In the ever-evolving field of digital marketing, where businesses scramble to stay ahead of the competition and appeal to an ever-discerning consumer, the importance of high-quality data can’t be overstated. Notably, in 2023, where attracting and converting prospective buyers is a central business challenge, every marketing executive’s question is, “How do we reduce customer acquisition costs?”
This investigation leads us to zero-party data (ZPD), a data acquisition process that promises insights on how to reduce customer acquisition cost (CAC). This article will discuss these challenges and how zero-party data marketing can help executives improve marketing efficiency and attract high-quality prospects while lowering customer acquisition costs.
The consumer is changing
In the 2020s, marketers have faced a sea of change in consumer behavior. More than ever, people are aligning their buying decisions with personal values. This shift isn’t limited to individual brand selection; it can include product categories they engage with.
Brands need to stay in touch with consumers to understand what they want and ensure they adjust their operations accordingly, introduce new products, or change their messaging to include how they address consumer concerns. Zero-party data allows marketers to understand what’s important to consumers and act on it.
A green example
For example, the global push toward sustainability and environmental responsibility has seen a surge in consumers prioritizing green initiatives. They seek brands that share these values and, more importantly, demonstrate them in their operations and offerings.
This “conscious consumerism” is more than a fad; it’s a burgeoning movement. Over 60 percent of consumers choose brands that are making an effort toward a greener future.
Fashion brands should consider creating products from environmentally friendly materials and tech giants can commit to carbon neutrality. Every sector feels the effects of consumer concern over the environment. Identifying this trend early would have prepared a brand, allowing them to respond intentionally.
Instead, retailers are scrambling. They put effort and resources toward understanding these new consumer paradigms, but playing catch-up is challenging and costly. The race to gain a deeper understanding of current consumer needs traditionally means intensive market research, focus groups, and deep analytics. In contrast, zero-party data is a clearer way to connect with customers and potential customers and get the needed data.
Escalating advertising costs
Brands are also suffering from escalating expenses in online advertising. The skyrocketing advertising spending shows a need for more understanding about their customers. This data gap means a lot of guessing or marketing to general groups—a gap that can be filled using zero-party data.
A solid online advertising plan incorporates advertisements targeted to general demographics. For example, the brand might identify a group of women aged twenty to thirty who generally respond to certain types of messaging. However, marketing teams armed with zero-party data now have the opportunity to drill down and take advantage of a granularity of focus.
A skin-care brand, for example, no longer markets merely to “women in their twenties.” They’ll target vegan consumers interested in cruelty-free products, or perhaps eco-conscious individuals seeking biodegradable packaging, and adjust their messaging according to each group.
This shift toward hyper-specific targeting means you’re talking to the people most likely attracted to your message and product. However, obtaining this key information is becoming increasingly complex through traditional methods for the reasons discussed below.
Social media is biased
Social media platforms make their money from advertising, so, from their point of view, the longer they can keep their users on their sites, the more likely they are to report the kinds of numbers their advertisers want to see.
Once a source of organic reach and community building, social media platforms reduce exposure to posts with external links. Going viral is all good, but these efforts may no longer win new customers for your brand because it’s no longer in the interests of social media platforms.
Privacy issues closing access
Driven by privacy concerns, worldwide legislation is affecting how marketers gather information on shoppers and track their online behaviors. Regulatory frameworks like the General Data Protection Regulation (Regulation (EU) 2016/679, abbreviated GDPR) have set strict boundaries around data collection and usage in the European region. This legislation curtails businesses’ ability to understand their potential European audience and increases the risk associated with non-compliance. Other jurisdictions are following suit, and navigating this intricate mesh of rules and restrictions means businesses can no longer have easy access to vast pools of third-party data they once had.
Further, in 2024, Google will change the game once again by deprecating third-party cookies and introducing the Privacy Sandbox, a tool that will allow users to manage their interests and will group them into cohorts based on browsing patterns. By July 2024, Chrome 115 will be released, which will make Privacy Sandbox’s relevance and measurement APIs available to all Chrome users, but there is a lot of uncertainty around how brands will solve data access problems caused by the deprecation of third-party cookies.
In essence, 2023 is a year of reckoning for businesses regarding customer acquisition. The mounting costs, the changing consumer landscape, and the increasingly stringent digital access barriers pose significant hurdles. The key lies in understanding and leveraging data more effectively than ever, which brings the conversation back to zero-party data, the solution for marketers dealing with this complex scenario.
Better data means a solid marketing ROI
Every marketing and advertising strategy hinges on data quality. Better data means lower customer acquisition costs. As campaigns become more targeted and personalized, the relevance and accuracy of this data decide the fate of these marketing efforts.
Again, there is a gap between this axiom and access to high-enough quality data. Though, over 78 percent of marketers believe they have embedded data in their organization, 70 percent feel their data could be better. When you consider that just a 10 percent increase in data accessibility can mean millions in revenue for a Fortune 500 company, access to this data is critical.
