3 questions to ask in determining if you need a first-party data strategy
Have you heard of the cookie apocalypse? If you haven’t, would you mind if I used your sensory deprivation chamber? I’d like to hide from all of my problems too 🙂
Joking aside, there’s been quite a bit of chatter about third-party cookies going away and how a first-party data strategy just might be your get-out-of-jail-free card. The truth is a first-party data strategy, while ubiquitously valuable, isn’t a panacea to the third-party cookie problem for all brands.
The reason is that a direct customer relationship isn’t as compelling for customers of certain brands. In order to effectively leverage a first-party data strategy, you’ll need the ability to directly connect in some form or fashion, or the appetite to create value for this connection.
Here are 3 questions to ask yourself to determine just how good a fit a first-party data strategy is to fix what ails you (and remember, even if you don’t answer ‘yes’ to these questions a first party data strategy is important, just not as a replacement for 3rd party cookies specifically):
Is your brand well known in your space?
Brands that are well known have significant advantages creating direct relationships with customers. I am more likely to form a first-party relationship with my favorite clothing brand than many stores where that brand is sold. Both brands benefit from first-party data, but one actually has a chance at getting my data while the other does not.
Direct relationships are required in order to get access to first-party data (it is the data that results from your direct engagement with your customer, after all). If your brand isn’t well known, don’t worry! There are still other reasons why a customer might be compelled to form a direct relationship. But name recognition is one of the biggest advantages you can have for a first-party data strategy because customers are highly willing to form the direct relationship that creates the first party data on which your strategy will depend.
Is your brand or product unique, innovative and/or novel?
If your brand has a noteworthy story or approach or philosophy or product, this is another reason why customers will form direct relationships. By having products on the bleeding edge, you create the opportunity to form insights into new behaviors AND you stand out more from the crowd thereby giving customers a reason to form a relationship. If you create the allure and reputation of releasing new things, people will want a relationship simply to see what comes next.
Is there strong value in customers regularly interacting with your brand?
Keyword: Regularly. Now, regularly does not mean frequently. It just means at a consistent interval. As you may have gathered from the first two questions, a first-party data strategy is built upon the foundation that there is a reason to engage directly with your brand. It’s even better if there’s a strong reason over time. This could be because of renewals, optimizations, advancing through stages, graduating to the next product, etc, etc. There are infinite reasons for a customer to “come back” and the more of those reasons your brand has, the more effective a first-party data strategy will be.
Some verticals do stand out as being generally strong fits for tapping a substantial first-party data strategy. Retail in particular is a great fit with deep customer relationships over time. Healthcare and Financial Services companies also tend to have strong, direct relationships with patients and customers. Sports and Entertainment, and Travel and Hospitality brands also rely on being known and engaging with known customers to generate loyalty and high lifetime value.