Why retailers should own their first-party data
By Claes Nygren
As a retailer, consumer data is possibly the most valuable asset you can possess. How can you be sure you own your data? Read this post for starters.
In this two-part series, we’ll discuss the importance of owning your own data—or first-party data—and how to enrich that data when you own it. In part one, we explain what first-party data is, how to collect it, and why owning your own first-party data is important. In part two, we’ll explain what it means to enrich data, how this can help your business, and how you can start the process of enriching your own first-party data. Let’s dive into part one, why it’s important to own your first-party data.
Who owns your data?
As a retailer, consumer data is possibly the most valuable asset you can possess. Despite this reality, it is shocking how many companies don’t actually own their own first-party data. You may want your marketing agency or web developer to aggregate or analyze customer data for you, but if you don’t own the raw data yourself, you are putting your company in a risky position. Issues including privacy infringement, lack of data integrity, limited insight, or even loss of access can arise if you leave your data in someone else’s hands.
What is first-party data?
According to Hubspot, first-party data is any data that you have gathered directly from your customers, fans, site visitors, or social media followers. It’s the most reliable data you’ll have about your customers because it comes from your own audience and gives you the clearest picture of the future when making predictions about shifts in behavioral trends.
How do you collect your own first-party data?
There are a few ways to gather first-party data. While free tools exist, if you’re looking for a solution where you own (and store) your own first-party data, you’ll need to invest in a customer data platform (CDP) or a customer relationship management (CRM) tool.
Owning your own data gives you flexibility
When another party owns or manages access to your data, you are at the mercy of their analytical preferences and capabilities, potentially limiting the insights you can glean from your data set. Owning your own data, however, gives you the flexibility of asking virtually any question: How does click-through rate (CTR) compare across channels? Which search terms are used to reach each product? How does the customer journey vary by device? An outside agency may not be willing or able to answer these questions for you, as they are beyond the scope of their typical analysis.
Owning your own data gives you accessibility
If you have outsourced your data, chances are the data will already be aggregated when you receive it, so you can’t dive into the details. This loss of granularity severely limits your ability to ask the types of questions described above, since you no longer have access to the individual data points needed to perform alternative aggregations. By owning your own data, you know that you’ll have access to any level of detail that has been captured by your system.
Owning your own data ensures your information safety
In an age where privacy is paramount and security breaches can ruin companies, securing your data is very important. It’s critical to gather your own first-party data in a way that doesn’t reveal any of your customers’ personal information. There are ways to track and save data that don’t store any information in a way that can be linked directly back to your customer, and owning your data collection and storage process allows you to ensure that this takes place. This protects the privacy of your customers as well as the longevity of your business.
You may want to obfuscate the IP address or other information that can lead back to the customer to maintain the privacy of your data. For example, a tool like Snowplow allows you to replace the IP address with x.x.x. to maintain customer privacy.
Owning your own data ensures quality
Website traffic data contains a reasonable amount of noise that can be hard to filter out if you don’t maintain control of your own data. Robots and automated hacker attempts may register as user information and significantly skew the analyses you are using to drive key business decisions. By owning your own first-party data, you can carry out data cleaning best practices and make sure that every data point you are looking at is a legitimately useful piece of information.
First-party data isn’t difficult to get
All websites log the activity that’s going on from day to day. It usually requires very little engineering to track the behavior of the user and to make it accessible for analysis. With so many tools available to enable this data capture, gaining direct access to your first-party data are an extremely low-cost investment and one that will yield massive returns, making it an easy business decision that should be made as early as possible by any company.
You’ll have historical data to inform future decisions
Once you lose historical data, it can be difficult or even impossible to get it back. Owning your own data allows you to collect and store it in a way that enables year-over-year access and permits you to conduct trend analysis over time, comparing where you are now with where you want to go. It takes very little effort to keep the data, it’s cheap to store, and it doesn’t have to be enriched or cleaned; you could just keep raw data around indefinitely if desired. After you’ve set yourself up to own the collection and storage pipeline, remember to put high-quality long-term storage processes in place. It’s easy to forget to check in on your backup system only to discover a year later that it’s stopped recording!
Data is your best business improvement tool
Your first-party customer data is an asset with potentially limitless value. You can analyze it in many different ways, enrich it with new information that generates fresh insights, and look at it again years later to help answer lingering questions or new ones that only recently came to light. This data can help you increase sales, reach new markets, predict trends, and improve customer experience. Why would you leave such a critical tool in the hands of someone else? Don’t. In the interest of improving your business and better serving your customers, own your data. You won’t regret it.
Once you have the data it’s time to enrich it
In our next post, we’ll talk about what to do with first-party data once you own it. If you are wondering how to start collecting your own first-party data, we’d love to talk! Fill out the form below with your questions and we’ll be in touch.
This article was written in collaboration with Eric Tucker and Rachelle Cummings.