If you've been following along with our blog, you've probably noticed we write a lot about the importance of customer data. But we do so for good reason. Successful marketers utilize customer data to help better understand their customers' shopping habits and preferences, which they then use to execute more effective marketing campaigns and make better decisions about customer acquisition and customer retention.
Customer data falls into one of three categories: first-party data, second-party data, and third-party data. Each of these types of customer data provides actionable information to marketers, but if you're new to the world of data-driven marketing it can be confusing trying to figure out what separates each type and the insights each provides about your customers.
Here's a quick breakdown of each to help you demystify the various types of customer data.
What is first-party customer data?
First-party data is information that your company collects on its customers (thus the "first" in first-party). First-party data is sourced from a variety of direct customer-business interactions, which include:
- tracked webpage visits (using cookies)
- app uses
- in-store or online transactions
- contact center interactions
- subscription-based emails or newsletters
- company social media profiles
- customer feedback surveys
First-party data is so valuable to marketers because it provides them with information on a wide-range of customer behaviors, and it is also extremely trustworthy and controllable because it has not been handled by anyone outside your business. And because it is collected first-hand, the information is not anonymized (like third-party data, more on that below) and can contain personally identifiable information (PII) that can be tied to a specific customer profile. A better understanding of customer behaviors (at both an individual level and large scale) translates to more personalized marketing outreach, which in turn translates to higher engagement rates and increased sales. First-party data can also be used by marketers to learn the best way(s) to engage with new audiences, and is also a vital component of ad retargeting initiatives.
Without question, first-party data is the most valuable type of customer data marketers can possess.
What is second-party customer data?
Second-party data is actually just another company's first-party data that is either shared with your organization through a partnership or purchased by your company secondhand (thus the "second" in second-party). Data sharing is generally carried out between trusted business partners to ensure that the data is trustworthy and not mishandled by either entity. Second-party data is extremely useful for marketers looking to gather intel on customer segments completely outside of your existing ones.
Despite being equal in nature to first-party data, what devalues second-party data to marketers is that it comes from a source outside your organization. Even if the data set is from a trusted partner, it's impossible to fully guarantee that it includes all of the pertinent information you need or that the data-gathering quality meets your standards. So while it may be accurate, you run the risk of it being incomplete.
What is third-party customer data?
Third-party data is information that has been collected and compiled by an organization with no direct link to the subjects of the data that is then sold to other organizations. Third-party data is primarily gathered via cookies that the independent organization places on a variety of webpages, which are then used to "track" the movements of customers across the Internet. This browsing data can then be pieced together to create customer profiles, which can then be segmented based on the pages they visit and used for ad retargeting initiatives based on the tracked behavior.
Unlike first-party data (and subsequently second-party data), third-party data is scrubbed of any PII before it is sold, so marketers only have anonymous customer ID to work with. This doesn't make third-party data useless by any means, but it cannot be used for truly personalized/targeted direct marketing initiatives. Third-party data can be gathered in mass quantities however, which provides marketers with information on a much larger audience than its own. This makes it particularly handy for gaining intel on customer segments your organization is struggling to reach (or hadn't even considered).
Regardless of type, customer data is the key to better marketing
Now that you know what the three types of customer data are and the value how each provides to marketers, it's time to start putting it to use to better your marketing efforts. This increasingly-recognized value of customer data has been the driving force behind the rise and widespread adoption of customer data platforms (CDPs), a tool you've likely heard of but may not be exactly familiar with.
More than likely you and your organization are utilizing multiple systems to store and analyze your customer data, such as platforms for campaign management, customer relationship management, email marketing, marketing automation, and more. This means your customer data is likely spread across many systems, preventing you from gaining a unified view of your customers. This is where a CDP comes into play.
What makes CDPs so valuable to marketers is their ability to integrate with these different systems, ingest all your customer data from them, and unify that data so to give you a single record/profile of each of your customers. Having all your customer data in one place provides you with a better understanding of your customer base thanks to more accurate customer segmentation, and it also means no more time wasted searching across platforms for the data you need.
So, could a customer data platform be just what you need to take your marketing game to the next level? We'd love to chat and discuss how the QuickPivot customer data platform puts the power of data in the hands of marketers and helps you improve the effectiveness of your marketing campaigns.