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What Is Zero-Party, First-Party, Second-Party and Third-Party Data

Whether you are a business owner or business developer, it’s important that you know about the zero-party, first-party, second-party and third-party data. That’s because in today’s digital world, data is one of the biggest drivers of successful business and marketing growth. Different types of data bring different benefits, so their effectiveness depends on your current situation and goals.

Keep in mind that due to GDPR and other data protection regulations there are certain instances where some data is no longer recommended for active use. We will get into that later in the article.

So, what are these different data types, how do they help your business, and how to collect them?

Zero-party data

Let’s start with the zero-party data. This type of data is not often being talked about, but it’s actually important. Zero-party data is the information given by customers which they proactively and intentionally share with a company. Because customers share their preferences in-detail, it clears any confusion or doubts the business might have about the customer. In return for customer data, businesses can give personalized bonuses and discounts to these customers. With the provided information, the business can accurately offer products and services the customers want to see and buy. This way, both parties win.

To collect zero-party data, you can send surveys, feedback forms, email, or use any other means to save information provided by your customer. Having zero-party data can significantly increase customer retention, improve customer loyalty, boost profits for your business, and much more.

Of course, not every customer will be willing to share all information a business wants to know about them. That is why you need to consider other types of data collection.

First-party data

A much more commonly used data type, first-party data, is information that is directly collected by businesses (knowledge about prospects, customers, and other users in the audience). It includes website behavior and activity: clicks, time spent, purchase history and any other information that is collected straight from customers’ interactions with your brand.

First-party data differs from zero-party data as it consists of recorded visitor, prospect or customer behaviors, activity and other data. Keep in mind that first-party data complies with GDPR and other privacy acts as the data is collected directly from the source, in this case, a visitor, a prospect, or a customer.

Some of the questions that eCommerce first-party data can answer:

  • What makes your customers spend more?
  • What products perform better for upsell/cross-sell?
  • How to improve retention and customer loyalty?
  • Do discounts really work, or do they only cut your potential profits?

To collect first-party data, you need to enable first-party cookies or a pixel on your website. There are many tools that can help you achieve that with ease. 

Once the first-party data is collected, it can then be managed, analyzed and made insightful to create a better understanding of your prospects and customers. In fact, some of the things you can achieve with first-party data is get insights about your audience, improve retargeting strategy, create highly targeted and personalized messaging, predict future patterns of your audience, and comply with data protection regulations.

Second-party data

Whereas first-party data is collected by your business directly from visitors, prospects, or customers, second-party data is information that you didn’t collect yourself. It’s someone else’s first-party data, usually business partner’s or other cooperating company’s.

Second-party data has many positive aspects that can contribute to your increased business performance. With the right second-party data set, you will add additional value to your first-party data. The second-party data is usually high quality and more precise than data that is separately aggregated from various different sources.

To get second-party data that includes information relevant to you, you will need to find a company willing to sell it or acquire it from any partners you may have.

While second-party data does not include information about your own audience, it’s still beneficial if you find a proper data set. It scales your data, and you can reach new audiences with it, predict different customer behaviors, and more. Even though you will most likely find zero-party and first-party data more valuable, second-party data should also be considered.

Third-party data

Third-party data is collected and aggregated data from various original sources such as websites and platforms. Third-party data usually come in large data sets and can be customized to one’s needs before acquiring it.

It is used to expand and discover new audiences, improve targeting performance, and more.

Third-party data was usually the preferred type of data to collect, manage, analyze and get insights from. However, due to various privacy concerns and regulations, third-party data now has limited uses, and it is no longer advisable to put a big focus on it. In fact, third-party cookie support is planned to be ended by Google in 2023. This, however, does not apply to first-party cookies.

If, for some reason, you would still like to acquire third-party data, you can still do so from various data providers. Again, the options above are recommended methods and should be considered first.

Final Thoughts

You’ve learned the basics about the different types of data and their benefits to your business. We’re here to help you get the most out of your eCommerce data, no matter which type you have and use most of. Verfacto is a powerful machine-learning product that improves eCommerce businesses’ performance in multiple areas. Our team is dedicated to offering a personalized experience to our clients. Whether you want to use a free plan or a plan with full functionality, we’ve got an option for every budget!