What is Zero-party Data? why does it matter for startups?

Zero-party data provides accurate insights needed to create tailored user experiences, which is critical as the Internet becomes more privacy-conscious. Brands can use this data to understand users, predict behaviour, and refine marketing strategies. In this blog, we'll explore the benefits and differences between zero-party data and other types of data and how to collect and use it.

Zero-party Data is the most accurate and relevant user information, direct from the source.

What Is Zero-party Data?

Zero-party Data refers to information users intentionally and proactively share with a brand. When you ask a user about themselves or what they're interested in, the data you collect from the response is Zero-party Data. Gathering this data is the most effective way to know and understand your target audience.

Examples of Zero-party Data questions: 

• "How often would you like to receive email from us?" 

• "What kind of content do you like?"

• "How was your last shopping experience in our store?"

4 Different types of data collection

Understanding the importance of Zero-party Data is impossible without first understanding what makes it unique. To do this, you need to understand all of the different types of data that can be collected from your users. 

Zero-party Data

Zero-party Data is the newest and most valuable type of data because it represents information that users voluntarily and intentionally provide to a brand. It includes preferences, purchase intent, personal context, and details about how they want to be recognized by the brand.

Zero-party Data enables highly personalized experiences and marketing that users value

• Users proactively share data, eliminating collection issues

• The transparent collection process fosters a sense of partnership

• Enables the deepest level of personalization based on direct user intent

First-party Data

First-party Data is the type of data collected directly from a company's users through their interactions. This includes data from website interactions, purchases, subscriptions, surveys, and other direct engagements.

First-party Data provides a clear picture of how users interact with the brand

• Information that brands collect directly from their channels and sources

• Competitive advantage through the unique user behavior of your collection

Collecting First-party Data can be resource-intensive, requiring investment in user relationships and robust data collection across owned channels. 

Second-party Data

Second-party data is first-party data that a brand receives from a trusted partner. It displays additional user information to drive sales, fill gaps and can be used at the point of purchase. 

Second-party Data is First-party Data from another organization that they share directly with you.

• Richer insights enable more targeted and engaging campaigns

• Enables sophisticated targeting of specific user groups

While Second-party Data can expand user insights, it has significant limitations compared to First-party Data, especially as privacy regulations evolve.

Third-party Data

Third-party Data is aggregated from multiple sources and sold by companies that did not collect the information directly. 

Third-party Data is information collected and provided by external sources about individuals with whom they have no direct relationship

• A more diverse set of user data than a brand could collect on its own 

• Provides valuable insights for entering new markets

While Third-party Data offers scale, it lacks the reliability, accuracy, and exclusivity of First- and Second-party Data.

Advantages and disadvantages of 4 types of data collection

How can Zero-party Data benefit your brand?

The ease of collection and potential drawbacks of other data types make Zero-party Data a critical focus for brands. This data offers several key benefits:

Accurate and reliable insights

Because Zero-party Data comes directly from the user, it is more trusted, explicit, and accurate than data inferred from other sources. Brands can rely on this information to make data-driven decisions.

Improved personalization

With users' stated preferences and intentions, brands can deliver highly personalized content, product recommendations, and experiences. Brands must respect and respond to this data to build trust and engagement.

Privacy compliance

Zero-party Data collection is inherently consent-based, making it highly compliant with evolving privacy regulations such as the General Data Protection Regulation (GDPR) and the California User Privacy Act (CCPA).

Competitive advantage

Zero-party Data provides valuable insights into unmet user needs and emerging trends, informing product and service development to better resonate with target audiences. 

Build strong user loyalty

A personalized user experience helps build strong user loyalty, which can translate into repeat purchases and positive word-of-mouth.

Where does Zero-party Data come from?

