The year 2020 was a year of tragedy, as well as wonder. Whether consciously, or subconsciously, it inspired many individuals and organizations to conduct their own SWAT analysis to honestly assess their strengths, weaknesses, threats, and opportunities. One critical metric that consumer goods and services businesses were forced to confront in 2020 was the true depth of their relationship with customers. It wasn't pretty. As lockdowns occurred, and consumers rapidly accelerated to digital channels, there were only a few brand winners across all brand categories (mass, premium and luxury) in this rapidly digitizing economy. As evidenced by the vast numbers of bankruptcies and devastated financials, many brands failed to retain customer relationships when severely tested, even with financially-resilient stay-at-home affluent consumers. Many companies realized that their brands, despite all the rhetoric to the contrary, are flat-footed, product-centric, channel-centric, and transactional. The transformation of brands into omni-personal, customer-centric organizations will be an existential imperative in the roaring 20s. Customer data will be the lifeblood of customer-centricity.
It bears repeating that post pandemic, and especially in the rapidly accelerating digital economy, data is the blood supply of any business. It drives customer prospecting, conversion, retention, transaction value, and referrals. Data drives the top and bottom lines of the enterprise. Global privacy regulations, the ongoing death of third-party cookies, ad-blocking, and other impediments to wasteful and ineffective marketing methods that exist today will eliminate unethical, and sometimes illegal, methods of collecting data by intermediaries. Ethical brands have been inspired to explore new, more effective ways to build deeper customer relationships. In 2021, and moving forward, one of the most important ways that a brand can measure customer loyalty is by how much data and insights their customers are willing to share with them, legally and ethically, for fair value rewards and personalization. Enterprise start-ups that are starved of customer data will never take off, and incumbents that can't achieve, or suddenly lose, customer trust will vanish.
The art and science of customer data access today is defined by four types of data: third-party data, second-party data, first-party data, and now zero-party data. Let's briefly understand each type:
Third-party data is collected by intermediaries from various sources. It can be demographic data such as age and gender, or behavioral data such as physical location, browsing, and ad responses. Most of the time, this data is collected online from third-party cookies or other direct feeds from public websites to data aggregators. This data is highly controversial now because it has been exposed for what it is: unauthorized consumer surveillance. Even the most benign third-party data brokers, who collect data from public records, have issues with data being notoriously inaccurate, dated, and obsolete. In a recent Deloitte survey, only 59% of consumers found their collected third-party data to be accurate. Third-party data providers may disappear as an industry if they fail to adapt because they rarely provide brands with the critical information they need to be effective marketers.
Second-party data is the data that organizations collect directly from clients and consumers. There are brands that share their data with other organizations as part of a partnership, or for financial gain. While this data is typically accurate, it is often thin and limited. Given new privacy regulations, it is an open question whether ethical brands, especially publishers, will continue to take the security and privacy risks of sharing their own customer data, even if they have customer consent, which is very unlikely. Second-party data is in decline.
First-party data is the data that is collected by a brand from their surveys, website, mobile app, store transactions, and other means of direct communication with customers. First-party data is essential to a brand's operations and success, but by definition, its use is limited in scope in terms of building comprehensive customer relationships. First-party data often resides in different systems within an enterprise, making it difficult to holistically understand customers. First-party data also tends to be biased as it is based on single sources and on actions taken by the enterprise, which may, or may not, be optimal for the business.
Zero-party data is a term coined by Forrester Research to refer to data that consumers are willing to share directly with a brand they trust in exchange for some understood and agreed-upon value. In lieu of third-party cookies, collecting this data has now become popularized as the holy grail by ad-tech and mar-tech vendors. Suggestions for collecting zero-party data such as demographic data and preference data include using surveys, contests, and incentives. For brands that are customer-centric, asking customers about preferences and recording them in some digital tool is nothing new. However, it is inefficient. Customers do not have the patience to consistently answer questions for every brand that wants to receive answers. At best, zero-party data methods, as currently defined, are completely insufficient to create a full 360-degree view of the customers in order to achieve advanced personalization.
Introducing Primary Data
Luxury Institute's Advanced Personalization Xchange (APX) platform, powered by DataLucent, is built on the knowledge that all people have intrinsic value and deserve data dignity. Individuals produce valuable content and data and have a right to control how their data are expressed and used. They can earn fair value benefits and rewards by building and licensing compilations of their data. Data consumers (marketers and brands) can now leverage a new access point to cross-platform data - the individual and their primary data.
Luxury Institute and DataLucent define primary data as consisting of genuine, authentic content and personal data that are generated, collected, compiled, and shared by individuals.
