How is First-party Data More Meaningful?
The most significant (and often surprising) fact about first-party data is that it provides better and more meaningful insights than second-and third-party data. It differs in the method of collection, the authenticity of the data, its quality as it applies to analytics, rights to usage, etc.
Let’s delve a little deeper into the nature of first-party data that makes it more effective in product management and analytics.
Data quality is top-notch
The very fact that the data comes from the users themselves makes first-party data more robust. Second-party and third-party data are not verifiable as they are sourced from places you have no control over and that are, very often, untrustworthy.
In the case of third-party data, there is no available information on where the data comes from or how it was gathered. This can put businesses in a predicament as they rely on these datasets to make product and marketing decisions. They are alienated from the full knowledge of its authenticity, or for that matter, whether the data is rightfully owned by them.
Second-party data also runs the risk of inappropriate authenticity checks as you are still relying on an external source to get you the data. As per a Forrester study, “27% of participants in a survey said they use second-party data due to a lack of scalability of their own first-party data
This could only mean one thing - that there are not enough efforts being put by organizations to harvest first-party, genuine data.
When organizations concentrate their efforts on high-quality data collection from users by establishing systems for data storage, processing, and usage, there is a manifold increase in scalability
. This means that companies can use the data across platforms without being concerned about data leaks.
Such scalability can establish new data standards and has the added advantage of not sacrificing on the quality of data, making way for better insights and, thereby, higher ROI.
Improved analytics and insights
Companies that implement data collection strategies from within the walls of their own organization should quickly find that their efforts are paying off. As data quality becomes a standard of evaluation in analytics, you gain better accuracy from any of the derived insights. You no longer depend on lagged and potentially expired information, as you now feed your analytics with real-time data.
Your customers also start to respond to product decisions quicker than ever before since it is based on their own responses and interests.
Long before the concerns around third-party data collections arose, Google’s research found that “leading marketers are 36% more likely to agree that their organizations dedicate time and budget to strategic experimentation
It is a long-term investment that does not depend on expensive outside resources. You get to specify your data usage, and that means that it can bring better customer experience
Better profiling and targeting of customers
When your business begins to analyze customers on a first-hand basis, you gain access to exclusive data that helps in precise user profiling
. As today’s customers continue to be increasingly digitally connected, it enables businesses to target them across various touchpoints.
For example, your customer may get push notifications about your latest offers, prompting them to open your business’ application. They can then find value in your product/s which can then lead them to your website to place an order. You can even find your customers and leverage usage data from connected devices
, interactive kiosks, and digital signages. These new technologies and rapid increases in connectivity are now helping businesses to walk away from less verifiable data sources.
Thus, you have access to a more specific and organizable set of data, which you own and can use to make product decisions even in the future.
Increased attribution and retention for the future
Data acquired through second and third-party instances tend to have limited extensibility due to the nature of collection and subsequent sharing. But you can always be aware of the validity of the first-party data, as the source is right in front of you. You can experiment with data according to the relevance and longevity of each of your product analytics’ endeavors.
The better usability of first-party data and improvements to customer experience will inevitably lead to customer retention. Customer retention
is now known to have the highest ROI
as loyal customers bring businesses more profits over time. You can then retarget users as you learn more about your user base, their unique interests, and methods of interaction.
As you can see, first-party data is now essential to every organization in building better customer experiences, ultimately making it a better alternative to other sources of data. With that said, let’s take a final look at what exactly you will be able to track through first-party data collection methods.
What can you track with first-party data?
Customer data analytics is a major driver for business growth and product marketing. Data can come from many sources, including personal interviews, to contribute to first-party and zero-party data. By utilizing the right technology and product analytics tools
, companies can gain huge insights into customer data analytics.
Websites, apps, and connected devices can calculate the number of daily active users (DAU), monthly active users (MAU), and so on for different time periods. Such data is valuable in analyzing entire customer journeys
, company north star metrics
, and more, so that you can understand your business and customers in profound ways.
Session data: Analyzing how effective your product messaging is and the value it generates for each user from across countries, devices, and demography is crucial for product development and improvement.
Another advantage of first-party data collection tools is that it gives you the exact number of seconds, minutes, and hours users spend on your site, to understand how engaging and/or informative your product information is.
Site behavior: Customer behavior analysis
is a focal point for creating better customer journeys. Product analytics can tell you where customers are falling off from your conversion funnel or where they get stuck in their product interaction. Instead of relying on expert analytics, product analytics tech can bring you insights in easily consumable chunks.
Survey and registration data: Strictly falling into direct information sourcing and the very definition of zero-party data is the data that customers provide to you through surveys, questionnaires, and registration forms.
If you can leverage this data for product changes, sales cycle improvements, and more, you have achieved the true potential of first-party data.