Zero-Party Data: Definition, Strategies, Ecommerce Examples

An effective zero-party data strategy is quickly becoming the north star for ecommerce brands that want to grow quickly and sustainably.

Modern ecommerce enterprises can lean on zero-party data for clear, insightful guidance. That’s because, unlike first or third-party data, zero-party data is willingly and explicitly provided by consumers and offers invaluable insights into their preferences, needs, and behaviors. You can harness this data to create a better shopping experience for your customers.

In this post, you’ll learn what zero-party data is, how to collect it, the benefits, and how to create a compelling strategy.

What is Zero-Party Data?

Zero-party data is information that a customer willingly shares with your brand. It’s not inferred, assumed, or collected without their consent or knowledge. Instead, it’s given directly by the customer, often in exchange for a better, more personalized experience.

The Role of Zero-Party Data in Ecommerce

The ecommerce brands that personalize each interaction with customers are the ones that win. Having a zero-party data strategy is how to build trust and provide better shopping experiences at scale.

This has an enormous impact on all aspects of your business, from sales and marketing to product innovation and development. For instance, if a subset of your customers are most interested in sustainability, you can provide targeted marketing campaigns and messaging about your sustainable products directly to them.

Likewise, if you know that 65% of your customer base  is interested in three sustainable products, you can use that to not only have more of those SKUs in stock, but you can also develop additional products that take these preferences into account.

What Zero-Party Data Taught About the Need for Laser Dust Detection

A prime example of this is how Zoovu’s Guided Selling Assistant helped Dyson learn about their customers’ desire for a dust detection laser. By collecting zero-party data through Dyson’s product finder experience, the company was able to gain deeper insights into their customer preferences.

It became apparent through this data analysis that there was a growing preference for devices equipped with the new green laser. Recognizing this trend early on allowed Dyson to adjust their production and marketing strategies accordingly, emphasizing the dust detection feature in their campaigns.

As a result, they were able to cater to this emerging demand, resulting in increased sales and customer satisfaction. This new feature has grown in popularity so much, it spawned a new category of “Illumination Vacuums” — a testament to how understanding and acting upon customer preferences can significantly impact a brand’s success in the ecommerce space.

Personalization in a Cookielss Word

Hold onto your chocolate chips! We’re biting into the crunchy world of digital cookies. You know, those sneaky little crumbs that hang out in your browser, remembering things like your secret love for cat videos or the product you favorited on Instagram. They’ve been the behind-the-scenes wizards, helping businesses magically recommend those fluffy feline socks for years — but they are about to go away.

The data collection free-for-all of the past decade is coming to an end due to rising privacy concerns. Businesses can’t just shadow users across the web anymore.

As we shift into a cookieless world, zero-party data is the fundamental shift ecommerce brands need for data collection and personalization since this offers a way to continue delivering personalized experiences while building trust and staying compliant.

– Anthony Chavez, Google’s Vice President of Privacy Sandbox

That’s because businesses can’t rely on tracking users across the web to gather data. Zero-party data offers a direct and transparent way to understand customer preferences without tracking them.
 
Plus, you can also get more insights since customers are willingly giving you this data.  You don’t have to make assumptions about their intent based on tracking pixels or third-party market insights.

Finally, it is fully compliant with GDPR, CCPA, and other data privacy and security regulations.  

Examples of Zero-Party Data for Ecommerce

Here are three examples of how our customers are collecting zero-party data.

Dyson

Diving back into the Dyson example, we can see within two seconds of landing on this Dyson vacuum cleaner quiz, that it’s tailored to learning more about a potential customer’s experience while still being concise. The entire quiz is four questions and takes less than a minute to complete.

The first question dives into understanding the size of your home. This isn’t just a casual inquiry. It is laying the foundation for providing personalized recommendations.

As you proceed, it asks questions about your cleaning habits, like “grab and go cleans” vs “deep cleans.” It also asks about the floor types in your home. This ensures the recommendations consider whether you have carpets, tiles, or hardwood floors that require gentle washing. It also asks about the components that are crucial to you in a vacuum, be it suction power, portability, or battery longevity.

By the time you reach the end of the quiz results page, a tailored Dyson vacuum cleaner recommendation is at the top of the page. There are also two CTAs present, including an ‘add to basket’ and a ‘learn more’ option.  Despite being fully automated, the entire experience feels distinctly personal. 

