Ecommerce brands offering personalized customer experience have ensured customers expect nothing else from any online brand.
According to a McKinsey report, 80% of customers expect some form of personalization when shopping online.
But to personalize, brands need data. As much as customers want personalization, they are also concerned about privacy and security, and hence, hesitate to give away data freely. But customer data is key.
In this blog, we explore how to collect customer data despite the various regulations and policies.
What is customer data?
Customer data is the information customers leave or share at various touch points when engaging with brands. For instance, when customers browse an online store, or visit their social media channels, or fill a survey form shared by a brand, they leave information. All this is customer data.
Customer data is the information about customer behavior, demographic, and personal details that brands collect from customers and visitors.
Customer data helps brands understand customers, their needs and preferences, and engage with them through targeted communication and marketing campaigns in the future.
Types of customer data
To understand how to collect customer data, you have to first understand the different types of customer data. In this section, we elaborate the types.
1. First-party data
First-party data includes any information that brands gather directly from their customers, visitors, or audience. First-party data can be collected from various touch points and channels. For instance, visitors on your website, social media pages, from in-person meetings, and more.
First-party data is usually collected from customer account profiles, details customers share when signing up to newsletters, etc.
But what is the importance of first-party customer data when there are other ways of collecting data? First-party data is authentic as it comes directly from the customer. Hence, it is more reliable.
2. Third-party data
Third-party data is collected from a party/resource that does not have a direct relationship with the brand collecting data. It includes information about demographics, interests, and online behaviors and activities.
Third-party data has been the most used type of data by marketers and brands. However, its collection and usage has been in debate and in decline. The reasons for this are consumers are becoming more concerned with privacy, stricter privacy regulations, companies shifting toward first-party data and browsers are phasing out third-party cookies.
3. Zero-party data
Zero-party data is information that customers willingly share with brands themselves. This data includes personal preferences, interests, and customers’ preferences of how the brand interacts with them. Zero-party data is considered to be more trustworthy and authentic.
The importance of collecting customer data
In today’s world of online shopping and marketing, data is one of the most important assets for businesses. Let’s look at exactly how important it is to collect customer data and what are the ways in which data helps businesses.
1. Better decision-making
Customer data helps businesses make better and more informed decisions. For instance, it helps marketers understand what customers prefer, what works, and what doesn’t work. These insights can be used to create marketing and promotional campaigns. In short, customer data helps make smarter decisions based on facts.
2. Enhance customer experience and personalization
Customer data can provide useful information about individual preferences and interests. This data, when used strategically, can help improve customer experience and personalization. 91% of consumers say they are more likely to shop with brands that offer personalized recommendations. And personalization directly impacts customer experience.
Various types of data can be collected to provide personalized experience. For instance, show personalized product recommendations to make customers’ shopping easier and enjoyable; customize the checkout experience by offering multiple payment methods, or provide location-specific experiences, such as language and currency options.
3. Increase ROI
A McKinsey report shows that businesses that make customer data- and analysis-based decisions report 115% higher ROI. Let’s look at some ways in which using customer data increases ROI.
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Analysis of customer behavior and preferences helps businesses create hyper-personalized marketing strategies, which can help reduce churn and improve customer loyalty, thus increasing lifetime customer value
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Data used for customer segmentation can help with more effective marketing for large groups of customers. Brands can target customers at scale
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Data used for loyalty programs can help repeat customers, increasing ROI and reducing customer acquisition costs
The importance of collecting first-party customer data
Increasingly, the world of digital marketing is becoming tougher because of a shift to a cookieless system. Third-party data tracking and collecting is becoming difficult with the introduction of features that allow customers to hide activities. This makes first-party customer data collection much more important. Let’s get into the detailed reasons why.
Personalization
First-party data is authentic and reliable and hence, is useful for personalized marketing and promotions. Businesses can create more relevant experiences for customers because the marketing campaigns are based on observations of their behavior and preferences.
Accuracy
First-party customer data is collected directly from customers and hence, it is more authentic and reliable. For example, customers leave behind information when they browse websites, apps, interact via activities on these platforms, share feedback and reviews via survey forms, and share data stored in the CRM platforms.
What are the common challenges
Customer data is extremely useful and also available from various sources. However, it is not that easy to collect without a strategy or roadmap. There are many factors that can be challenging. Here are some common challenges of collecting customer data.
1. Privacy regulations
Businesses that want to collect customer data must ensure they follow customer data privacy best practices. Businesses must have data protection compliance in place. For instance, GDPR and CCPA. Customers are wary of sharing their personal information unless brands explicitly mention that their personal data is secured. For this, brands require unified systems that help keep sensitive data secure.
