What Is First-Party Data (+ Second-Party and Third-Party Data)?

There’s a reason Gatorade and Frito-Lay — the company behind behemoth brands like Pepsi — increased their global first-party data records by a whopping 50% by 2023.

In recent years, I and the rest of the marketing community have witnessed Google's concerted push to remove third-party cookies. At the same time, global governments have brought more rigorous data privacy regulations into full effect. In short, first-party data has never been more critical for businesses. That said, second- and third-party data are not without merit.

In this blog post, I'll discuss the difference between the three terms and which type of data is best for your business. To top it off, I’ll share how the experts are not just using first-party data but how they create a winning strategy, too.

Table of Contents

• What Is First-Party Data?
• Second-Party Data
• Third-Party Data
• Why Is First-Party Data Important?
• First-Party Data Use Cases
• First-Party Data Strategy

5 Free Customer Satisfaction Survey Templates

Easily measure customer satisfaction and begin to improve your customer experience.

• Net Promoter Score
• CSAT Score
• Customer Effort Score
• And more!

Download for free Learn more Download for free

Download Free

All fields are required.

You're all set!

Click this link to access this resource at any time.

Download Now

Essentially, you or your business are the first party to collect unique information about your audience directly from your audience. First-party data can include things like:

• Demographic information.
• Behaviors or actions taken across your website, app, and/or product.
• Data in your CRM.
• Social media conversations.
• Subscription-based emails or products.
• Survey data.
• Customer feedback.
• Customer purchase history.
• Online chat transcripts.

How is first-party data collected?

First-party data is collected by adding tracking pixels to your website, product, or social media profile that collects information about behaviors and actions and records it within your CRM or customer data platform (CDP). So, for example, whenever a visitor lands on or clicks on your website, looks at your products or engages with a social media post, the pixel will collect and record that action.

A CDP centralizes customer data in one place, from which marketers, sales reps, and customer success managers can run analyses to better understand audiences. CDPs are primarily focused on collecting and aggregating first-party data, but they can also store second- and third-party data.

Image Source

You can also collect first-party data from customer surveys you send to your audiences, conversations with customers, or any direct information about their experience that customers have shared with you or your business specifically. A good example of how first-party data is not collected is if you were to aggregate customer product reviews from Amazon, as that would be second-party data.

Example: To add to my content strategy, I ask my clients whether they had any specific questions about my services before working with me. I then use that first-party data (first-hand insights from existing customers) to create blog posts that answer those common questions on my website.

Why Is First-Party Data Important?

First-party data makes it easier to retarget and nurture your audiences based on what you've learned about them. Plus, you can make better decisions and changes to your business processes or products based on what your audiences say they do or do not like — not educated guesses. But wait, there’s more! I share data and expert-driven insights below.

Audience Insights

In my experience, first-party data is vital because it‘s collected directly from the people you have the most to learn from — your own audience. There is no third-party collecting the data or getting in the way of collection; it’s just you and your audience.

Ryan Jones, marketing manager at SEOTesting, agrees: “First-party data is really a game-changer because it's data you collect directly from your customers, making it so much more accurate and reliable than anything you'd get from third-party data sources. I think the only third-party source that would come close is a survey company, but even this is still less reliable.”

Privacy Regulations

According to HubSpot's 2024 Industry Trends Report, data privacy changes and regulations are a top concern for marketers. Looking at the research, marketers predict the following changes to impact them significantly:

• Google Chrome's third-party cookie phaseout (a concern of 47% of marketers).
• Apple iOS Privacy Protection features (41%).
• GDPR (General Data Protection Regulation) (40%).

In the B2B world specifically, 21% say that reduced access to personal data due to data privacy regulations is the top challenge they face in 2024. One of the main negative impacts of this is a lack of insights regarding customer pain points and challenges.

Image Source

Aside from being a direct line to understanding your audience, Jones highlights how first-party data can combat privacy regulations.

"With all the privacy regulations now, first-party data helps you stay compliant while also allowing you to personalize your marketing in a way that truly resonates with your audience. Essentially, it's the key to building trust with your customers while getting better results from your campaigns,” Jones says.

Data Accuracy

According to Hristina Stefanova, head of marketing operations at Goose‘n’Moose, first-party data is a step up from third-party data, which can be problematic for two reasons: It’s implied and incomplete.

"What I mean by implied data is that it's not always accurate. Especially when it comes to tracking the geo location of a user, there is a lot of noise. Blame this on Cloudflare and VPNs,” says Stefanova.

