The major benefit of using a customer data platform (CDP) is that it centralizes all available customer data in one place, from which data-driven marketers, sales reps, and customer success managers can run analyses to work more effectively to attract, close, and retain successful customers.
CDPs are primarily focused on collecting and aggregating first party data, but they can also store second and third party data as well. In this blog post, we'll discuss the difference between the three terms, and which type of data is best for your business.
First Party Data
First party data is defined as data that your company has collected directly from your audience -- made up of customers, site visitors, and social media followers. "First party" refers to the party that collected the data firsthand to use for re-targeting.
When it comes to retargeting, first party data is the best of the best to use, because it's collected from the people you have the most to learn from -- your own audience. That makes the data as reliable as possible for making predictions and forecasting future behavioral trends. It can be comprised of data like:
Data from behaviors or actions taken across your website, app, and/or product
Data in your CRM
Data from your social media profiles
Data from your subscription-based emails or products
Data from surveys
Data from customer feedback
How Is First Party Data Collected?
First party data is collected by adding a pixel to your website, product, or social media profiles that collects information about behaviors and actions and records it within your CRM or CDP. Whenever a visitor lands on or click your website, looks at your products, engages with a social media post, or fills out a survey, that data can be collected by the business.
How Is First Party Data Used
First party data is used for audience retargeting via advertisements, nurturing, and during the sales process. It's also used to learn more about what an ideal or best-fit customer looks like to learn more about how to reach out to new audiences, and how to close those site or social media visitors familiar with your brand who might become future customers.
If you've ever looked at a product online, and then continued to see ads for the product follow you around in banner and social media ads, that's an example of first party data retargeting at work.
First Party vs. Second Party vs. Third Party Data
In addition to first party data, you may also be familiar with the terms "second party data" and even "third party data." Here's a quick breakdown of the differences between the three terms:
Second Party Data
Second party data is first party data that you didn't collect yourself -- in other words, you're using it secondhand. Second party data is sometimes shared between trusted partners who come to an agreement to share audience insights if it would be mutually beneficial to both businesses. For example, if a software company works with an agency partner to re-sell its products, the software company might share its first party data with the agency to use as second party data to target and attract new clients.
Third Party Data
Third party data is any data that's collected by a business or other entity that doesn't have any direct link to the visitor or customer.
Third party data is often collected, aggregated, and sold to companies to help them build out audience insights to build an effective advertising and retargeting strategy, but since it's not collected from your actual customers and is available to your competitors, it's up for debate how useful it actually is. It's a better use of your time and resources to collect first party data about your own customers and site visitors to help inform your strategy and get better results.
To learn more about using customer data, read about how to conduct an RFM analysis next.
Originally published Nov 1, 2018 8:00:00 AM, updated November 01 2018