Building a Zero-Party Data Strategy That Improves Customer Retention

While promotional marketing aimed at attracting new customers tends to draw a lot of marketing’s focus, the issue of data deprecation—largely driven by customer privacy concerns—presents a growing challenge. 

Customer acquisition will always be important, but the changing nature of data availability underscores the importance of customer retention strategies that help marketers engage better with their existing customer base to drive repeat sales, build loyalty and achieve greater customer lifetime value (CLV).

The big question is how to do this most effectively. 

Here we’ll take a look at how zero-party data is proving to be a key tool in driving customer retention and loyalty.

Why Focus on Customer Retention?

On the marketing stage, customer acquisition often steals the spotlight. It’s natural. We’re doing business in a culture that thrives on growth and values acquiring new things. But for marketers, this mindset can make it easy to overlook the importance of customer retention marketing—potentially missing out on the significant long-term value of deepening relationships with customers who are already in the fold. 

When you consider that acquiring a new customer costs five to 25 times more than retaining an existing one, shifting the spotlight to your customer retention program can increase your bottom line up to 95%!

How is Zero-Party Data Used in Retention Strategies?

Customer retention involves more than producing products and services people love (though that is certainly a major driver). Effective, enduring customer retention comes from building customer engagement and loyalty. 

In this highly competitive market, with so many brands to choose from, customers shop around, but they keep coming back to the brands they feel a personal connection with and brands that personalize their experiences. 

97% of marketers recognize that personalized digital experiences are a cornerstone of marketing programs. 

But with diminishing access to third-party data, zero-party data is now becoming the preferred data source because it enables a deeper level of personalization than either third-party or first-party data. In fact, zero-party data supports exactly the kind of personalization that is successful in building customer loyalty and driving successful customer retention marketing.

What is Zero-Party Data?

Zero-party data is personal information a customer chooses to share directly with you. Unlike first-party data that is gathered passively from user interactions, zero-party data comes from an act of trust by your customer with your brand. 

This makes zero-party data the most accurate and valuable data you can have as a marketer because it explicitly indicates the customer’s desire to engage with your brand. And, when used well, it can be the jumping off point for better personalization and fostering of customer loyalty and retention.

What Can You Use to Collect Zero Party Data?

Collecting zero-party data involves making it both easy and enticing for customers to share their information with your brand. Customers choose to share this kind of information when you offer them something of value in exchange for their information. Examples include asking customers to fill out surveys or forms in exchange for access to great content or special offers. 

How Can I Use Zero-Party Data to Drive Loyalty?

When a customer chooses to share their personal information with your brand in order to gain something of value, it not only gives you information you can use to enhance personalization, it also opens the door to deeper engagement and connection. 

These two elements—personalization and connection—work synergistically, enabling you to grow the customer relationship in a meaningful way and establish the kind of brand attachment and trust that builds loyalty over time.

For example, if a customer shares information about their age, occupation, personal interests or group affiliations, it tells you much more about that person than you could infer from knowing their gender or zip code. 

For example, if you know a customer is a teacher, you will know that they likely spend their own money on school supplies and that they likely identify more strongly with being a teacher than their religion or family role. 

Ultimately, zero-party data gives you more of what you need to drive effective personalization. This creates better experiences for the customer and keeps them coming back for more. It’s a virtuous cycle that pays off in CLV.

How Do I Create a Zero-Party Data Strategy?

Using zero-party data to create customer and brand value is one of the most successful customer retention strategies readily available to marketers today. Here are four key steps to help your business make the most from your zero-party data strategy—winning customer loyalty and driving CLV. 

01 Leverage First-Party Data to Drive Zero-Party Success

Your business can reap the most benefits from customer retention marketing with zero-party data when you also have a robust first-party data strategy in place. 

When done right, gathering passive information about your customers through first-party cookies and tracking pixels on your website gives you a privacy-friendly starting point for understanding your customers. 

For example, you can gather behavioral data about a customer’s interests and product preferences based on which pages they visit, the products they buy, and what they put in their wish lists. Once you understand where your customers are going on your site, you then know where and when you have opportunities to collect zero-party data from them. 

And, once you have collected zero-party data, you can pair that with your existing first-party data to create an optimal, personalized customer experience on your website.

02 Mine Your Email Preferences to Collect Zero-Party Data

Email preferences can tell you a great deal about what kind of content your customers care about and want to receive from you. By tapping into your email preferences center, you can use data to conduct re-engagement campaigns and ask active subscribers to update and add information to their profiles. This also provides an excellent opportunity to use special offers to learn more about your customers and engage more deeply with them. 

Ultimately, when you offer something valuable in exchange for information about your customers’ life status, age, profession and other affiliations, and they choose to accept that from you, you have the kind of zero-party data that enables you to continue marketing to that customer for years to come with highly relevant content, products and services.

03 Make the Most of Your Customer Loyalty Program

The moment when a customer decides to sign up for your loyalty program can be the beginning of a long and highly lucrative relationship based on zero-party data—if you ask the right questions. 

Because the customer has already decided to engage with you, you have a premium opportunity to ask questions that wouldn’t be appropriate earlier in the customer journey. To get the most from this inspired interaction, ask them questions about their location, personal interests, values, occupation, family size and other clear, meaningful attributes that will help you tailor their loyalty program—and drive future purchases.

04 Use Identity Marketing to Gather Zero-Party Data

Identity marketing is one of the most direct ways to gather and utilize zero-party data to its fullest. It involves connecting with your customers based on meaningful attributes like profession or life stage and offering discounts or perks that speak to their interests, show your appreciation for them and foster the long-term loyalty that sustains successful customer retention. 

With the SheerID Identity Marketing Platform, you offer a consumer community, like students, nurses, or first responders, something valuable to them, like a discount, free shipping or an experience. 

To obtain this deal, customers are asked to verify their identity as members of the community you choose. During the verification process, customers share their zero-party data, such as the college they attend, and SheerID instantly verifies this information against authoritative data sources. 

The transaction is win-win. You get verified zero-party data from customers, and customers get a deal. 

After the verification process, your brand can use the zero-party data you collected to further connect and deepen the relationship and customer loyalty over time. 

When a group has a particularly strong identity, such as teachers or the military, identity marketing taps into the customer’s sense of belonging and pride and demonstrates how your brand honors and appreciates their service.

05 Engage Customers With a Zero-Party Data Retargeting Plan

This is where personalization gets real. All that first- and zero-party data you have gathered can be integrated into your customer profiles and audience segments. This gives you unprecedented power to fuel personalized experiences that continue to engage customers, deepen loyalty and drive repeat purchases over time. 

Athletic brand ASICS has done this with great success, driving double-digit growth from using a mix of zero- and first-party data to power their personalized marketing program. By collecting meaningful information through its OneASICS loyalty program, the marketing team is able to tailor content across multiple channels. 

ASICS uses identity marketing through SheerID to provide exclusive discounts to first responders and members of the military. They take advantage of key moments like Veteran’s Day and other special occasions throughout the year to keep the pulse of engagement alive and sustain connection with those communities that keep customers in the fold.

Use Zero-Party Data to Inspire Loyalty and Drive Customer Retention

Because it is such a powerful way to personalize the customer experience and drive continued engagement with your brand, a robust zero-party data strategy—particularly one that is supported with identity marketing—is tightly linked to customer retention. 

And when it’s working well, it can also go a step further, helping turn those loyal customers into brand advocates that fuel your customer acquisition as well. Brands that take advantage of zero-party data through identity marketing are reaping the benefits, experiencing renewal rates of 75% or more while also increasing conversions by 6x.