What is first-party data?
First-party data (also known as 1P or 1st-party data) is the information companies collect from customers, subscribers, users, and site visitors. It has several advantages over more traditional data collection methods (like third-party and second-party data gathering).
Businesses can collect first-party data when site visitors interact with the site or marketing emails, browse the company’s website or app, or complete surveys. Using first-party data helps businesses understand the customer journey and tailor digital marketing based on customer identity.
First-party data plays a big role in company data strategies because it provides reliable and insightful information without needing to purchase it from another provider. It typically offers better data quality than other data types, allowing companies to track database sharing and other digital interactions effectively.
Let’s look at how first-party data compares to other types of data.
Zero-party data is the information customers and internet users voluntarily share with website providers and companies.
Users may share zero-party data by completing market research studies, customer satisfaction surveys, or mini quizzes on the company’s website.
Companies typically acquire second-party data from trusted partners. For example, a hotel website could purchase second-party data from an airline it has partnered with to improve the accuracy of its targeted advertising.
Businesses purchase third-party data from sources that are not the original collectors (i.e., third-party sources). These sources are often large data aggregators that buy first-party data from various other websites and platforms without establishing a direct relationship with the consumers. They then resell this data to other companies.
Examples of first-party data
Here are the most common first-party data points with examples:
- Demographic information – gender, race, age, marital status, employment
- Location – where users live, work – or where the business is based
- Interests – products, preferences (e.g., marketing materials, content)
- Purchase history – subscriptions, bundles, cross-sells or upsells, purchase value, or how long someone has been a customer
- Social media – providers and platforms the customer uses and where they most actively interact with the organization’s marketing.
With the wealth of information available, companies can create in-depth customer profiles, map customer journeys, and improve customer intelligence.
How is first-party data collected?
Since first-party data comes directly from customers, companies collect it through data channels they own. The four main data sources are:
- Website/mobile app activity. Most companies have website and app analytics, providing reliable and continuous data about their customer activity. The information tracked includes time spent on the website or app, products purchased (or left in shopping carts), and browsing patterns.
- Emails and SMS. Email and SMS marketing is a key source of first-party data. Every email a business sends allows them to track how customers interact with it. Companies can know if the potential customer opened the email, clicked the offer, or purchased a product or service.
- Social media. Companies may also collect information about their customers on social media platforms. They can get a lot of insight from user comments, likes, follows, and messages.
- POS systems. If a company also offers in-store services, the point-of-sale system can provide useful information on purchasing history. For example, companies may track product sales, customer spending, loyalty program effectiveness, and membership statuses.
Companies can also collect first-party data from several other sources:
- Lead generation campaigns
- Customer feedback and satisfaction surveys
- Customer service/sales conversations
- Live chats
It’s worth noting that collecting first-party data is typically free, while companies need to pay for second- or third-party data.
How companies use first-party data
Companies can do so much with customer data – especially when it’s high-quality data from their own sources. Customer data is so valuable for businesses that they keep investing millions of dollars into data tracking and marketing strategies year after year.
First-party data allows companies to make their marketing strategies more effective – and boost sales performance. Here are some of the most common ways companies use first-party data:
- Building customer profiles. Audience insights gained through this data help companies build more accurate customer profiles. The more reliable information these profiles contain, the better their understanding of their online customers. Companies can make better purchasing predictions when they know how a particular profile customer might act.
- Creating personalized customer experiences. First-party data helps businesses personalize their products and services and customer communication. For example, companies may tailor their website, email, and SMS content based on the customers’ interests, demographics, and location. They may also decide when the right time is to communicate with particular customers – and what offers to show to spark their interest.
- Improving customer segmentation. Not all customers are created equal. That’s where segmentation comes into play. Companies need to be able to group users based on their information so they can identify the most valuable groups and target them more effectively. Using first-party data, companies create accurate segmentations of existing and new customers.
- Customer journey mapping. Companies need to know how their customers move through the marketing funnel stages. First-party data provides companies with the necessary puzzle pieces to map their customer journey and improve conversion rates at each step.
Is first-party data good for customers?
While gathering first-party audience data is great for companies, the debate is ongoing about online customer tracking and digital privacy.
Companies can collect information about their customers in countless ways – from voluntary zero-party data to customer information purchased from third-party data sources.
However, unless customers answer questions directly, many don’t realize companies can access this wealth of information about them.
Demographic data, interests, habits, purchases, preferences, and online activity – all that and more may be available for analytics and advertising without the user realizing.
It’s worth noting that in terms of data privacy, first-party data is arguably better than third-party data that companies purchase from data providers. Using first-party data means the company has complete control over the collection methods.
Purchasing data from a data broker – even if the broker is certified – makes it more difficult to verify the data collection process. It comes from multiple sources that may not be known. Therefore, first-party data may be a better alternative than data purchased from a data provider.
Ultimately, the issue with any type of tracked user data is that it needs to be done with complete transparency, giving the user a chance to opt out of being tracked. While companies want to gather as much data about their customers as possible, the decision of whether they agree on being tracked lies with the individual.
Every person should have the right to decide what data about them companies collect, store, and share – and avoid tracking if that’s what they wish.
How to avoid data tracking
The good news is that you can take control into your own hands and avoid data tracking (or minimize it to what you’re comfortable with).
The most important factor is to be mindful that companies are constantly gathering user data as part of their data strategy. That’s just what businesses do.
However, you can decide how much of this information you allow them to collect and store. Here’s how to stop data tracking:
1. Check what cookies a website collects
Most websites have third-party cookies that track customer behavior and collect various information about them.
Before accepting cookies, scan through to see what information you’re happy for the website to track.
2. Use a private search engine
If you’re using search engines like Google, you are a lot easier to track online. Everything you do – from your Google searches to your most-visited forums – is included in your user profile.
Many companies rely on Google Analytics to build customer profiles and analyze the data from first-party trackers.
If you want to enhance your online privacy, choose a private browser like Tor or DuckDuckGo. These anti-tracking browsers allow you to browse with more privacy by blocking trackers.
3. Use a tracking blocker
A tracking blocker can help you reclaim your privacy. Most websites use web trackers – small tracking pixels, scripts, or third-party cookies that gather data about the site’s visitors. Some provide information about your actions on the website – others also track you around the web.
Threat Protection is an advanced privacy feature that prevents tracking and monitoring – and you get it with every NordVPN subscription. So you can maintain a safer internet connection with a VPN – while also keeping away intrusive trackers and annoying ads.