First-party data primer: Why you should create customer profiles, STAT

To get the most out of your customer profiles, especially those fueled by first-party data, take a cue from one of the most iconic slogans in history: Just do it.

We know third party data is going away and big data will forever be a part of marketing. Think about big data, which is data so great that typical databases cannot manage it. People talk about the Vs of big data, which range from volume and velocity to variety and value. Ultimately it’s about data that you can count on to be accurate. We often tout the benefits of planning – of investing upfront to drive significant benefits later. And yet, it’s hard to put it into practice.

Almost every annual planning meeting I’ve been a part of has dedicated a portion of time to finding ways to be “less reactive.” When we answer to internal and external stakeholders, it’s scary to challenge the status quo, so we weigh options and strategies at length before taking any action.

But when the action you’re planning to take gets stronger over time, then delays could come back to bite you later.

Well-implemented customer profiles get fuller and more valuable as customers’ relationships with brands evolve. And as more and more companies recognize that value, the gap between those who start utilizing them now versus waiting will only grow. So, if you want to keep your competitive edge, it’s time to get a move on robust customer profiles.

Avoid FOMO with first party data

Brands, and especially marketing teams, are abuzz with the impending end of third-party cookies. But while tons of ad and marketing strategies have been built around third-party data, it’s not the only data we have access to. Big data and the ways in which it can be segmented is rich with insights.

To prepare for the cookie-less world, businesses need to recognize and harness the value of their first-party data. And there is plenty of value.

It’s the age-old lesson of, “Just because we’ve always done it this way doesn’t mean it’s the right way to do it now.”

The reason first party data is so important is that it’s pure, direct from the source. First party data is the data a company gets directly from their customers—from the person for you to use to benefit that same person. A complete circle of insight and satisfaction.

First party data has huge benefits compared to its third-party cousins. It’s proprietary and relevant to you and specific to your audience. It’s a gateway to getting to know your customers so you can:

1. Develop relevant and captivating experiences based on their preferences, and
2. Attract more customers like them

Companies have already been doing this, of course. Big data creates big opportunities. But the shift away from third-party cookies means that they’ll need to lean more heavily on their first-party insights. Adjusting to this change in the landscape will take some shifts in strategy and approach.

And since the shift is scheduled for the start of 2022, time is of the essence. If you haven’t already launched a marketing strategy fueled by data-rich customer profiles, it’s time to get moving. Organizations that have already invested in customer profiles built from customer data platforms are at an advantage. CDPs pull data from first- and third-party sources, so they already have the infrastructure in place to effectively utilize the first-party data.

Create a virtuous data experience cycle

The challenge of first-party data is that customers need to want to share it with you, which means you need to offer something worth opting-in for. It could be anything from members-only discounts to a relevant industry webinar, but it needs to be something they’ll actually want.

And the best way to know what they’ll actually want is to get to know them.

If we were operating in the pre-data age, that would seem like a chicken-and-egg dilemma. But we’ve spent years collecting all sorts of data on our audiences. If you don’t know what types of experiences they’re interested in, you may have other issues to address. But even then, you know what your company brings to the market, and that alone should draw in some people.

Think of it this way: would you rather plan a surprise party for your best friend of over ten years or the coworker you met last month? You know a little about your new colleague, so chances are you could plan a delightful night. But the deep knowledge you have of your BFF would likely lead to a more uniquely enticing event.

Use the insights you already have to deliver value to your customers, and they will happily share their information directly with you. Then, you can use that data to deliver even more relevant experiences, which will attract more customers and earn you more first-party data. And so on, and so on.

That virtuous cycle means customer profiles get stronger over time. Good data leads to better experiences, which drive higher engagement, which leads to more valuable data.

With first-party data, more is more

Another reason time is of the essence when it comes to building customer profiles? The sheer amount of data today’s systems can act on.

Data management solutions like CDPs are enabled with machine learning and AI, allowing them to sift through big data more effectively than humans ever could. So massive collections of data are no longer insurmountable. Instead, the bigger backlog of historical data you have, the better your system can identify patterns and trends to improve your customer experience and inform strategic decisions.

But, especially when you’re relying on first-party data, you will not build that database overnight.

Optimizing customer profiles is an iterative process—it’s not going to be perfect the first time you use it. You’ll start to see the positive patterns and trends as you use it, but you’ll also identify gaps that you couldn’t have predicted otherwise. It could be gaps in the data (“If only we knew X, we could really make an impact.”), or gaps in your customer experience (“We’re losing a lot of people at this stage in the journey – what’s going on?”).

You then use all those insights to adjust your user flow, profile settings, or anything in between. Then you do it again. And again. It takes time, but the investment is worth it.

If you wait to get started with a customer profile strategy until it’s perfect, you’ll find yourself stuck in a loop, because you can’t make it perfect until you see it in action.

Don’t wait to turn first-party data into first-class experiences.

No one can see through false urgency like a marketer. When I see “Don’t wait! Act now!,” my buzzword-spidey-senses start to tingle. But sometimes, the urgency is real. Customer profiles are incredibly powerful tools that can help all sorts of businesses create meaningful, long-lasting relationships with their customers. They can impact every facet of the customer experience and lead to serious ROI.

And once third-party cookies are retired, profiles based on first-party data will be taking center stage.

But they aren’t a magic bullet that can instantly transform your business. If you want to reap the benefits down the line, you need to make a move now. And if you don’t, someone else will.