Like Jones, Stefanova also reminds us that first-party data can help you mitigate the impacts of increased privacy regulation — for a different reason. You will not just have legitimate permission to access and use first-party data but this route can also help you gather more accurate data.

She explains that the incompleteness or inaccuracy of data can come from regulation. More specifically, “The now legal right of users to reject cookies makes them untrackable, so key characteristics and browsing behavior remain unknown.”

First-Party Data Use Cases

You might hear nebulous discussions about using first-party data for retargeting via advertisements, nurturing existing customers, and throughout the sales process. But what does first-party data usage really look like in practice? I wanted to find out. So, I contacted industry experts and uncovered six real-world examples of how they use first-party data.

Discover new potential marketing areas.

I spoke to Ryan Jones to learn about SEOTesting's first-party data strategy. Jones says they use first-party data through their customer sign-up form with the end goal of running successful product trials.

“We collect data about what company they are from, their name, etc. But we also ask them where they found out about us,” explains Jones. “This helps us at the end of every month as we can analyze the data, find out what marketing strategies are working for us and what methods aren't working too well.”

Aside from discovering what works and what doesn‘t, this activity also helps the SEOTesting team to identify new potential marketing areas they haven’t considered.

He adds, “Recently, we had a few customer sign-ups from a mention in a blog post, so we were able to contact them and do some cross-collaboration, which worked out well for both parties.”

Target segments by geo proximity.

Hristina Stefanova also shared a first-party data use case with me. Stefanova is in the midst of setting up a large Customer Data Management platform (MS Dynamics 365 Customer Insights). A significant proportion of the campaigns will be about attracting offline visitors to 15+ entertainment locations U.K.-wide.

“The critically important first-party data point that I need in order to run those campaigns successfully is knowing the users' relative location,” says Stefanova. "So from the onset, I am setting up a sign-up process that will be asking website visitors for their outward postcode (city/county level).”

Stefanova says this eliminates the noise she would get from third-party data.

“With Cloudflare, I see a lot of U.K. web visits as coming from the U.S. or another country — that's not helpful in my use case at all),” Stefanova notes.

Stefanova explains that in the ideal scenario where most website visitors provide their outward postcodes, all campaigns will target segments by geo proximity. She adds, “For example, campaign X should only reach people within a 20-mile radius from London (as location X is in London). Campaign Y should only reach people within a 20-mile radius from Liverpool (as location Y is in Liverpool).”

Find audience communication preferences.

Joe Fletcher, a marketing consultant at Scaled, said he needed to interact with first-party data in a more efficient manner to increase the open and click-through rates in the links to a client's newsletter.

“After speaking with the client who then reached out to his clients, he identified that a number of them found chatting via text, WhatsApp, etc., more efficient for them,” says Fletcher. As a result, the emails the team sent kept hitting promotional tabs in inboxes, which meant prospects were overlooking the newsletters.

“With the content being valuable, we set up a small test via WhatsApp web business to opted-in users, for which we had a mobile contact. This allowed us to send out updates when we sent newsletters or just start sharing the stories directly with the users.”

Fletcher explains that this also allowed them to ask newsletter recipients direct questions about the content they were sharing to help fuel future content ideas.

The result? The first-party data-driven approach helped drive traffic to the client's website. "We had a 67% click-through rate on our articles and drove in 33 conversions from a small list of 250 people, which turned into actionable sales calls,” Fletcher says.

Create personalized customer experiences.

The State of Personalization Report 2024 finds that 56% of consumers are more likely to make a subsequent purchase after a personalized shopping experience. Further, 89% of leaders believe personalization is crucial to their business's success in the next three years. Short story shorter? If consumer personalization isn't on your radar, it should be.

Image Source

Here's how marketing manager and ecommerce optimization expert Reilly James uses first-party data to drive personalized customer experiences at William Morris Wallpaper.

“First-party data is central to understanding our audience and creating more tailored experiences,” says James. “We use them to personalize engagements with our customers, from product recommendations to design inspirations that fit their tastes.”

For instance, knowing which collections a customer has viewed or the types of patterns they favor helps William Morris craft more relevant offers and content that aligns with their preferences. According to James, this approach makes each interaction feel personal, ultimately strengthening customer loyalty.

Run customer reactivation campaigns.

Running marketing campaigns that retarget lost, churned, or dormant customers can be a cost-effective tactic to boost revenue. After all, these customers are already familiar with your brand, which can significantly reduce the sales cycle. In fact, research shows the top quartile of SaaS companies wins back one in four churned customers.

