How CPG Brands Can Reduce Third-Party Data Reliance By Investing in Zero- and First-Party Data

Brands need to reduce reliance on third-party data. Here's how.

December 20, 2021

Knowing consumer actions and behaviors ensures CPG brands successfully connect with them to build and maintain relationships. Effectively appeal to the right target consumers and your conversions, engagement, and bottom line are all going to grow. Appeal to the wrong market or in a way that’s too sales-y, and you’ve wasted valuable time and money.

But how do CPG brands know what consumers want and effectively market those products and services to them? To successfully appeal to and connect with consumers, brands must know how to build a relationship with the right target market in the right manner.

Brands could outsource to a data analytics company and gain third-party data that gives a general oversight on what kind of products a specific demographic is interested in and learn about their behaviors. Or they could gather that information themselves by connecting with consumers directly and implementing valuable first- and zero-party data into their production and marketing practices.

Third-, First- and Zero-Party Data

The different kinds of data are defined by how a company acquires that information.

Third-Party Data

Third-party data comes from sources that are not directly correlated with a brand or its audience. This kind of data is obtained (bought) from a site or source that also does not gather that data itself — it’s typically an aggregation.

Third-party data sources may include:

  • Websites
  • Social media platforms
  • Other platforms

First-Party Data

First-party data is collected by a company from consumers. A brand gathers this information based on how consumers interact with its site, products, and other accounts.

Different ways first-party data is gathered may include:

  • User actions on a company’s website
  • Engagement data from social media accounts
  • Point of sale (POS) systems (Address, phone number, product purchases, etc. gathered during transactions)
  • Customer loyalty programs
  • Customer relationship management (CRM) systems

Zero-Party Data

The term zero-party data (previously referred to as “declared data”) was first coined by Forrester Research. The defining factor with zero-party data is that a consumer knowingly, willingly, and intentionally shares this data with a brand. It’s done on a basis of trust.

Zero-party data sources may include:

  • Preference centers (what kinds of emails a consumer wants to receive from a brand, filling out a profile with different personal information, indicating what kinds of products they are most interested in on a site, etc.)
  • Purchase intentions (what a consumer is looking to purchase and when)
  • Digital experiences (polls, quizzes, etc.)
  • Customer surveys (asking about different preferences and opinions they’d like to see, asking about behaviors, etc.)

Fatemeh Khatibloo, VP principal analyst at Forrester, noted in an interview with Cheetah Digital (previously Wayin) that this data can serve as a key performance indicator (KPI) for brands. When brands see that consumers are willing to share information and build that relationship with them, it’s an indication they’re doing something right.

Why First and Zero-Party Data is the Key to CPG Brands’ Success

While third-party data may seem like the most efficient way to gather a wide range of information from a mass of consumers, it’s not the most effective — and may do more harm than good.

The Downfalls of Third-Party Data

When brands turn to third-party data to make decisions on marketing, products, and more, it’s difficult to know where that information came from and to make sense of it. You can learn general information about different demographics’ behaviors, but they won’t be specific to your brand — and possibly even your industry.

This leads to not only wasted time as it may create unsuccessful trials and errors in product creation and marketing but also leads to wasted money as it harms your bottom line.

Powerful Insights Directly From Consumers with First- and Zero-Party Data

With first-party data, brands don’t have to guess — they can use their internal sites, systems, and more to see how consumers (and potential consumers) behave. However, brands are still making some assumptions based on consumers’ behaviors.

Zero-party data takes out all the guesswork when it comes to figuring out what consumers are doing and thinking, what they want, and more. Instead of guessing what kinds of products a customer is searching for, brands can directly ask them, and consumers willingly provide that information. Then, brands lead consumers to the products they seek — or conversely, companies can learn what kinds of products they should create to appeal to consumer wants and needs.

To be the most successful, brands should couple first- and zero-party data together to gain powerful insights that empower them to make the right decisions to build consumer relations.

How CPG Brands Can Gather Valuable First- and Zero-Party Data

Smart products platforms like Blue Bite empower brands with the tools to gather valuable first- and zero-party data.

First-Party Data with Powerful Analytics Tools

With analytics tools like those built directly into the Blue Bite dashboard, brands can see real-time data on consumer engagement. They can effectively optimize content and tailor brand messaging to upsell consumers and filter them through the sales funnel.

Pre-and post-sale actions information empowers brands with data on how consumers interact with their products.

Zero-Party Data with an Engaging Digital Experience

A digital Experience like those powered by Blue Bite empowers brands with a way to connect with consumers, build trust, and gather valuable zero-party insights.

Blue Bite empowers companies with a way to both share information about their brand and its products/services, and to learn from consumers themselves. Brands can directly request information about consumers’ product preferences, how they’re using products after purchases, and what they want more of.

Take the Guesswork Out of Data With a Smart Products Platform like Blue Bite

When learning how to engage with consumers and build relationships with them, data is a brand’s best friend.

While third-party data can be helpful to teach CPG brands about general consumer behavior, it’s not specific enough — so companies shouldn’t rely on it too heavily. Instead, investing in a smart products platform empowers them with first- and zero-party data, to effectively connect with consumers and gather the information that’s actually helpful. That’s key to CPG brand success.

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