One of the biggest changes caused by the coronavirus pandemic has been the surge in people heading online to work, shop, and connect with friends. For many businesses, keeping pace with this huge behavioural shift has been hard, and this recent article looks at how first-party data (information sourced from customers through CRM and other touchpoints), can help them keep up.
Yet despite so many new stress points to manage as a result of COVID-19, the opportunity now exists for brands to explore how first-party data can be a critical step to improving their overall digital marketing capabilities, adapting to this new world, and building firm foundations for the future.
Strengthening customer relationships
Unlocking the potential of first-party data depends on how well a company can integrate its data sources and link them to marketing activities, and that’s difficult to achieve. Much also depends on the level of access businesses have to customer data. For example, automotive or consumer product brands have limited consumer interactions, while others — travel and financial services especially — have frequent and direct access to their customers.
Before the spread of COVID-19, Boston Consulting Group (BCG) explored how companies are using first-party data to strengthen their customer relationships by giving them better and more relevant experiences. Their study reported that companies which link all of their first-party data sources outperform those with limited data integration in important metrics.
These companies see incremental revenue from a single ad placement, communication, or outreach is up to twice as high as companies with limited data integration, and they can perform 1.5 times better in cost efficiency metrics, too.
Yet while nine in ten marketers in BCG’s study said that first-party data was important to their digital marketing programmes, very few are actually using it to its full potential.
In fact, while less than 33% reported having the ability to collect and integrate data across multiple online and offline channels, only 1% are using data to deliver a fully cross-channel experience for their customers.
To help organisations make better use of their first-party data, the research reveals three critical success factors that can allow businesses to create value while still sustaining ongoing relationships with customers:
- Create a fair and transparent value exchange so you can start building your first-party data pool.
- Ensure strict adherence to local data regulations by understanding what the rules are, where consumer data sits within your organisation, and how you are using it as a company.
- Develop innovative data collection methods by creating new and genuinely useful interactions with your customers.
1. Creating a fair and transparent value exchange
As companies start engaging with new online users, one of the first challenges they face is building a long-term relationship and delivering value and relevance over time.
As the diagram below shows, for a fair and helpful exchange to occur the company must offer something useful or valuable to the customer. This could be information, assistance, premium content, an app, or a special offer — as long as it incentivises customers to share a bit more information about themselves.
Provided the business is transparent and responsible with how it uses that data, this creates an ongoing value exchange between company and consumer. The consumer gets something of value, and the company learns more about their audience — allowing them to deliver better experiences and more effective marketing through the use of the first-party data.
The ongoing cycle is based on trust. However, an unwanted surprise — such as a data breach or misuse — can undermine the relationship and may lead to the consumer revoking permission to use their data, or even walking away from the company altogether.
2. Following data regulations
To sustain this value exchange, good data stewardship is critical and companies must ensure that they are acting responsibly and adhering to local regulations. BCG’s research shows that leading companies have strict internal guidelines around how they collect, manage, and use data. For example, relevant teams should meet or communicate regularly with updates on how they’re using and sharing data — and collectively ensure this complies with internal principles and external regulations.
Businesses should also ensure this data governance remains transparent throughout the organisation, by defining an explicit data strategy and hiring the right people to manage it. This could perhaps be a chief data officer, tasked with forming the basis for a data-centric company culture with responsibility at its core.
3. Using innovative data collection
Another way businesses can improve their service to users is through gathering data via new and innovative customer touchpoints. This first-party data can then be linked with data from other sources to improve customer insights and to enhance customer experience.
For example, one car manufacturer has created an app which drivers can use to lock and unlock the doors, pre-heat the car in winter, and plan trips. In return for this extra functionality, the business collects customer data, which it uses to help develop the customer experience and other cross-selling opportunities.
A personal care brand has also produced content-specific websites to capture traffic from the more than one billion hair care searches each month. Users can watch videos and live blogs with styling tips specific to their hair type. In return, this approach helps them gather first-party data such as site visit actions, and email addresses to improve audience segmentation and create more relevant messages.
Both these examples also demonstrate effective use of the value exchange model.
Integrating first-party data for future success
Used responsibly, first-party data can undoubtedly help businesses not only keep pace with a changing consumer, but also deliver better experiences. When planning your company’s first-party data strategy, start off by following the three best practices covered in this article.
Additionally, according to the BCG research, best-in-class advertisers can improve their technical data capabilities by adopting centralised data warehouses, integrating and improving the match rate across multiple data sources, and developing customised proprietary measurement algorithms in-house.
Finally, these advertisers also work to improve their organisational capabilities by facilitating a data-first mindset, developing in-house specialised skills, and implementing strategic partnership models.
Every company’s starting point will be different, but one thing is certain: improving first-party data capabilities can help you adapt to changing situations. Download the full report to learn more about what best-in-class advertisers are doing and see how you can unlock the power of your company’s first-party data.
Want to know how your digital maturity compares to others in the industry? Our Digital Maturity Benchmark is a diagnostic tool developed based on our in-depth research with BCG.