Fixing the first-party data gap

This is the era of data-driven marketing. But getting hold of the right data is getting harder.  With GDPR, the impending end of cookies and the walled-gardens of big marketplaces such as Amazon, many brands are looking to develop their own customer data assets. But is it worth it? And what are the options to fix the first-party data gap?

Photo by Daniel Eledut on Unsplash

91% of consumers are more likely to shop with brands who provide relevant offers and recommendations (Accenture).  

92% of marketers reported using personalization techniques in their marketing, yet 55% of marketers don’t feel they have sufficient customer data to implement effective personalization (Evergage). 

And since 91% of consumers say they are more likely to shop with brands who provide relevant offers and recommendations (Accenture), it is unsurprising that 89% of digital businesses are investing in personalization (Forrester).

It’s easy to feel left behind if you are one of the many businesses that has not traditionally held a lot of customer data.

Here’s a simple test. 

Who are your customers? If you are thinking not of end-consumers, but other businesses, (typically retailers) who buy your products, the chances are you have a first-party data gap. 

Whether you are a FMCG brand selling in Tesco, a consumer electronics brand on Amazon, or a beauty brand selling through Boots, you face an uncomfortable truth. 

Your customers know more about your consumers than you do.  

They hold the data. They control the experience. And they are using it to develop products and services of their own that meet changing consumer needs. 

Amazon now offers 22,617 products from 111 of its own brands, more than triple the number of items it offered in June 2018, (Coresight Research and DataWeave)

Conversely, data-poor brands are missing out on deep consumer knowledge.  They cannot react in real-time and have to rely on slower, traditional methods of consumer research. They are unable to understand the different value that different consumers provide to their business, impacting media efficiency and effectiveness.

And, as more and more consumers shift to ecommerce, data-poor brands are finding it harder to compete with the continuous, personalised experiences that consumers are getting from elsewhere.

It is no wonder that so many B2B2C organisations are looking to develop direct-to-consumer propositions that will build their first-party data assets. But what kind of data? And what kind of propositions should brands consider? 

1. Behavioural data,
Typically, web analytics and clickstream data., Much of it is anonymous, which is great for understanding trends, testing propositions and optimising consumer journeys, but less good for personalisation. For that, you need behavioural data at an individual customer level, for example from email clicks, app usage or logged in web experience . But generally you will need to have a reasonable sophisticated, always on customer engagement programme in place before getting a lot of this kind of data. And its worth remembering that behavioural data can only tell you what someone did, not why, which makes it quite open to the narrator's fallacy of seeing motivation and meaning where none should be implied. 

2. Declared Data
This is the data that people volunteer, usually in exchange for something they value. At its simplest, it is email addresses captured through competitions, events or newsletter signups. Survey data can also be part of this, though usually not at sufficient scale to power personalisation programmes.  It could include loyalty propositions or the use of preference centres which explicitly ask what consumers want and like. Most interestingly, there is a growing opportunity to capture preference data through relevant digital experiences, such as chatbots, choice tools or social polls. The best of these are seamlessly integrated into the brand’s digital experience, creating engaging, brand-building moments as well as valuable data. 

IKEA have used Instagram Polls to gauge sentiment toward different products. Such polls can be useful for fast feedback though do not provide data for customer-level personalisation.

Since embarking on ‘Consumer Direct Offence’ in 2017, Nike have developed multiple ways to engage more than 170 million people and build deep understand ing of their passions and needs. Nike Running Club app tracks progress and provides virtual coaching, Nike Training Club delivers tailored home workouts plans. And SNKRS gives limited access and special products to sneakerheads, contributing around 20% of Nike Direct’s $16b in sales.

3. Transactional Data
Simply, the data from direct sales. With ecommerce sales up 19% in 2020, many brands are seeing DTC as a route to building first-party data. And whilst it is very unlikely that DTC will ever rival traditional routes to market in scale, smart brands are using niche DTC propositions to fuel a data-driven, consumer-centric strategy that touches all parts of their business. Many of these models offer something unique, such as product personalisation, multi-brand bundles or subscription services. So that in addition to data, these platforms become brand-building channels in their own right. 

Pepsi Co have recently launched new DTC propositions in the US: pantryshop.com  and snacks.com.  “The quality, fidelity and speed at which we get consumer feedback is just changed by having this direct touchpoint with the consumer,” said Gibu Thomas, Head of Ecommerce at PepsiCo.

Ben & Jerrys online store lets fans order new flavours for home delivery. It blends B2C and B2B channels, so that if you’re outside a direct delivery zone, you can still get details of how to order B&Js from Deliveroo or other partners . The site also sells  branded merchandise direct.

Summary

The first party data-gap is growing. Data-poor companies are missing out on valuable insights as well as the opportunity to personalise communications and experiences.

Brands should not expect to completely transform their businesses to DTC. Even Nike, with its all out commitment to changing the business model, still sees 68% of sales going through wholesale (though the fact that is down from 82% in 2012 is impressive).  But smart companies are already experimenting with different programmes that not only build first-party data assets but also create unique experiences to build their brand.