Even if a customer doesn’t buy right away, Dyson is collecting many zero-party customer data points they can use in future marketing campaigns.

Nespresso

Nespresso’s approach to guiding coffee enthusiasts towards their perfect brew is a blend of sophistication and personal touch.

The quiz starts by asking about what kind of coffee machine they are using. Recognizing that the machine can influence the brew, users are prompted to specify their machine type, even accommodating those who haven’t made a purchase yet.

From there, they ask about their coffee preferences and whether they add milk to their coffee.

Despite being only four questions, each answer refines the path, ensuring they are collecting more zero-party data and the coffee recommendations are what customers are looking for.

Upon completing the questionnaire, Nespresso unveils a curated list of six coffee selections, each promising a unique flavor profile aligned with the insights shared. The ‘add to cart’ option is conveniently placed at the bottom, making the transition from discovery to purchase seamless.

They also have a “You may also like” section at the bottom of the quiz results landing page with complementary products to enhance their purchase and increase average order value.

Logitech

Logitech’s approach to guiding users toward their ideal office setup is both intuitive and personalized.

Beginning with the premise that “Every setup is different — depending on who you are, what you do, and how you work,” the brand sets the stage for a tailored shopping experience.

As you engage with their shopping assistant, you’re asked to weigh in on what matters most to you. Is it the performance of the devices, ensuring each keystroke or mouse movement is precise? Or perhaps it’s the aesthetics? And for those who value hassle-free experiences, simplicity might be the top priority.

Each response adds another zero-party data point and helps provide more accurate recommendations that are in sync with their preferences.

On the quiz results page, Logitech presents a selection of products that feel handpicked just for them. From mice and keyboards to webcams and headsets, each recommendation aligns with the insights they’ve shared. And to make the purchasing decision even smoother, there’s a straightforward ‘add to cart’ button.

What is Zero-Party Data used for?

From product recommendations to content customization, here are four of the most common ways to use zero-party data in your ecommerce business.

Product Recommendations

Using zero-party data from customer surveys, quizzes, or preferences, create highly personalized product recommendations that align with individual preferences and needs. So, you can move beyond generic product recommendations and offer a shopping experience that feels personal, intuitive, and delightful. 

For instance, if a customer specifies a preference for eco-friendly products, the recommendations you surface should focus on sustainable and green products.

But it doesn’t have to stop at style or product type preferences. If that same customer shares that they’re shopping for a special occasion, like a wedding, you can alter product recommendations to showcase wedding attire or must-have accessories that also happen to be ethically sourced and made from sustainable fabrics.

Customized Bundles and Offers

Zero-party data allows businesses to shift from a one-size-fits-all approach to a personalized bundling strategy. By offering customized bundles and packages based on direct customer input, you can increase engagement, boost sales, and foster lasting customer loyalty.

Here are some ways you can implement this at scale.

• Bundles and packages. Bundles are a great way to increase average order value. Using this data, you can curate packages that feel personalized and offer genuine value to the customer.
• Special offers aligned with individual interests. Beyond just product bundling, zero-party data can inform special offers. If a customer has shown interest in a particular product category, businesses can provide exclusive discounts or early access to new product launches in that category.
• Upselling and cross-selling. Zero-party data can also be instrumental in upselling and cross-selling. So, you can recommend premium versions of products they are already looking at or complementary add-ons based on the preferences they’ve already shared with you. This in turn increases average order value and usually leads to higher customer satisfaction.
• Loyalty programs and rewards. Customized offers can extend to loyalty programs. Based on the preferences customers share, loyalty rewards can be tailored to offer them early access, exclusive products, or special discounts in their favorite categories.

Personalized User Experience

You can also utilize zero-party data to personalize the website layout, featured products, or even language settings based on customer input.

For instance, if a customer has shared that they’re visually impaired, the website can automatically adjust font sizes or offer a dark mode to enhance readability.

When a website caters to a user’s specific needs, it creates a sense of comfort and trust. This not only enhances the immediate browsing or shopping experience but also encourages repeat visits and fosters brand loyalty.

Content Customization

Finally, you can use zero-party data to offer a personalized content feed on your website based on your customer’s stated interests and preferences. This allows you to curate content that resonates deeper with customers.

This allows you to move from a broad content strategy to a hyper-personalized approach. By presenting users with content that mirrors their stated interests, you ensure a richer, more engaging, and loyalty-building user experience. This in turn usually leads to more sales since customers feel like you get them.

