How to Build a First-Party Data Strategy (6 Key Steps)

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MARKETING
TERM
DEFINITION

First-Party Data Strategy

A first-party data strategy is your plan to collect customer data and use it improve marketing performance, build stronger customer relationships, personalize marketing, and create more customer value.

Why you need a first-party data strategy

We know third-party data is on the way out, driven by regulation changes and data privacy concerns. Furthermore, third-party data is inaccurate and inconsistent, wasting marketing budgets and hurting user experience. Therefore, it’s time to adopt a first-party data strategy.

The smartest next step is to power your marketing strategy with the direct relationship data you already collect from customers — first-party data. The first-party data benefits are clear, from regulation compliance to reduced cost, data integrity, and more.

How to create a first-party data strategy

In this article, I’ll give you a high-level roadmap to build an effective first-party data strategy. You’ll learn to define goals and map the customer journey. I’ll also cover first-party data collection, data governance, integration, data management, and more.

Before you dive in, read our article that explains the difference between first-party cookies vs third party cookies to clear up any misunderstandings.

1. Define your business objectives

Regardless of the type of data collection you want to use, your business goals need to be clear and defined. Most likely, these are already defined. You’ll need to update them to fit the first-party data strategy context.

There are so many valuable use cases for your own data compared to second-party data or third-party data. Here are just a few:

• Retarget website visitors on social media in real time based on purchase history
• Create better loyalty programs
• Boost new customer retention rates
• Use marketing automation to deliver more personalized experiences
• Empower your current digital marketing initiatives with better attribution modeling
• Improve identity resolution for a more accurate 360 customer view.
• Analyze specific customer behaviors
• Optimize customer experiences based on customer profiles and data points

After you outline your business goals, you can start developing your strategy.

2. Identify target audience segments & data sources

Depending on the specific goal of your first-party data strategy, you’ll need to identify the audience segments that align. Then, by analyzing the behavior of customers in your chosen data set, you can start to apply the learnings to your overall goals.

Your current sales funnel, from awareness to transaction, is likely collecting first-party data. Using this information, you can develop buyer personas that match up with your most common demographics. 

Some common first-party data sources include:

• Website — Customer interaction with your website creates all kinds of firsthand data.
• Newsletter sign-ups — Interaction with your newsletter creates behavioral data you can use in your strategy.
• Mobile apps — Apps play a major role in many sales funnels and can be a great data source.
• Email and SMS — Email communications and opt-in SMS text interactions rely on and collect important customer data.
• Point of Sale and CRM — Customer relationship management (CRM) tools are a repository of customer information that can help you reach your goals.
• Call centers — Customer service interactions through call centers generate first-party data.

3. Map the customer journey

Next, create a detailed customer journey map that covers each step in the buying journey. This map reveals key customer touchpoints to activate your audience, as well as opportunities to tweak messaging and improve user experience.

Understanding how your customers move through the funnel is important because it allows you to optimize the brand experience and remove friction. As a result, you’ll build deeper brand loyalty and improve conversions.

When you map the conversion funnel, include data that reveals how your customers think, including keywords, website visits, mobile app downloads, chat interactions, email automations, and social media engagements.

4. What data do you need to achieve your goal?

Step 2 mapped out some of the data sources you need to define your audience. A variety of data sources is required and collection will be ongoing. 

This means assessing the customer data technology you have access to. Tools like customer data platforms (CDPs) should help you target, collect, and unify the required data in one place. 

With enough data systems in place, you’ll ensure you have what you need to pursue your goals.

5. Connect and integrate marketing data

Data alone doesn’t get you anywhere. You must interpret it and remove the silos.

Almost all business goals require transactional data. Transactions alone don’t add up to an actionable insight. A data-driven understanding of your customers means connecting and integrating it with your marketing efforts and goals.

You should be taking the data you have, figuring out how it relates, what it means, and how to operationalize it.

6. Create a measurement method

With all of the above done or in progress, the next key item to tackle is setting goals, metrics, and measurements for your strategy. 

How will you measure your success? What does success look like? What KPIs will you use? Your answer will differ depending on the goal you are targeting and will have to be addressed.

Some good starting points include:

• Determine reporting tools
• Pick the most relevant metrics
• Establish reporting periods
• Determine resource allocation

Without a detailed measurement process, it will be difficult to achieve your goal. An added benefit of measuring your progress is that it can identify problems, help you detect unforeseen factors, and allow you to shift your goal depending on potential changes.

Final thoughts

These are the high-level aspects of creating a useful first-party data strategy to better pursue your audience and customer-centric goals. 

There is no one-size-fits-all solution. Identifying your goal, determining your audience and data sources, mapping the customer journey, establishing data requirements, and measuring your success are the elements to focus on.

Start with these principles, spend the time and resources to build your strategy, and reap the benefits of a first-party data approach.