One of the essentials to producing strong results with data-driven marketing is high-quality data. Quality data isn’t a myth, but it does require an understanding of the different types of data and how they are best used.
First Party Data
First-party data, sometimes referred to as customer data or behavioral/transactional data, can be collected from a variety of sources including email opt-ins, loyalty sign-ups, customer service calls, customer purchasing history, point-of-sale data and other direct relationships between companies and their customers.
Companies use first-party data to communicate directly with their customers. Although the data isn’t purchased and is exclusive to the company that owns it, it has its challenges as well. Data such as phone numbers and email addresses quickly become outdated. In addition, first-party data also may be incomplete or erroneous when customers fill out forms in a rush for a one-time coupon or offer.
Second Party Data
Companies may receive permission from a trusted partner to use their first-party customer data. Whether exchanging data sources or licensing the data, second-party data from a trusted marketing partner still may not show the entire picture of your customers.
Third Party Data
Third party data is information collected by data compilers and aggregators to be used by brand marketers for the creation of targeted marketing segments.
A variety of sources comprise third party data including public records, proprietary data sources, self-reported sources , sophisticated models and many others.
Third party data can include demographics, lifestyle data, real property information and firmagraphics among many other attributes that will round out the view of your customers and allow you to market intelligently.
Brands that try to ignore third-party data likely will miss cross-device customer identity recognition, better marketing attribution models, more refined persona development, customer journey mapping to create a unified customer view and omni-channel marketing opportunities.
“If 2017 is the year of data, 2018 will be the year of data quality,” said Maureen Noonan, sales executive in the retail channel, LiveRamp, at the Ramp Up event in Philadelphia.
One of the best uses of third-party data is to aid in hygiene and enhancement of your existing customer files. Blending first party and third party data allows companies to optimize customer experiences with a thorough understanding of data assets in order to communicate with their customers on a more individualized basis.
In addition, third party data can help marketers predict who their future customers are likely to be. With this deep understanding of customers, marketing communications will become more personalized and highly effective.
Loyal customers spend 67% more than new customers. With that in mind, increasing customer retention rates by only 5% can increase your profits by 25% – 95%.
So make the pursuit of data one of your top priorities in 2018. It will pay off in droves.