What are the Benefits of Zero-Party Data?

There are a handful of benefits to using zero-party data, including:

• Establishing trust. Customers are in full control of what data they are sharing with you. By using zero-party data, you’re showing your customers that you value and respect their data privacy. 
• Personalize the buying experience. Knowing your customers’ preferences directly means you can tailor their shopping experience. For instance, if a customer tells you they’re vegan, you can show them vegan products first.
• Provide accurate recommendations. Unlike first, second, and third-party data, which might be based on assumptions or behaviors, zero-party data is straight from them. It’s what the customer has explicitly stated, so it’s highly accurate.
• Improve marketing performance. Personalized marketing campaigns based on zero-party data are more likely to resonate with the target audience, leading to better engagement and conversion rates.
• Stay compliant. With increasing regulations around data privacy, like GDPR or CCPA, using zero-party data can help ensure you avoid costly fines.  
• Future-proof your business. As we move to a cookieless world, relying on zero-party data is the way to go. This ensures you stay in the know about customers’ preferences and reduces your dependence on third-party data providers. 

Zero vs. First vs. Third-party data

In the world of data-driven decision-making, understanding the nuances between zero-party, first-party, and third-party data is crucial.

Zero-party data is like having a face-to-face conversation with your customers. They openly share their preferences, needs, and desires with you, typically through channels like surveys or quizzes. Because this data is explicitly volunteered, it’s like getting a direct invitation into their world. This not only makes it more accurate but also compliant with even the strictest data privacy regulations.

Now, imagine observing someone’s actions from a distance. That’s first-party data. It’s gathered when consumers interact with your website. For instance, when they click on a product or download an ebook. While it doesn’t offer the direct insights that zero-party data does, it still provides valuable information about customer behavior. However, you need cookie banners or another explicit way for customers to “opt in” to collect this data. 

Lastly, there’s third-party data. This is like playing the telephone game. You didn’t get the information directly from the source, nor did you observe them yourself. Instead, you’re relying on rumors or third-party sources, like data brokers, to provide these insights. Because you are removed from the original source, it is usually less accurate (just like the last person in a game of telephone) and often lacks clear consent from consumers.

While all three types of data have their roles, it is generally best to do everything you can to collect and rely on more zero-party data.

What Insights Can You Get from Zero-Party Data?

As consumers become more aware of how their personal data is used by companies, there’s a shift towards obtaining explicit customer consent before collecting their information. This approach contrasts with the traditional marketing strategy of using third-party cookies or buying data from brokers.

On the other hand, zero-party data is information that customers willingly share with brands, as opposed to third-party data which is often collected without explicit consent and can be a violation of data privacy laws.

Forrester Research describes zero-party data collection as demographic information that a customer “intentionally and proactively shares with a brand.” This can be through social media, website forms, quizzes, emails, surveys, polls, reviews, product preferences, onsite focus groups, and interviews.

It provides a glimpse into customers’ pain points, motivations, needs, and beliefs. The more insights and touch points you get about their purchase intentions, the more intel you have to build richer customer profiles and provide more accurate recommendations and content at scale.

How Do You Collect Zero-Party Data?

There are many ways that marketers can collect zero-party data. However, from our experience working with some of the largest brands, like Microsoft, 3M, and Logitech, these are the most common methods.

• Product Discovery Experiences. Offering interactive experiences on a website, like product discovery tools, can be a way to educate and solicit feedback. The interactions themselves can also be a rich source of zero-party data that can be used for tailored content and product recommendations.
• Quizzes and Polls. Create quizzes that educate and engage your customers and help them find what they are looking for. For example, a fashion brand might have a “Find Your Style” quiz to provide personalized recommendations based on customers’ answers in this quiz.
• Preference Centers. Allow customers to set their preferences in their account settings. This could include product categories they’re interested in, frequency of emails, etc.
• Rewards for Information. Offer discounts or loyalty points in exchange for customers filling out their profiles or answering questions.
• Value exchange. Customers are more likely to share their data if they perceive a direct benefit from doing so. For example, a gourmet ice cream brand might request a customer’s birth date to send a special birthday offer.

How To Create a Zero-Party Data Strategy

Product discovery experiences offer a strategic opportunity to collect zero-party data.

Guided Selling Assistants

Guided selling is about leading customers through their buying journey by understanding their needs and preferences. Think of it like having your own personal shopping assistant who asks you questions to better understand what you’re looking for and then recommends products that align with your desires.

