In an increasingly data-driven world, companies have realized the importance of collecting and analyzing information about their customers and their behavior. However, the majority of this data remains untapped, leaving untapped potential on the table. The first-party datadata, i.e. data collected directly from your company's customers or users, is often neglected or under-utilized. Yet it can provide valuable insights for improving products, services, marketing strategies and much more. In this article, we'll explore why companies don't always take advantage of their first-party data, how to identify it and how to create value from it.
First-party data not always put to good use
First-party data is not always integrated into companies' data strategies, even though it can be extremely useful. But how can companies end up with valuable data, but no idea what to do with it?
Let's take the example of an e-commerce site specializing in ready-to-wear clothing. This site collects customer information (such as name, e-mail address), demographic data (age, gender) and product feedback from its audience. It also collects data from its customers' various transactions (product preferences, purchase history), web activity (pages visited, time spent on the site) and social networking activity. All this data is first-party data.
However, they are not necessarily integrated by this e-commerce site into its marketing strategy, even though they could be used to :
- launch marketing campaigns campaigns
- offer personalized product recommendations
- improve product design anduser experience
- better understand the preferences of customers and prospects
Why aren't companies using their first-party data?
This raises the question of why first-party data is not used.
Firstly, companies may lack the resources to decipher the data they collect. Collecting, cleansing and analyzing large quantities of data can be complicated and time-consuming. It requires very specific skills and knowledge. The lack of in-house skilled manpower can lead to difficulties in managing, using and understanding first-party data.
The budget allocated is also an important factor to consider. A company may lack the financial resources to invest in analysis tools and software, or to recruit data management experts from outside the company.
First-party data can also be inaccurate and incomplete. Collection sources such as satisfaction surveys, newsletter sign-ups or account creation have an impact on the quality of the data recovered. If these sources fail, the data may be missing, obsolete or incorrect, and therefore unusable.
In some companies, data is stored in silos. They are not easily accessible and cannot be compared and complemented. It's hard to get an overview of all the first-party data in stock, which can lead to difficulties in understanding and examining it.
Finally, there may be other reasons why first-party data is not used.
Companies may be afraid to use sensitive information such as personal or financial details because they don't want to breach confidentiality rules or compromise the security of their customers' data.
Some companies also don't realize the value of the first-party data they collect, or understand how to use it to generate business.
As a result, first-party data falls by the wayside, and companies miss out on business opportunities that are essential to their strategies.
What are the risks for companies?
Failure to take first-party data into account can represent a real risk for companies.
Indeed, they can miss out on development opportunities. First-party data provides valuable information for growth. Failure to consider this data can lead, for example, to more fragile marketing strategies, stagnating sales or a lack of understanding of customers.
First-party data is also important for decision-making. If this data is incomplete or inaccurate, a company's ability to make the right decisions can be compromised! The absence of information from first-party data can lead to poor strategic choices, and may fail to identify certain decisive steps in a company's expansion.
A loss of competitiveness can also be the cause of a missed opportunity. Companies that fail to exploit their first-party data will find themselves losing ground, compared to competitors who manage to leverage their first-party data to develop their business. Losing your competitive edge and no longer being a leading player in your market can clearly be detrimental to a company's development!
First-party data tells you a lot about your customers. Ignoring it can give your customers a very bad impression of your company! If first-party data isn't used, your customers are likely to be much less engaged, and more likely to be unfaithful.
Processing first-party data can also make companies aware of the risks involved in storing and using their customers' data, and thus make them more accountable.
As a result, first-party data is not always put to good use by companies. To avoid certain risks, it is essential to identify first-party data that is not being used to its full potential.
How do you identify unused first-party data?
Here, we'll take a look at how you can identify first-party data that is not being used by your company.
For example, you can start by conducting an inventory to identify all the first-party data present within a company. This involves researching all the sources, formats and owners of this data within the various departments of your company. This will give you an overview of the first-party data collected and already used in your strategy. This will make it easier for you to identify data sources that are not yet being exploited.
It may also be interesting to analyze how you are already using the first-party data in your possession. What data is analyzed regularly? How is it used? Is it important for marketing decisions? Which batches of data are not accessible or have not been analyzed for some time? All these questions will help you determine which first-party data is currently being used, and which is not.
We also advise you to mobilize cross-functional teams including your IT and marketing departments, your data analysts... Thanks to this teamwork, it will be easier for you to exchange information between teams on the use made of first-party data, in order to highlight its usefulness and benefits in generating value.
Last but not least, you'll be able to discover new sources of first-party data that can provide you with valuable insights, by pinpointing gaps in your data collection and analysis processes. Through this analysis, you'll be able to identify the most cost-effective collection points. You will also need to compare the cost of the resources required to collect, store and analyze this new data with the potential benefits to your business. This will enable you to prioritize the new data you acquire.
Once you've identified the gaps in your first-party data collection strategy, we suggest that you develop an action plan on how best to use this information, taking into account the resources required to implement it, your ability to analyze the data, as well as confidentiality and security issues.
How do you create value from first-party data?
It remains to be seen where first-party data can be most useful.
First-party data gives you important information about your customers. You can use it to better understand your customers' behaviors, preferences and motivations. This data can be exploited to help you make better decisions for the development of a new product or marketing strategy.
You'll also be able to improve the personalization of your marketing messages and advertisements delivered to your customers, based on their behavior, preferences and purchase history. As a result, your marketing campaigns will be more personalized and relevant, and will have a greater impact on your customers. In particular, this will boost engagement and encourage conversions.
Finally, accurate first-party data can help you improve your customer service and all associated support. By gaining a better overview of a customer's journey and history, you'll be able to better understand the main problems they encounter and resolve them more easily, while offering them better support.
First-party data can also be used to perfect the design of a website or product, by analyzing customer browsing behavior. Polls and satisfaction surveys can be used to gather feedback on your products. This data can help you improve the design and UX of your site, with the aim of improving the retention and/or conversion of your future customers.
Finally, first-party data can also help youidentify gaps in your data collection processes. With all this information, you'll be able to think about ways of improving and optimizing your costs. It will also enable you to better track the results of your marketing campaigns and determine what's working and what's not. This will enable you tooptimize your future campaigns for maximum impact.
Historical analysis of your first-party data will also enable you to identify major trends and make truly data-informed business decisions.
To find out more, download our guide to new CRM challenges in the context of data compliance.