Brands leveraging high-quality data consistently outperform their counterparts who rely on more generalized, lower-quality information. By honing in on specific consumer preferences, behaviors, and pain points, businesses can craft marketing messages that resonate deeply, ensuring better engagement, higher conversion rates, and a significantly lower CAC and higher ROI.
The problem with analytics
However, while data analytics tools have evolved to be sophisticated and intricate, offering previously unattainable insights, they could be more flawless. As insightful as they may be, analytics can only tell you what a website visitor is doing, not why customers are making their choices. Marketers relying on analytics tools have to guess the “why,” which may not allow them to anticipate sudden market changes or unpredictable consumer behavior shifts.
So, while data remains pivotal, its inherent limitations underscore the need for businesses to refine their data sources and analytical methods continually. After all, in the dynamic world of digital marketing, resting on one’s laurels is not an option.
Zero-party data revolutionizing marketing strategies
Zero-party data is quickly emerging as a primary tool for marketers. The customer freely gives ZPD, so it’s the gold standard of customer information—high quality and unparalleled clarity. What exactly makes zero-party data an essential asset for contemporary marketers?
Zero-party data originates directly from the consumers themselves. Unlike first-party data, which relies on observations or third-party data, often sourced from external agencies, ZPD is explicitly provided by consumers. There’s no room for assumptions, ambiguity, or inaccuracies. Brands receive raw, undiluted insights when customers share their preferences or feedback through ZPD. This direct access translates to data that’s not just reliable but also refreshingly authentic.
Profound predictive power
Anticipating consumer behavior is invaluable, and with ZPD businesses gain a robust predictive tool. Since this data captures explicit consumer sentiments, preferences, and intentions, it provides a roadmap to their future actions.
Do you want to know if a customer will likely engage with a new product line or a revamped service? Zero-party data strategies allow brands to ask the questions they need to ask to get the data that will enable brands to tailor their approach proactively.
Seamless integration and usability
A common pain point with many data types is the “lag”—the time and effort needed to process, analyze, and render the data actionable. ZPD dramatically truncates this timeline. Being explicit and straightforward, there’s minimal, if any, analysis required. Whether crafting a new marketing campaign or tweaking an existing one, the insights from ZPD can be instantaneously leveraged, giving brands a competitive edge.
Dynamic and engaging collection mechanisms
With ZPD, the data acquisition process transforms into an interactive experience. Brands leverage gamified surveys, interactive content, and value-driven feedback mechanisms to gather ZPD. Aside from being engaging, these methods offer consumers tangible value, be it personalized recommendations, loyalty points, or exclusive offers.
What’s more, these enjoyable interactions are innately shareable. Impressed by the experience, consumers are more likely to share it on their networks, amplifying the brand’s visibility and reach.
LĒVO: a zero-party data case study
LĒVO, a D2C ecommerce brand for oil infusers, doubled their engagement rate and increased conversions 30 percent by incorporating Wyng ZPD experiences on their site. Though LĒVO had achieved steady traffic and good growth, traditional marketing (third-party data, targeting, and landing pages) had become increasingly complex, expensive, and ineffective. LĒVO needed to increase conversion rates of their existing traffic. An increased conversion rate means a lower CAC on their advertising investments.
Wyng helped LĒVO create multiple digital experiences— a welcome quiz, contextual preferences embedded on recipe pages, and a customer preference center — that offered immediate value to web visitors. These experiences gathered information about visitors’ likes/dislikes and product affinities, which allowed LĒVO to recommend products most aligned with their needs.
Now, after these changes, if a shopper doesn’t immediately convert onsite, instantaneous connections created by Wyng between the online store and LĒVO’s email marketing tool will allow LĒVO to follow up on the shopper’s visit. Armed with the gathered data, LĒVO can send marketing email flows sharing relevant and personalized offers based on the shopper’s stated preferences, further increasing conversions.
Zero-party data means lower CAC
Not just another data point, zero-party data represents a paradigm shift in how brands think about customer data and website visitor interactions. Collecting customer data is no longer an opaque process with little transparency or value for the customer. Instead, it is an enjoyable experience for customers where they receive value in exchange for their data through personalized offers, content, and recommendations that improve their shopping experience (and thus conversion rates for the brand).
Consumers are no longer interested in generic messaging, and many care deeply about their preferences as emotionally driven consumers. Zero-party data, with its promise of accuracy and relevance, bridges the data gap between consumers and brands, allowing brands to give consumers what they want, resulting in higher conversions and lower CAC.
For marketers looking to reduce their customer acquisition costs, Wyng offers a zero-party data platform that allows brands to build engaging digital experiences that collect customer data. This data can then be used within Wyng to personalize web experiences, or synced to any other channel to provide more accurate targeting and personalization across ads, email, SMS, and more. Contact Wyng, the leader in zero-party data marketing, for more information on how ZPD can decrease your customer acquisition costs.