This ensures that customers feel heard, valued, and presented with choices that resonate with their explicit needs, leading to higher customer satisfaction and increased sales.

As users interact with a Guided Selling Assistant, they provide explicit preferences through quizzes or product finders. For example, an electronics ecommerce site might use a series of needs-based questions to determine a customer’s preferences toward size and weight over performance. This explicit data is captured and stored as zero-party data.

So, you are not only providing more relevant help and recommendations for this particular customer. It is also being stored (with the customer’s consent) and used for future engagements. The next time the customer visits, the platform might highlight additional products that have been launched.

And as more customers interact with the Guided Selling Assistant, the business can aggregate this zero-party data to identify trends. This can inform your company’s future product offerings or partnerships.

Intelligent Search

Intelligent search goes beyond just matching keywords. It’s about understanding user intent and delivering results that align with their needs. By incorporating zero-party data through search filters, the search functionality becomes even more refined and reduces search friction.

For instance, if a user consistently opts for vegan products in their search queries, this preference can be logged as a zero-party data point for future personalization.

With accumulated zero-party data, intelligent search can offer more predictive suggestions. If the user in the above example starts typing “chocolate,” the search might auto-suggest “vegan chocolate” based on past preferences.

Configure-Price-Quote (CPQ)

CPQ tools, like a visual product configurator, are designed to transform complex sales processes from a transactional interaction to a personalized journey.

It’s a dynamic and interactive process. Every choice a customer makes during this configuration provides real-time pricing and is a direct reflection of their preferences and requirements.

As customers configure a product to match their needs—selecting specific features, add-ons, or service tiers—their selections can be captured as zero-party data. This information can then be used for future engagements or upsell opportunities.

By capturing and leveraging the explicit preferences customers share during the configuration process, businesses can offer a more tailored experience, foster customer loyalty, and maximize sales opportunities.

Zero-Party Data and AI for Ecommerce Personalization

When you combine your zero-party data strategy with AI, you can merge customer insights with the power of predictive analytics. When executed well, you can get to know more about your customers than they may even know about themselves.  

The result is deep personalization and predictive shopping journeys at scale.

Zero-party data provides a direct window into your customers’ preferences, needs, and desires. When this data is fed into AI algorithms, these systems can analyze and predict patterns at a scale that’s impossible for humans.

For instance, if a customer indicates a preference for sustainable products, AI can not only highlight such products but also predict other eco-friendly preferences the user might have, like organic food or energy-saving appliances.

This can also lead to a more dynamic user experience. Imagine the same customer browsing eco-friendly products and indicating a preference for “plant-based meats.” As they navigate the site, AI can instantly curate and rearrange product displays to highlight different plant-based meat products and even suggest complementary products, creating a shopping environment tailored just for them.

At a certain point, you may even be able to anticipate a customer’s needs even before they articulate them. Going back to the sustainability example, if this same customer has previously shown interest in sustainable food for camping and later expresses a preference for winter vacations, the AI might proactively suggest the best plant-based camping food and winter camping cookware. 

This results in a more engaging user experience, increased customer loyalty, and ultimately, higher conversion rates.

Zero-Party Data and GDPR

Zero-party data doesn’t just offer a path to enhanced personalization. It is also fully GDPR compliant. By focusing on data that customers willingly and transparently provide, businesses can navigate the complexities of GDPR with confidence, ensuring that they respect user rights while also delivering tailored experiences.

That’s because at the root of GDPR is the principle of informed consent, individuals must be aware of how their data is being collected and used, and they must give explicit permission for such collection and usage.

Zero-party data achieves both. When customers provide zero-party data, they’re actively and willingly sharing specific information with brands, often in exchange for a more personalized experience. This voluntary sharing ensures that businesses are on solid ground when it comes to GDPR’s consent requirements.

Plus, you are now less reliant on third-party data, which is often less accurate and can lack clear, informed consent.

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In an era where data privacy concerns are at the forefront and regulations like GDPR set stringent standards, having zero-party data is a way to not only stay compliant when collecting data but can also provide better personalization at scale.

You are also building trust with customers since they are in full control over the information they share with your business. 

Furthermore, when combined with AI, zero-party data can significantly elevate personalization strategies.

Looking to collect more zero-party data and leverage it for more personalized shopping experiences at scale? Schedule a demo of Zoovu today.