But it's not just SaaS companies boosting revenue via reactivation campaigns. “Dormant customer data plays a crucial role in shaping our targeted win-back campaigns,” says Adam Tishman, the co-founder of direct-to-consumer brand Helix Sleep.

Tishman explains, “By analyzing purchase history and engagement patterns, we can create personalized incentives that align with the preferences and interests of customers who have drifted away. This targeted approach significantly boosts the chances of reactivation, as it speaks directly to their past experiences and encourages them to reconnect with our brand.”

Shape content to match audience interests.

Above, I shared how important it is to create personalized customer experiences. It can be a fast track to repeat business, strengthening customer loyalty, and gaining a competitive edge. Aside from using first-party data to drive relevant product recommendations, you can also use it to shape content personalization.

If you're in B2B, this is especially pertinent. According to HubSpot's B2B Buyer Survey — a 2024 HubSpot Blog survey of 422 U.S.-based B2B professionals who buy or scout new purchases for their teams — 75% of B2B buyers prefer to gather information through self-service tools over communicating with sales reps.

With B2B prospects preferring to scour through your online content, you want to make sure it‘s hyper-targeted to their needs, or else they’ll likely bounce.

Spencer Romenco, chief growth strategist at Growth Spurt, shares how their B2B business achieves this: "In our business, first-party data guides us in shaping content that aligns precisely with audience interests. We focus on gathering data points like video watch time, engagement rate, and click-throughs, as well as customer behavior on our website.”

For instance, “if a lead consistently engages with product demos but doesn‘t convert, we use that insight to retarget them with value-driven, tutorial-style videos that meet them where they’re at in the decision process,” Romenco says. According to Romenco, this creates a more personalized journey and boosts conversion rates without infringing on user privacy.

5 Free Customer Satisfaction Survey Templates

Easily measure customer satisfaction and begin to improve your customer experience.

• Net Promoter Score
• CSAT Score
• Customer Effort Score
• And more!

Download for free Learn more Download for free

Download Free

All fields are required.

You're all set!

Click this link to access this resource at any time.

Download Now

First-Party Data Strategy

I‘ve put together a first-party data strategy with the help of the experts. Throughout each step, you’ll be guided by me and other folks who are well-versed in building successful first-party data strategies. If you‘ve never created one or want to improve your existing plan, you don’t want to miss this.

1. Prioritize user trust.

Earlier, Head of Marketing Hristina Stefanova shared her first-party data use case for targeting segments by geo proximity. She referred to her end goal of most website visitors providing “their outward postcodes” as an ideal scenario. Here's why.

“I am calling this an ideal case scenario because I feel many people will choose not to share their location, even if it's aggregated to city level,” says Stefanova. This brings us to one of the most essential elements to consider if you want your first-party data strategy to be successful.

In Stefanova's words, "Trust remains the major consideration and challenge to overcome when it comes to capturing first-party data." And I couldn't agree more.

In my experience, you can gain audience trust — improving first-party data collection efforts — through transparency. In this instance, that means letting folks know exactly why you need specific data, how you will use it, and how it will impact them. And others report the same.

“Customer trust is very important in the financial services industry,” says CEO and Founder of Fig Loans Jeffrey Zhou. “We developed our plan with a significant focus on compliance, ensuring that we followed requirements such as the Fair Credit Reporting Act. We also openly communicate with clients about how their data is used, which raised retention by 23% as they felt more secure.”

Pro tip: During this stage, try to focus on value exchange. So, you might emphasize that any customer data collection will occur to improve existing products and services and user experience.

2. Account for compliance and regulation.

With increasing regulations, data transparency is no longer a trust-building “nice to have.” In some cases, it's a legal necessity. For example, the General Data Protection Regulation (GDPR) means you must share why you‘re collecting people’s data and how you'll do it. And even though GDPR is an E.U. law, it's enforceable in other countries.

Many of the experts I spoke to for this article emphasized the importance of compliance and regulation when building out your first-party data strategy, including Ryan Jones.

“First, you have to make sure you are ticking all the boxes when it comes to privacy and compliance,” says Jones. “People need to know how you are going to use their data, and you need to have their consent to collect any data from them.”

Pro tip: A clear privacy policy will define how you collect, store, and use customer data to ensure compliance with regulations. Make sure you create one and make it easy for your customers to access.

3. Set clear goals.

According to Spencer Romenco, “When crafting a first-party data strategy, it's important to map out clear data collection goals from the start.” And I totally agree!

Without clear goals, you risk collecting data for the sake of it and not having a strategic road map to follow. That said, to set effective first-party data goals, I think it's important to have a clear grasp of why trust, transparency, and data compliance matter. See steps one and two.