Primary data comes in many forms. Some of the most powerful include:
- Social media profiles from Facebook, Google, Instagram, Apple and other digital platforms with complete histories of content and metadata
- Amazon and other e-commerce platform shopping history, recommendations, and searches
- Direct engagements with consumers via online surveys and other means
All primary data begins with a verified individual - a human being. It represents the most original, authentic personal data possible. Primary data is the richest most accurate collection of digital information in the history of the Internet because only the individual can access and share this verified, cross-platform data.
Best Uses of Primary Data
In order to understand the best use cases for this powerful new source of data, brands need to first understand how the APX platform elevates consumers so that they enjoy true legal standing in online environments. The journey begins with the consumer making an informed, active choice to download their data to a device they own and control. This simple step vests ownership and control immediately with the individual and enables the consumer to assemble valuable compilations as licensable digital assets. The profiles and data sets created now reside outside of proprietary networks - free from one-sided Terms of Service - and ready to license to trusted, eager brands and marketers legally, securely, and privately for fair value rewards.
All peers on a network based on these principles of fairness and symmetrical exchange of value enjoy equal commercial standing. They engage in a simple business transaction - benefits and rewards for access to primary data - in a model in which many billions of transactions are conducted each year. Use cases include:
- Highly relevant consent-based audiences for advertising applications
- Business Intelligence and syndicated market research products
- Direct engagement with real, verified consumers
- Dynamic data markets with real-time offers and rewards
- Advanced personalization recommendations and/or actions designed for a customer segment or an individual customer
In short, primary data allows advertisers and brands to enjoy a single gateway to better, cross-platform data. Brands are empowered to legally access rich, relevant, timely compilations from individuals rather than aggregations from digital consumer silos. Advertisers and brands also lower their risk by offloading data storage and security to a trusted exchange platform. Companies only access what they need, when they need it. The data and insights are now protected from becoming a high-value "honey pot" target for data thieves.
Economics of Primary Data
Using primary data, brands are now empowered to create a direct relationship with the consumer. They partake in a rich, ongoing dialogue of confirmation and updates of demographic and behavioral attributes with customers and prospects. This combination of consumer dialogue (online surveys and interviews), combined with behavioral data from the richest sources, delivers far greater accuracy and far more predictive power for recommendations than any other option currently available for targeting. It empowers relationship deepening for segments and individuals. It triggers continuous new product and service innovations. The end result is a new range of opportunities for achieving compounded economic returns for both brands and individuals.
For example, each time a consumer collects a new data source and compiles it with their existing data sets, the value and accuracy of the new compilation increases exponentially for the consumer and the brand. This allows brands to run much more tightly targeted, cost-efficient, effective advertising campaigns while delivering greater benefits and rewards to consumers in exchange for increasingly better data.
The emergence of primary data empowers brands and consumers to exponentially develop relationships and innovations that are unprecedented in value and scope.
As the primary data market grows, brands will experience compounding effects on three different vectors: financial return, accuracy, and compliance.
First, as the example above demonstrates, financial benefits will accrue to all parties symmetrically and fairly. Second, predictive accuracy and relevancy will compound since consumers will continuously add to their rich, accurate data sources and make them available to more and more brands they trust. Third, automated compliance with emerging privacy regulation will become the norm as the primary data access system tracks all consents and requests for deletions by consumers. For top-tier brands, agencies and consultants that embrace true digital transformation, primary customer data will become the obvious choice for personal data, which, when combined with first-party data, will optimize business models in the roaring 20s. For the high-performance brands of the next data generation, the new era of sourcing primary customer data has already begun.
About Luxury Institute
Luxury Institute is the world's most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry. Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system, Luxcelerate, that dramatically improves brand culture and financial performance.
To learn more about Luxury Institute, please contact us at LuxuryInstitute.com
About DataLucent
DataLucent empowers consumers to access and share comprehensive, historical social media data with brands in return for rewards, benefits and personalization via a legal, ethical, secure, transparent and privacy-compliant process. DataLucent's patent-pending platform navigates consumers through the process of requesting, downloading and transferring personal data from Facebook, Twitter, Google and other consumer platforms, then provides real incentives for individuals to share data with companies they love and trust. DataLucent transforms and integrates data on behalf of consumers across networks to provide unparalleled customer and consumer insights to brands.
To learn more about DataLucent, please visit DataLucent.com
Contact: Milton Pedraza - mpedraza@luxuryinstitute.com
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Original Source: Luxury Institute and DataLucent: The New Era of Primary Customer Data
