What is first-party data and why is it important?

In recent years, the global online community has become (understandably) increasingly concerned with privacy and how data is collected, used, and shared. First-party data, or, data that your company collects directly from its audience, is going to play an even more important role in the next era of marketing strategy. 

Here’s what we’ll cover:

What is first-party data? 

In simple terms, first-party data is any information about your current and prospective customers that your company has collected directly, and, therefore, owns. 

Because it is information that your company collects directly from your audience, first-party data is the most trustworthy and reliable data you can access about the people who actually use your product or service.

First-party data examples can include:

  • Data collected within your product (website or app) about customer behavior
  • Data from customer surveys
  • Data collected from subscription-based emails or products
  • Data from in-app purchases
  • Data collected within your product (website or app) about customer behavior
  • Customer feedback data
  • Data collected by your customer relationship management (CRM) platform
  • Data collected from your social media accounts, including private and public conversations

Side note: Zero-party data is information that customers proactively share with you – such as filling out a form on your site. Zero-party data is equally valuable in its accuracy, reliability, and usefulness. 

Second- and Third-Party Data

While first-party data is collected by a company about its specific audience, there are two other categories of data sources, second- and third-party data, that are sometimes utilized as part of an overall data strategy. These sources are collected by external entities.

One example of this is the third-party cookies used by internet browsers like Chrome, Firefox, and Safari to track visitors’ web activity and serve targeted ads, among other purposes. However, in recent years, these browsers have begun phasing out third-party cookies in an effort to protect the privacy of their users and offer more secure browsing experiences.

With the demise of third-party cookies and increasing demand for data privacy, there is a greater need than ever before for efficient and effective systems for collecting, analyzing, and leveraging first-party data. 

Using second- and third-party data involves buying and utilizing people’s information without their knowledge – raising ethical concerns. These sources are less favorable than more direct sources of information.

Why is first-party data important?

Oh, let us count the ways! 

First-party data is the richest, most reliable information you could possibly have about your audience – the people actually buying and using your products and services. It gives you the ability to retarget or nurture your audience based on data you’ve collected about them. You can also use this information to optimize your products, services, and processes based on what you learn about your customers’ likes and dislikes. 

First-party data is also uniquely owned by you: Unlike second- or third-party data, which can be sold to your competitors, no one else has access to the treasure trove of information that is your first-party data. 

Another benefit of first-party vs. third-party data (or second-party data) is that you don’t necessarily have to pay to have access to it. That isn’t to say that all first-party data is free – your company will likely have to pay in order to build the optimal system for collecting, analyzing, and leveraging data. However, there is no limit to the amount of data you can collect, once that system is built. 

It’s also inherently more ethical: Rather than paying some other source to gain access to a dataset of people’s information, you can invest your money into building systems that collect rich data for you – with your users’ consent. 

How to collect first-party data 

There are several ways to collect and manage first-party data. The most common way is to add tracking pixels to your website, product, or social media profiles that collect data about visitor behaviors and actions. This information is then recorded in your CRM or customer data platform.

So, for example, if someone visits your website, the tracking pixels would record what actions they take on your site – such as which pages they look at, which products they are interested in, and how long they spend on each page. 

This information can be combined with direct conversations that visitors have with your company – such as if they interact with the chatbot on your website, send a DM to your social media page, or mention your handle on Twitter.

When collected and analyzed together, this information can be used to inform your retargeting efforts. For example, if the user visited a specific educational course on your website, but didn’t sign up yet. You can use this information to send them targeted ads about that course to get them to convert, rather than wasting their time (and yours) retargeting them with other offerings that aren’t of interest to them.

Transparency and security are key pillars of responsible data collection. 

Another even more transparent way to collect first-party data is to simply ask for it: For example, by sending customer surveys to your audiences, recording conversations with customers, and of course, using information they provide when they sign up on your site (again, this is technically zero-party data). 

How to organize first-party data 

Creating an effective first-party data strategy starts with ensuring that your data collection is efficient, accurate, and effective. In other words, before you can even begin to develop a strategy, you have to make sure that you have access to clean, accurate data. 

A customer data platform can help to make sure that all the first-party data you collect from a variety of sources is clean, combed through, and organized in a way that makes it usable for your purposes. (PS – If you aren’t sure exactly what data you should be collecting from your customer engagement tools, check out our Data Tracking Guide and Templates.)

The way this typically works is that your customer data platform will combine your various sources of data about a person or entity into a unique user ID. First-party data enrichment is often part of this as well: The information in users’ profiles can be further enhanced with additional demographic and behavioral information. 

Leading customer data platforms integrate seamlessly with the other tools in your martech stack to allow you to create ultra-personalized experiences for your current and potential customers. They also structure data in a way that makes it ripe for AI and machine learning – and in a way that ensures compliance with privacy laws like GDPR and CCPA. 

Maintaining compliance with these laws isn’t just the correct thing to do from a legal perspective – it’s also the responsible thing to do on behalf of your customers. When choosing a customer data platform, it’s important to ensure that your customer data will be stored securely and that it will only be used to improve or customize their experience. 

You can learn more about customer data platforms – what they are, how they work, and their important role in your first-party data strategy – here

How to leverage first-party data

Designing a data strategy centered around first-party data is the most reliable way to continuously optimize your acquisition, onboarding, retargeting, and retention efforts. The importance of first-party data cannot be overstated, especially with the recent shifts away from third-party cookies and other forms of data collection that compromise the privacy of your users. 

First-party data and personalized experiences go hand-in-hand. An effective first-party data strategy arms you with the exact information you need to create better, more personalized experiences for current and potential customers. First-party data is key for creating memorable customer interactions across mobile and web using channels like push, email, in-app, and SMS.

Customer.io Data Pipelines (CDP) and Customer.io Journeys work perfectly together to allow you to collect, store, and leverage your first-party data seamlessly. CDP delivers first-party data to the tools you already use, and Customer.io Journeys builds a unified view of each customer. Together, you can use these products to deliver personalized messages to your customers and customize your engagement with confidence. Sign up for a trial today!