If you're new to setting first-party data strategy goals, Romenco recommends outlining what metrics align with your business objectives. Meanwhile, Riken Shah, founder and CEO of OSP Labs, who uses first-party data from providers and medical device manufacturers, suggests asking yourself the following questions:

• Why do you need the first-party data?
• What will you use it for?
• What result are you expecting?

Example: At Fig Loans, Jeffrey Zhou shares how they set and accomplish goals for their first-party data strategy.

“When we launched, our primary goal was improving loan repayment rates,” says Zhou. “We evaluated behavioral data such as payment history and user interactions to personalize loan terms. For example, we discovered that borrowers who enabled autopay were 25% more likely to repay on time, so we promoted that option by lowering fees.”

4. Audit existing data.

You‘ve prioritized user trust and data compliance and set clear goals for your first-party data strategy. Now, it’s time to audit your existing data. Why? You may already have valuable user insights hidden in a sea of data.

Aside from working with what you already have, you‘ll also be able to identify what you’re missing. And that means rather than gathering data for the sake of it or employing guesswork, you'll know exactly what you need to progress.

Further, you can make sure your existing data is clean and usable. Make no mistake: Data hygiene (did I just coin a new yet somewhat unnerving term?) should be an integral part of your strategy during the audit phase and beyond.

On the latter, here's what Tishman has to say, “When developing a strategy, I find that data accuracy is critical. Clean, up-to-date data yields better insights and results by removing guesswork and inefficiencies. With accurate data, I can effectively segment customers, allowing for personalized communications that reflect their actual behaviors and preferences.”

Pro tip: Data quality software can help you keep your data clean, clear, and under control.

Keep your data clean with HubSpot’s Data Quality Software.

5. Map out critical data touch points.

Gal Cohen, business development leader & field area manager at JDM Sliding Doors, uses first-party data to learn what customers tell them directly, such as what problems they're having with their doors, any odd repair requests, or how they feel about how the JDM team is doing.

According to Cohen, to build their strategy, they choose a few critical data points that add to how they interact with their customers. He explains that this could be identifying the most frequent issues clients experience or recording any requests or preferences they mention during service.

“These data points don't need to be complicated,” he adds. “The goal is just to gather relevant information that helps us better understand and respond to what our clients need. Starting with a small, focused set of data points makes it easier to track and keeps things straightforward for the team.”

6. Collect and analyze data.

Next, Ryan Jones recommends focusing on gathering data “that's actually useful.” He reiterates that it‘s about collecting the right kind of data that’ll help you make better decisions. (Auditing your existing data and mapping out any relevant touchpoints — see above — will give you a head start here.)

Jones also warns that the customer experience should not be forgotten during this stage. He adds, “Collecting data should feel natural, not invasive, so keep it simple and ensure you're using the data to improve their experience, not just for your benefit.”

Beyond data collection, Rob Stevenson, the founder of BackupLABS, emphasizes the importance of data analysis. “It's not just about collecting data; the real value lies in analyzing it to extract actionable insights,” says Stevenson. “For example, we use tools like Google Analytics and predictive analytics to understand user behavior better. This allows us to tailor our product features and marketing messages in real-time, ensuring they resonate with our audience.”

Pro tip: Jones recommends making sure you have the right tools in place to manage and analyze your data effectively. “Using a good CRM or CDP will make it easier to use what you're collecting.” (I might be biased, but I highly recommend HubSpot’s Customer Platform, which is built with customer connection in mind!)

Start using HubSpot’s Customer Platform to collect, analyze, and organize your data.

7. Establish a data governance framework.

Research suggests that 40% of data leaders find data privacy and governance to be the main obstacles to realizing their data strategy. Given the increase in the volume of data available in many organizations and concerns about quality, this is no surprise.

So why does data governance matter? Well, it goes hand in hand with data management. Simply put, it's an internal framework for gathering, storing, processing, and destroying data. A data governance process will help you organize data, manage usage, and maintain quality.

It also helps you manage who can access what kinds of data while accounting for external data regulations. (I covered how important that is above! See step 2.) In the context of your first-party data strategy, Rob Stevenson shares why data governance matters.

“Maintaining high-quality data is vital,” says Stevenson. "We regularly conduct data audits and clean-up sessions to ensure the accuracy and reliability of our information. Implementing a robust data management infrastructure, like a Customer Data Platform, has helped us centralize and manage this data effectively.”

Pro tip: Use your data governance framework and policies to train your team. Teach them the importance of governance concerning first-party data usage and outline any steps they need to take to stay internally and externally compliant.

