more likely to resonate with them and lead to conversions. This not only enhances the customer experience but also drives revenue for the business.

3. Increase retention rates and ultimately repeat purchases 

Understanding your customers better helps you tailor your products or services to meet their needs and preferences. When you know your customers well, you can identify their pain points, anticipate their needs, and provide solutions that make their lives easier and more enjoyable.

Customers value customer experience always more and therefore are willing to pay more for products with excellent experience. Research confirms that 86% of buyers are willing to pay more for a great customer experience.

By providing a personalized experience, you can build a strong relationship with your customers, which can lead to brand loyalty and repeat purchases. Customers are more likely to return to a business that they feel understands and cares about them. In contrast, if customers feel neglected or misunderstood, they are more likely to look for alternatives and switch to a competitor.

4. Word of mouth and better reputation

When a business takes the time to understand its customers and their needs, it can create targeted marketing strategies and personalized experiences that are more likely to resonate with them. This can lead to positive word-of-mouth marketing as customers share their positive experiences with friends and family, leading to better reputation. 

5. Better product development 

When you have a deep understanding of your customers, you can identify their needs and pain points. This information can be used to develop products that meet their specific needs and address their problems, resulting in more relevant and useful products.

Understanding your customers can also help you prioritize which features to focus on when developing new products or improving existing ones. This allows you to focus on features that will be most beneficial to your customers, rather than guessing at what they may want. Finally, When you know what your customers want and need, you can develop products that are more likely to be successful, reducing the risk of developing products that don't meet customer needs.

How to understand your customers: first party data vs. third party data

In today's business world, it's essential to understand your customers if you want to succeed. Customer data is a valuable tool that can help you improve your marketing strategies, product development, and customer experience. Previously, many brands have relied on third-party data to gather demographic information, geographic data, or buying signals about their customers.

However, this approach has proven to be inadequate in providing brands with a powerful understanding of their audience. Currently, 52% of marketers are prioritizing the collection of more first-party data from digital experiences due to regulations.

According to a recent report provided by Merkle, around 1 out of 5 marketers use third-party data that drive customer experience efforts. In contrast to third-party data, which can be unreliable and incomplete, brands are increasingly recognizing the value of first-party data in gaining a deeper understanding of their customers. 

Collecting first-party data is the best way to understand your customer

With first-party data, you can gain insights into customer behavior, such as what they buy, how often they make purchases, and what they search for on your website. You can also learn about their interests and preferences, such as the type of content they engage with, the products they like, and their preferred channels of communication.

By utilizing first-party data, brands can obtain a more complete and nuanced understanding of their customers, enabling them to provide tailored experiences that are in line with their customers' preferences while adhering to data privacy regulations, specifically to GDPR. The collection and analysis of first-party data allow brands to create deeper connections with their customers, resulting in increased customer loyalty and lifetime value. Ultimately, the use of first-party data provides brands with a competitive edge, enabling them to stand out in an increasingly crowded marketplace.

What types of first-party data do you need to understand your customers?

There are various types of first-party data that consumer goods companies can collect to better understand their customers, including:

Demographic data

This includes information such as age, gender, income, education, and occupation. Collecting demographic data can help companies understand who their target audience is and create more tailored marketing campaigns. For example, a company that sells luxury skincare products might target their ads towards women aged 35 and above with a higher income level.

Behavioral data

This refers to data that tracks how customers interact with a company's products or services, such as purchase history, product usage, and website browsing behavior. Collecting behavioral data can help companies identify patterns and trends in customer behavior, allowing them to make more informed decisions about product development, inventory management, and marketing campaigns. For example, a company that sells pet food might notice that customers who purchase dog food also tend to purchase dog toys and accessories, prompting them to offer bundled deals or promotions.

Psychographic data

This type of data includes information about customers' personality, values, interests, and attitudes. Collecting psychographic data can help companies understand what motivates their customers and create more personalized marketing campaigns. For example, a company that sells outdoor gear might target customers who are interested in hiking and camping with ads that highlight their products' durability and functionality.

Geographic data

This refers to data that captures where customers live, work, or travel. Collecting geographic data can help companies identify regional trends and preferences, allowing them to tailor their marketing and product offerings accordingly. For example, a company that sells winter sports equipment might prioritize advertising and promotions in regions with a high percentage of snowfall.

By collecting and analyzing these types of first-party data, consumer goods companies can create better customer experiences and unlock revenue potential.

