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Why Zero-Party Data Is the Key To Customer Lifetime Value

August 31, 2021

Marketing is hard. And, as someone who has spent much of their career building and launching brands, every year seems to bring even more choices, more tools, and more channels to evaluate.

While some decisions may be harder and more urgent – “To TikTok or Not” – the ultimate goal of any marketer and any organization remains straightforward.

Build awareness. Drive preference. Grow lifetime value.

Elegantly simple but remarkably hard.

While digital continues to expand and evolve at a staggering pace, it is the recent and rapid evolution in the area of data that most excites me.

Specifically, Zero-Party Data.

Why Zero Party Data?

For decades, marketers have been relentless about capturing as much data about their consumers – and even those who weren’t yet consumers – that they could. They created massive databases of how consumers shopped, what they looked at (and then left in their shopping cart), what they liked on social media, how often they bought us, who liked our products, and who really really liked us (we called them loyal) and so on.

All with the express purpose of trying to understand how to better serve these consumers. Remember. Awareness. Preference. Lifetime Value.

This was great (for a while) but there were shortcomings.

Some of the data collected – often third-party data and via cookies – merely allowed brands to infer consumer intent. In some cases, brands generated and leveraged 1st Party data, which was better. This was data from direct interactions, purchases, enquiries, and more. Better yes, but far from perfect.

In recent years, consumers have grown increasingly leery and vocal about all this tracking of their online and offline habits. As a result, we have seen major changes from Apple and from Google and governments around the world, enacting legislation to better protect consumers and their privacy rights.

But, there is an elegant solution.

Enter Zero-Party Data:

Zero Party Data is when consumers willingly and explicitly provide data to brands from direct interactions and via their preferences. This enables marketers to design and create great (digital) experiences for their consumers. Unlike cookies, this method creates truly personalized and relevant consumer experiences which drive preference and grow lifetime value.

For brands to leverage zero-party data, they will need to provide a clear and customer-centric reason for the data collection; “because we want to know more about you” will not cut it. Brands will have to show how they plan to use data that is collected and provide a mutual exchange of value for their consumers.

Personalization is no longer a promise; with zero-party data, brands will be able to finally deliver personalization at scale and re-claim ownership of their consumers.

And this all translates into greater preference and higher consumer lifetime value.

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About the Author

Jed Schneiderman headshot

Jed Schneiderman
SVP, Industry Practice Lead for Media and Telecommunications

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