8. Take an iterative approach and continuously improve.

A first-party data strategy is no different from any other strategy: It should be a flexible roadmap that evolves as you gain more insights. On a more granular level, each strategy stage should also remain flexible.

As Stevenson reminds us, “The landscape of data and consumer expectations is constantly changing.”

That‘s why he and the team at BackupLABS make a point to stay informed about new trends and technologies so their strategy remains relevant. He continues, "For example, we’ve started integrating artificial intelligence to enhance our predictive analytics capabilities, which has opened up new avenues for personalizing user experiences."

Adam Tishman mirrors this sentiment: “Consistent refinement helps maintain relevance as customer interests and behaviors evolve. This ongoing process allows me to identify patterns, adapt campaigns, and fine-tune targeting, ultimately resulting in stronger engagement and higher conversion rates.”

Here are some practical ways I think you can take an iterative approach to your first-party data strategy:

• Test and refine. Implement A/B tests to see what resonates with each segment and fine-tune the approach over time.
• Conduct regular audits. Routine quality checks keep data reliable, which is critical for personalization efforts.
• Identify bottlenecks. Look for bottlenecks that appear as your data volume increases. Remove them to allow for smooth data management and analysis.

The crux? In the long term, an iterative, flexible approach will help you build a scalable data infrastructure that can grow and adapt as your business grows.

While I find first-party data to be the most valuable, it’s not the only data out there. Let’s explore second- and third-party data to understand how it can also be part of your customer data strategy.

For example, a software company working with an agency partner to re-sell its products might share its first-party data with the agency to use as second-party data to target and attract new clients.

How is second-party data collected?

Second-party data comes from another source rather than direct actions taken by your business, like sending product satisfaction surveys.

An easy way to obtain second-party data is to purchase it from a source that has what you need. However, I’ve learned the hard way that while it’s certainly faster than collecting it yourself, it’s riskier, as you can quickly spend a lot of money on data that is not useful to you. In my experience, it's a best practice to ask for a preview or a summary of the data you’ll receive to ensure it’s relevant to your company.

How is second-party data used?

First- and second-party data are used in the same way: to create ads, nurture leads, and remove friction within the sale process.

The difference is that second-party data can offer you a new perspective on your customers. You may uncover trends or patterns you overlooked or didn’t include in your own search, helping you spot customer needs or interests that you can further incorporate into your business processes and products.

It, however, should not be used as the most trusted and valuable source of information as it has been gathered from an entity with no direct relationship to your customers. That said, I have found second-party data valuable as a supplemental source.

Third-party data is sometimes compiled from multiple different sources and is sold to or bought by companies to learn more about audiences. However, since it’s not directly collected from your actual paying customers and is also available to your competitors, it may not be as useful as first- or second-party data.

Third-party data can, however, give you a wider view of audiences than your data could — at least in my experience.

How is third-party data collected?

Third-party data is collected in the same way as first- and second-party data. Researchers use surveys, interviews, feedback forms, etc., to gather information about a large audience. Then, like second-party data, organizations can purchase this information for their own use.

A difference is that much third-party research is conducted on random sample sizes, often by anyone who is willing to fill out the form, which is why the results don’t directly come from your customers. While this yields more participants and responses, the information might not always be useful for your business.

How is third-party data used?

While it may be tempting to use it in place of your own research, third-party data should be used as a complement to your first-party data. Remember that just because there are more results, it isn’t necessarily more relevant to your business.

Instead, I recommend first analyzing your first-party data for trends and patterns in customer behavior. Then, you can compare your findings with your third-party data, specifically targeting respondents who fit your buyer personas. That way, you can see if the behaviors you observed align with the majority of your marketplace.

Making Data Work for You

By collecting data on your target audience and customers, you can better understand their needs and wants to serve them better and grow your business. I think first-party data should be your priority as it is the most accurate, reliable, and relevant. However, second- and third-party data can supplement the information you collect to create a more robust strategy.

I can’t end this blog on data without one more reminder to make sure you earn and keep your customers’ trust by collecting and using their data securely and responsibly. Not only does this keep you on the right side of the law but it also ensures the ultimate success of your company.

Editor's note: This article was originally published in October 2018 and has since been updated for comprehensiveness.

5 Free Customer Satisfaction Survey Templates

Easily measure customer satisfaction and begin to improve your customer experience.

• Net Promoter Score
• CSAT Score
• Customer Effort Score
• And more!

Download for free Learn more Download for free

Download Free

All fields are required.

You're all set!

Click this link to access this resource at any time.

Download Now