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5 Effective ways to collect first party data

Collecting first-party data can help businesses gain valuable insights into their customers, but it is important to do so in a way that respects privacy and builds trust. Here are some effective ways to collect first-party data:

1. Website and app tracking

Implementing tracking tools such as cookies on your website or app can allow you to capture customer behavior and preferences as they interact with your digital properties. This can include information such as browsing history, search queries, and purchase behavior. However, it's important to ensure that you are transparent about your tracking practices and obtain user consent where required, to comply with the current GDPR regulations.

2. Incentive systems

One effective way to encourage customers to share their information with you is to offer them incentives that are relevant to their interests and needs. For example, if you are a bike brand, you could offer a discount on their next purchase in exchange for their email address or other personal information. Alternatively, you could offer exclusive content such as early access to new product launches or behind-the-scenes footage of your brand.

Reward systems can include tiered reward systems where customers earn points for each purchase or action taken on your website, and those points can then be redeemed for discounts, free products, or other perks. By providing tangible benefits that align with your customers' preferences and interests, you can increase the likelihood of them willingly sharing their information with you.

3. Onboarding process

During the onboarding process companies can collect data about customers. The after sales period is the perfect time to understand customers because they are excited about the new product and are willing to disclose more data to learn how to use the product in the most effective way. By collecting data during the onboarding process you can personalize their journey and make their overall experience more relevant.

While 43% of U.S. consumers said they would not give companies permission to collect their personal data (such as location, age, lifestyle, preferences and purchase history) to allow for more personalized, customized experiences, 63% said they’d be more open to sharing their data for a product or service they say they truly valued. 

Layerise is a tool that allows businesses to gather first-party data starting from the onboarding process and throughout the entire customer journey. This can include information such as user preferences, behaviors, and feedback, which can be used to inform product development and marketing strategies. 

4. Surveys and feedback

Asking customers directly about their experiences, preferences, and needs through surveys and feedback can provide valuable insights into customer behavior. This can help businesses tailor their products and services to better meet the needs of their customers.

Surveys can be conducted in a variety of ways, including online surveys, email surveys, or in-person surveys. The questions should be carefully crafted to ensure that they are easy to understand and that they elicit honest and meaningful responses. In addition to collecting quantitative data, open-ended questions can be used to gather qualitative insights into customer behavior.

Feedback is also a valuable tool for businesses to collect customer opinions and experiences. This can be done through customer reviews, social media comments, or direct communication with customer service representatives. Feedback can be used to identify areas of improvement, as well as to recognize what the business is doing well. Layerise can help you collect relevant customer feedback and other customer satisfaction related data through product assistants.

5. Social media listening

Monitoring social media conversations about your brand can provide insights into how customers perceive your products and services. This can help businesses identify areas for improvement and develop more effective marketing strategies. Social media listening can also help businesses identify emerging trends in their industry, which can be used to stay ahead of the competition.

A successful case study for first-party data collection: Heineken

As an FMCG (Fast-Moving Consumer Goods) brand, Heineken Brazil faced the challenge of having limited or no direct relationship with their consumers, which made it difficult to obtain insights directly from them. However, they recognized the importance of a first-party data strategy, especially with the challenges of a cookie-less future. To accelerate their path to success and unlock unique consumer insights, Heineken Brazil transformed their first-party data strategy.

The project was split into three phases: Empower, Build, and Achieve, with a strong strategy and roadmap put in place to track and measure success throughout. By building out their data strategy and reaching different levels of maturity, Heineken Brazil was able to grow quality first-party data and activate it for insights and more connected consumer journeys.

Through the smart application of technology, Heineken Brazil managed to reach millions of consumers and embedded a data DNA into their business. This allowed them to better understand their customers and improve their direct relationship with them, leading to a more personalized and relevant customer experience.

Layerise is the perfect solution for you to collect valuable first-party data

Layerise is the perfect solution for collecting valuable first-party data because it provides a powerful platform for engaging with customers and collecting data in a way that is both effective and compliant with GDPR regulations.

Layerise provides businesses with the ability to collect and centralize their data in one CDP, making it easier to build comprehensive customer profiles and gain insights into the value of individual customers. By leveraging this data, businesses can optimize their marketing campaigns and personalize their customer interactions to build stronger relationships with their customers.

In addition, Layerise's platform is designed with GDPR compliance in mind, ensuring that all customer data is collected, stored, and used in accordance with regulations. This means that businesses can collect first-party data without risking the privacy and security of their customers.

Overall, Layerise provides a comprehensive solution for businesses looking to collect valuable first-party data in a way that is effective, compliant, and customer-centric. Learn more about how Layerise can help your business, book a demo today!

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