In today’s era, many industries, especially retail, and e-commerce, are embracing digitalization. It has become part of every business’s success with its ability to collect, analyze, and leverage data.
The data collected is used for “personalization”— tailoring consumers’ experiences to keep them engaged. This helps build stronger relationships with customers and gain brand loyalty.
Customers now expect personalization, and companies that can fulfill this can have a competitive advantage. In this regard, “third-party data” has been the go-to method for companies to gain valuable customer insight and create a personalized experience.
However, technology continues to evolve, and now companies are adopting “First-party data” while slowly phasing out third-party data.
Insider Intelligence (2022) reported that “Google is planning to remove third-party tracking cookies from its Chrome browser in the second half of 2024.”
What is First-Party Data?
Unlike third-party data cookies where the data is collected from a third-party company or provider, first-party data collects directly from its customers or users. This data is typically collected through various means such as website analytics, social media accounts, subscription-based emails, CRM systems, customer surveys, and loyalty programs among others. It is unique because the data is collected directly from the source and is one of the most accurate and reliable types of data.
Collecting first-party data is often more cost-effective for companies as compared to buying data from third-party providers. This is because companies already have access to their own data.
According to Google Insights, 92% of leading marketers believe that it is crucial to leverage first-party data consistently in order to develop a deeper understanding of people’s needs and preferences, which is critical for driving growth.
Furthermore, first-party data allows consumers to decide how much personal information they want to disclose when engaging with a brand. They are aware of what data is being collected about them since they are proactively sharing the data with retail. This level of consent is crucial given the growing concerns of consumers regarding data privacy.
First-party data is also often compliant with data privacy laws and regulations such as GDPR and CCPA. Companies have direct consent from their customers to collect and use their data. Therefore, businesses can ensure that they are following these regulations and avoiding any potential legal issues.
Leading retailers prioritizes connection thus, leveraging first-party data helps build stronger and more direct customer relationships. The use of first-party data is transforming the retail and e-commerce industry, bringing data-driven decisions, and developing more effective marketing strategies. By using it effectively businesses can gain a competitive advantage, improve customer experience, and drive revenue growth.