Use surveys, quizzes, and forms to collect data and help users find the right products for their needs

Zero-party Data collection can cover a wide range of sources, including:

• Surveys

• Quizzes

• Forms

• Interactive tools and funnels

• Ranking and rating buttons and sliders

• Social media platforms

• Transactional data

• New users' registration details

Collecting Zero-party Data should be a seamless, enjoyable experience for users. Integrating it naturally into online interactions makes them more likely to engage. Zero-party Data is best collected through engaging digital touchpoints that directly ask users for more information and gradually accumulate over time.

How do you collect Zero-party Data?

6 strategies for collecting Zero-party Data

Here are 6 common strategies to effectively collect valuable Zero-party Data:

1. Interactive content

Create engaging quizzes, polls, trivia games, and surveys that capture Zero-party Data in real-time while providing personalized recommendations, product suggestions, or content based on user responses.

2. Contests and giveaways

Encourage users to share their interests and contact information by offering incentives such as contests and giveaways to create brand buzz while collecting valuable data.

3. Personalized email campaigns

Deliver targeted email campaigns that allow users to self-segment based on their preferences and collect non-personally identifiable information to enhance the personalization of future communications.

4. Gamification

Incorporate game-like elements such as points, badges, and leaderboards to reward users for sharing their interests and personal information, encouraging engagement and participation.

5. Social media engagement

Leverage social media platforms to create interactive experiences, ask questions, and encourage followers to share their opinions, building a strong social media presence and collecting Zero-party Data.

6. User feedback

Solicit user feedback through reviews, testimonials, or ratings, and offer incentives for participation, enabling brands to make informed decisions and improve their offerings based on user insights.

How to use Zero-party Data?

Marketers should view data as an active expression of user trust that can lead to lasting loyalty. Here are some expert strategies for using Zero-party Data:

8 Best ways to leverage Zero-party Data

Tailor product recommendations

Personalize product recommendations for each user based on their unique Zero-party Data, including their specific interests, preferences, and needs. Use insights from Zero-party Data analytics to match products to each user segment. 

Build comprehensive user profiles

Combine Zero-party Data with other user data sources, such as purchase transaction history, browsing behaviour, and demographic information. Use the rich user profiles to segment users into more granular and accurate groups. Identify patterns and trends across multiple data sources to uncover unique user segments.

Create personalized marketing campaigns

Use impartial data to create highly targeted and engaging marketing messages that speak directly to individual user needs. Focus on user engagement and tie data collection to user value. Invest in high-quality feedback tools to streamline the data collection process.

Deliver unique and helpful content

When you gain insight into users' interests and passions through impartial data, you can deliver branded content that is seen as helpful, rather than irrelevant and intrusive. For example, send targeted content such as product review pages or home renovation inspiration based on stated preferences.

Invite users to relevant experiences

Use Zero-party Data to invite users to engage with your brand through interactive digital activities, product samples, or local events. Always let users know they are receiving this invitation because of shared data, and thank them for reinforcing the value of sharing information.

Build community connections

Zero-party Data enables you to facilitate lively discussions about important topics. This emotional connection is difficult to achieve with other types of data and can foster a strong sense of community.

Deliver tailored promotions and incentives

Offering special discounts, coupons, or incentives in exchange for Zero-party Data is an effective way to demonstrate immediate value to users. This is especially useful in the early stages of building your Zero-party Data engine.

Show user appreciation

Use Zero-party Data to go above and beyond to show users you care. This can include moments of surprise and delight, complementary products or services, personalized notes, or involving users in your upcoming decisions. 

Unlock Zero-party Data and gain actionable insights with Formo 

Easily create forms to collect Zero-party Data

Formo enables Web3 startups to create surveys, quizzes, and forms to collect Zero-party Data. Formo provides advanced survey logic, social media integration, and analytics that help you effectively collect Zero-party Data while respecting user privacy.

Zero-party data is changing the data landscape by putting users in control and helping brands build more meaningful relationships. Embracing zero-party data means committing to user-centricity and ethical data practices. Brands should use this data to gain a deeper understanding of users and drive product-led growth.