It used to be enough to deliver a better, cheaper product or service than the competition. Not anymore. Today’s marketers need to demonstrate that their products and services are relevant. But providing relevance requires access to data, especially first-party data. Gaining and keeping this access depends on earning then keeping your consumers’ trust. The most effective way to build trust is through fair and transparent value exchange.
The Boston Consulting Group (BCG) recently conducted a survey to better understand how companies are using first-party data to improve their ability to customize their relationships with customers and deliver better experiences. They focused specifically on the key success factors that enable companies to best use first-party data to create value for consumers and competitive advantage for the business. Here are a few key takeaways.
Benefits & Barriers
Marketers value first-party data because it improves their ability to execute basic digital marketing functions, such as customer segmentation. It is also a key requirement for more advanced uses such as cross-channel orchestration and personalization, which enable companies to serve customers better. The most advanced marketers stitch relevant data sources together with a Customer Data Platform (CDP) to paint a more complete picture of users. According to BCG, those that do this will see a higher return on advertising spend (ROAS) and 1.5 boosts in efficiency over those with limited data integration.
While nine out of ten marketers say that first-party data is important to their digital marketing programs, less than a third of marketers are consistently effective at accessing and integrating data across channels, and very few are good at using data to create better outcomes for customers
There are multiple reasons for this. Many companies, such as consumer product manufacturers and automakers, have limited direct customer interactions. Others are comfortable relying on partners, such as retailers, that collect relevant information about customers. Another common challenge to leveraging first-party data is it is stored in silos and not available for broader, integrated use.
Earlier BCG research found more than 60% of consumers believed that opt-in or opt-out permissions should be required for most types of data use. Moreover, a continuing stream of high-profile cases involving data breaches reminds users of the risk of data abuse. Still, concerns over data security shouldn’t be considered a total rejection of data-driven marketing. Consumers are much more likely to share data with companies that they trust; they just want more control over what gets used. It’s the company’s responsibility to ensure their data stewardship is visible to customers.
Each company’s circumstances and starting point are different, but all companies can speed their journey up the digital marketing maturity curve by unlocking the potential of first-party data. Additionally, the role of first-party data will be different for each company. Success comes when use cases are linked directly to business objectives. Companies need to be precise about what data they want to gather and crystal clear with securing consumer consent. They must ensure first-party data is leveraged responsibly and demonstrate the value to the user.
Contact Leverage Lab to learn how to respectfully leverage your first-party data.