Author: Immy Ewbank, Senior Digital Strategist

Retailers now have so much customer data at their fingertips that it can be hard to spot opportunities amongst the deluge of information. Particularly, first-party data can be incredibly valuable as a starter for crafting an effective advertising strategy.

An eCommerce business, by its very existence, is perfect for gathering data on buying habits, demographics, and preferences, and investment in these areas can bring profits into a business.

A study from FT Strategies found a relationship between profitability and developing first-party data assets. The average percentage of logged-in users (the foundation for first-party data collection) for very profitable organisations was 11%, with businesses making a loss coming in at only 5%.

Collecting data

Often, it can be hard to know where to start. Businesses can get worried that first-party data needs to be highly structured, and in vast quantities, but this isn’t always the case. There are many different types of data, all at different scales. For example, data collection can take the form of questionnaires and polls sent out to a business’s target audience, which can then be used for segmentation.

Businesses can also look at verified segmentation from affiliate tools such as gocertify for identifying particular groups like students. There is, of course, site data collection driven by visitors and activity on websites, and one that is often forgotten is enquiry forms. Looking closer to home for data collection and asking customers questions is a great way to understand who they are – and build a picture of the kind of audiences to target.

Even SMEs, with limited resources, can start leveraging first-party data effectively. Start small, focus on one data source, such as an email list, and one key metric, like open rates, to build a foundation. Free analytics tools from website platforms can be a great starting point to understanding more about an audience. Businesses will want to keep an objective in mind so that data collection has a focus and stops them going down a rabbit hole of innocuous information.

In a world where privacy and safety are paramount, you need to be transparent. Anonymised and aggregated data is essential for privacy compliance. Transparency in data collection and usage builds trust with customers, and building a customer’s trust can increase the degree of first-party data able to be obtained, as customers may be more willing to fill in collection methods such as a survey or opt in to provide extra information.

Using data

SMEs can layer anonymised first-party data such as purchase history and website behaviour with publicly available demographics and industry trends. This creates a customer profile informed by both direct interactions and broader market forces. Industry trends are easy to research using free versions of tools such as SimilarWeb.

Some key metrics SMEs should focus on when analysing first-party data for customer insights include website visits, conversion rates by channel, customer acquisition cost, and repeat purchases. These paint a picture of acquisition, engagement, and loyalty.

Once the data is collected, it’s easy to be overwhelmed, luckily there are some free data analysis platforms out there to make things much easier. Google’s Data Studio can bring clarity to an SME’s analysis.

Segmenting by behaviour (past purchases) and demographics (age, location) can be a great starting point. Retailers can also isolate particular audiences who would resonate with their campaign, getting the most out of their ad spend. 

Leveraging outcomes

Data-driven advertising offers superior targeting, personalisation, and campaign measurement compared to traditional, broad reach approaches. By embracing retail data and collaborating, brands can unlock a new level of advertising effectiveness and customer engagement. Consumers want to feel that the product or experience they have is personal to them, and this new expectation means that brands need to deliver. In fact, McKinsey found that 76% of consumers now get frustrated when they aren’t met with personalisation.

Retailers offer ad space based on shopper insights through their first party data which is becoming increasingly valuable, creating a strategic partnership between the two. The benefit here is that advertisers can gain access to high-intent audiences, boosting campaign effectiveness and ROI. This might include specific targeting, utilising the data for actionable insights that reveal more about an audience and their preferences, or tailoring campaigns and touchpoints. 

Leveraging outcomes

Like everything else in retail, the role of first-party data will continue to evolve over the next few years. Expect to see even greater emphasis on building direct relationships with customers. Loyalty programmes and permission-based marketing will be crucial for gathering valuable data and personalising the shopping experience.

AI will become a bigger player and help deliver personalised product recommendations and promotions based on individual customer behaviour. Interactive surveys within the shopping journey can provide real-time feedback for continuous improvement.

For eCommerce businesses, this continual first-party feedback can help build a robust picture of your customers and how they behave online. Brands can leverage this information to deliver better campaigns that are built specifically around findings from your data. Reaching more audiences at different stages of the buying journey, moving them along from interest to intent to purchase, over and over again.