An in-depth understanding of consumers sits at the heart of what we all need to do, but we know it’s not always easy to uncover insights that will unlock a true innovation opportunity.
Successful data-driven marketers are increasingly turning to first-party data to improve customer intelligence and lessening their reliance on third-party data sources, a new report claims.
The Promise of First-Party Data report, produced by Econsultancy in partnership with data management vendor, Signal, found 82 per cent of US marketers surveyed planned to increase first-party data usage in the next year. First-party includes anything that identifies the customer, such as transactional information, CRM, Web analytics, data collected from mobile apps, call centres, point-of-sale and locational data.
At the same time, one in four surveyed will decrease their use of third-party data intelligence, historically the most common sources of insight for marketing team. The report also found 81 per cent of marketers reporting the strongest ROI from data-related investments are using first-party data sources, compared to 71 per cent of their peers.
For the purposes of the report, ‘high-performing data-led organisations’ were those experiencing the strongest positive impact from data (36 per cent) on their business.
For three in four respondents, first-party data provides the greatest insights into customers, in comparison to 18 per cent for second-party data and 8 per cent for third-party data. First-party data also delivered the highest increase in customer lifetime value (64 per cent) versus second-party (31 per cent) and third-party (5 per cent) data.
In addition, first-party data investment was easier to justify financially (68 per cent, versus 23 per cent for second-party and 9 per cent for third-party data), and demonstrated the highest lift among data sources (62 per cent for first-party data, versus 30 per cent for second-party and 8 per cent for third-party data).
Signal Australia, NZ and Southeast Asia MD, Warren Billington, said the local market reflected a similar story and cited a growing and emerging number of data-driven marketers either testing first-party data, or already doing it at scale.
“In a lot of ways, marketers have had access to first-party data in a number of channels, and quite often, the biggest insights they have on customers are from a transactional data perspective or residing within CRM or offline environments,” he commented.
“But the inherent problem in recent years is how to unlock that data and leverage those insights across other channels where they can’t currently identify customers.”
In many instances, unless customers log in on a regular basis and authenticate themselves from a Web, mobile app or even retail level, many remain largely unidentified by marketers as they interact online or in-store, Billington said. The real opportunity is bringing together first-party data to get a single view of customers across channels, and building out those profiles at scale, he said.
“The opportunity to identify those known customers at a first-party level suddenly creates a much stronger opportunity to target these customers wherever they are,” he said.
Billington said several Signal clients are looking to identify customers they have in their CRM files by linking that data together with interactions across digital channels that are currently unidentified. This is becoming more achievable thanks to the volumes of addressable, accurate and available first-party data now at the marketer’s disposal.
“That would then allow them to personalise engagement within the context of their website, or off network and in terms of driving media personalisation,” he explained. “Then generally, you can start to understand the entire customer journey and tie all those interactions together. It means you’re making much more effective decisions on where media spend is invested.”
While it’s always been inherently clear that first-party data works well, the difficulty for marketers has been fragmentation and leveraging first-party data at scale, Billington continued.
“The real focus needs to be on how to amplify instances where you can identify known customers wherever they are. If you’re able to do that, it makes sense to engage in personalising as opposed to using third-party data,” he said. “It’s one thing to identify customers more frequently in more channels, but they need to be addressable.”
For Billington, one area of first-party data still relatively underutilised is around understanding customers walking into physical retail environments.
“Ninety per cent of retail sales are still happening offline yet there is this complete gap in terms of identifying who these customers are, unless they transact, “he said. “We will start to see a lot more insights being collected and generated at the retail level through technologies, which allows an understanding of that footprint. That then allows you to market to that individual then and there in-store, or through retargeting them through other channels.”
But it’s not just marketing or advertising that benefits. These insights can then be used to personalise the whole experience.
“I’ve seen some interesting things happening around generation of insights in stores that are then delivering more personalised merchandising environments, based on the types of customers going into those stores,” Billington said.
And while there’s been plenty of focus on data allocation within digital, it’s the connected story that needs more work, Billington added.
“There are still a number of marketers that identify customers on the Web or via mobile, but don’t necessarily have the connected story,” he added. “In terms of targeting, there’s a lot of duplication, or lack of frequency about being able to identify those customers. There’s also a lot of talk around cross-device connectivity of customers. It’s that connected story that allows you to identify and increase the addressability of targeting those customers.”
The Econsultancy report was based on a survey of 302 mostly US respondents conducted in May 2015. Respondents were at management level or above and had at least US$100 million in annual revenues.
What high-performing data-driven organisations do differently
According to the Econsultancy/Signal report, high-performing, data-driven companies maintain stronger capabilities in several important data-related practices.
For example, 66 per cent excel at campaign targeting and analysis, 60 per cent have strong personalisation capabilities, and 59 per cent are more successful at attribution and audience segmentation.
The report also found organisations with high-ROI data initiatives are much more likely to have plotted a long-term data strategy (44 per cent versus 16 per cent), have agreed measurement processes in place (44 per cent versus 16 per cent), and have matched data strategy with staffing (37 per cent versus 11 per cent).
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