Data is throwing lots of parties these days. And while first-party and third-party data are likely familiar to you, the analyst firm Gartner has coined a new one: zero-party data. At a time where international privacy regulations are popping up everywhere and browser providers like Google are finally abandoning the ever-intrusive third-party cookie, it appears to be an excellent alternative. Though as we will explore in this article, it’s not without limitations.
What is zero-party data?
Zero-party data is data customers intentionally provide to you so you can provide a better experience. For example, if you’ve ever signed up for a new project management app and it asked you what you planned to do with the software, you’ve probably provided zero-party data. The implicit assumption here is that by declaring additional information about yourself and your intent, you expect to save time or reach the value faster.
The four types of data
Zero-Party Data
Data someone intentionally and voluntarily provides: Self-declared preferences, title or role, use case, feedback, intent data
- A new user tells you their goals so you can personalize the interface.
- A customer takes your survey to give product feedback.
- A customer tells a salesperson everything they hope to achieve.
First-Party Data
Data you collect by asking for it on a site, app, or property you own: Purchases, visits, downloads, clicks, sign-ups, demographics, firmographics.
- User fills out a form to download an ebook.
- User leaves a trail of clicks within the app.
Second-Party Data:
Data that two companies share privately; it’s not available to others: private account lists, bespoke audience purchases, data trades.
- Two software companies share lists to see where there’s crossover.
- A digital publisher sells its email list to a software company who’ll target those individuals.
Third-Party Data:
Data that’s resold by a third party. Often, they didn’t collect it—they’re a data broker who packages and resells it: Purchases, visits, downloads, clicks, or technographics, all provided by a data vendor
- A purchased list from a data provider who’ll sell the same list to anyone.
The advantages of zero-party data
The biggest upside to zero-party data is that it’s 100% completely safe from a compliance perspective. If the customer went out of their way to volunteer this information, there’s no question they want you to have it, so it could never be considered illegitimate or unnecessary in an audit.
Another big upside is that it has the potential to save you a lot of guesswork. An advanced analytics platform with all the first- and third-party data in the world doesn’t hold a candle to someone simply coming out and telling you what they’re hoping to achieve. Maybe they want to be promoted. Maybe the company has a very secret challenge they’re trying to solve. In many cases, there’s good reason to believe their zero-party data is accurate. Customers and users are often happy to supply it, but it of course comes with a few catches, and that brings us to a discussion of zero-party data’s downsides.
And yet, the downsides of zero-party data
The biggest downside with zero-party data is that if you collect it, you must use it. If customers tell you their intention is to be the best solopreneur on earth and they never plan to hire, they’re going to grate when the in-app messages prompt them to “invite their teammates.” Or if they indicate their business’ financial goals and it never saves, that’s going to leave you worse off perception-wise than if you hadn’t asked at all.
Stories of irritating software experiences are rife with references to zero-party data, though it’s rarely mentioned by name. For instance, it’s known that Microsoft users who activate their license while traveling, say in Holland, are forever stuck with the default language set to Dutch. (Good luck reaching support.) Or, users of Adobe’s digital design product Creative Cloud are notoriously stuck with their name set to their computer’s default username at the time of sign-up. Whenever they comment or collaborate in shared Adobe XD files, they’re stuck with people thinking they’re someone else.
As Mollie Bodensteiner, Director of Revenue Operations at Granular explains, data of this sort raises the bar for how companies integrate, cleanse, and activate.
“I’m always asking, ‘Are we doing right by the customer?’” says Mollie. “Because very often, it’s the operations that drive customers’ feelings about whether we know them or not. When the customer interacts with us, they expect we know everything they’ve previously provided us. They know the last time they logged in. They know the last ticket they submitted. They expect that we know it too, and if we have access to all that data, and we should. I see it as RevOps’ job to surface that information in a way that drives higher-impact customer interactions.”
And so, zero-party data, for all its advantages, is complicated to use. It demands organizations be more nimble with their data. Plus, if you collect something, do users have the opportunity to change it after the fact? If they hurriedly set their occupation as “Accountant,” and can never update it, you’ve got a recipe for a very unhappy user—even though things are technically personalized.
For greater data agility, tools like Syncari, which provides a distributed source of truth across all your top systems, are handy.
How do I collect more zero-party data?
Perhaps the end of third-party cookies has your attention. Or perhaps the €10B lawsuit a Dutch non-profit has launched against Oracle and Salesforce over the misuse of data has you convinced that zero-party, self-reported is for you. There are many ways to start collecting more of it. Our top recommendation is to be transparent and to follow through on using it. Tell people why you’re collecting it and what they stand to gain, and then do precisely as you say.
Ways to collect more zero-party data:
- New user, in-app welcome quizzes
- Pre-sale quizzes and benchmark graders
- Polls and buttons within emails
- Website chat bots
- Site widgets and pop-ups
- Customer success conversations
- Polls during virtual events
- Mid-roll video surveys and polls
Three examples of clever zero-party data collection
1. Data provider Crystal allows users to take a personality test
This one is quite meta. This firm offers you psychological insights into your buyers. As part of its lead-generation process, it allows potential buyers to take that psychological quiz themselves.
2. B2B publisher Marketing Dive lets prospects calculate their advertising CPM
It’s an excellent marriage of buyer needs and seller needs—buyers are curious to have a benchmark and Marketing Dive can use that data to help them find what they need.
3. YogaClub starts visitors off with a style quiz
While not B2B, it is a brilliant example of zero-party data collection. This startup invites all visitors to take a quiz so it can personalize its recommendations, and then its merchants use that aggregate data to forecast styles.
In all three examples, you’ll see a trend: Each promises to tell visitors something about themselves. And as part of that tradeoff, those visitors expect these companies to know them too.
The verdict: Trust zero-party data, but be mindful of its flaws
Zero-party data has one more downside: The data is self-reported. That means there’s inherent bias. Zero-party data isn’t necessarily the truth—it’s the truth the buyer wants you to know. So, if the buyer intends to misdirect you, there’s really no avoiding it. If you’ve got a competitor acting like a secret shopper, or a CEO pretending to be an intern, there’s now way to know. That’s why zero-party data, however valuable, is best complemented by observed data of the first-party and third-party sort.
Taken with a grain of salt, it has many advantages. At a time when privacy regulation is clamping down and users are increasingly wary, zero-party data offers you a completely consensual look into their thinking and intent. Just be sure you balance it with other data. And whatever you do, make sure you actually use it to offer a better experience. You may find that asking and not using is worse than not asking at all, and the benefits will be zero.