2. Fragmented data
With multiple touchpoints, such as physical stores, websites, social media, WhatsApp, SMS, etc., customers’ data often remains scattered and fragmented. This can pose a big challenge for analyses. For correct analysis results, all the data has to be collated and then analyzed. Hence, businesses must incorporate an intuitive tool or system to make data congregation simple and effective.
3. Data relevance
Customers’ needs and preferences are always changing. Hence, data collected in the past may become obsolete. Working with fresh and relevant data is a challenge that businesses have to face continually. The only solution for this is to collect data consistently. One of the ways businesses keep data relevant is by syncing real-time data with their marketing tools and channels.
How to collect customer data
Customers use various channels to interact and transact with businesses. The advantage of multiple channels and platforms is that brands can collect data from these multiple sources. Here are some ways to collect customer data.
1. Post-purchase surveys
One of the most authentic ways to collect data is directly from customers. And the best time to do so is soon after customers have transacted with you. Send them a survey to gather their views on their experience or products. You could also ask targeted questions, such as why they bought the product.
2. Loyalty programs
Customers who join loyalty programs are amongst the most engaged and long-term customers. When loyalty programs are combined with pricing strategies such as product bundles, it helps increase engagement as well as sales. Creating opportunities to collect customers’ personal data through loyalty programs can help collect information easily.
3. Quizzes
An effective way to collect customer first-party customer data is by sharing quizzes. Based on your product type, you could share quizzes to understand your customers’ preferences. For instance, an optical frames brand could send a quiz to understand customers’ facial features, color, material, style, and budget preference. These can be useful for gaining other insights on customers.
4. Direct customer interaction
Data can also be collected directly from customers. For example, when customers visit an eCommerce store, brands can encourage them to sign up, share their contact details, etc. When customers visit physical stores, a feedback system set up at the cash counter could collect data. Moreover, in-store staff can directly interact with customers and collect information, for example, their preference, likes, budget, etc.
5. Using tools and apps to collect data
Businesses that operate on a large scale require tools and technology to help them collect data. It is essential for them to have a technology stack including customer relationship management (CRM) systems, data management platforms (DMP) and customer data platforms (CDP). It is also important for these tools to be in sync rather than work in silos.
6. Account creation on the website
One of the best methods to collect customer data is to encourage them to create a customer account and profile on your website. Some ways to drive more account creations is to make the account-creation process easy, to offer value to customers by offering incentives, and to include self-serve functionalities, which makes it easy for customers to use their accounts.
How Shopify can help build first party data
Shopify’s customer data system helps collect data from all the touchpoints. It unifies data from the eCommerce website, in-store data, and marketing channels.
When data is collected and stored centrally in one place, it helps brands analyze first-party data more efficiently. With Shopify’s capabilities, brands can get a comprehensive view of their customers’ activities, such as browsing history, purchase behavior, and more.
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Shopify offers features that encourage customers to sign into the website; for example, features such as wishlists, saved carts, recommendations, etc. Thus, when customers sign into Shopify sites, they end up sharing more data.
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Shopify has an effective feature - Web Pixels API - with which you can track data. You can collect customer data about behavior, sync it with existing marketing stacks, and extract insights.
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The segmentation tool of Shopify enables retailers to group customers based on various parameters. These different segments can be targeted with personalized campaigns.
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Brands can also use Shopify Forms to collect data from customers by using forms for various activities, for example lead-capture forms.
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Another feature, Shopify Audiences, lets you collect anonymized data with other brands, improving targeting and maintaining ownership of first-party data.
Top Shopify apps you can use
Here’s a list of some Shopify apps you can use to enhance data collection on your Shopify store.
1. Yotpo
Yotpo enables businesses to collect customer data through many features, such as SMS automation, abandoned cart messages, loyalty programs, referral programs, and more.
2. Zigpoll
Collecting data post-purchase can be as useful for businesses. That’s where Zigpoll comes in. The app helps with post-purchase emails and surveys, feeds customer data into Mailchimp, Klaviyo, etc. and offers incentives for customer participation, among other features.
3. Searchspring
A product recommendation app, Searchspring helps businesses with insights into customer behavior. It helps target customers with products and offers, controls how products are arranged on the site, and shares analytics on customer behavior.
4. Shop Quiz: Product
This tool enables businesses to create quizzes that help customers make better purchase decisions. With targeted questions and personalized recommendations, this tool helps collect various types of customer data.
Is your customer data strategy ready?
Collecting customer data and using it in the right manner is critical for business success. In this article, you’ve learnt how to collect customer data, its benefits, customer data management tools you could use, and how Shopify can help you collect first-party customer data.
However, to get started with and run your customer data systems successfully, you need a partner like XgenTech. XgenTech can help you set up a storefront that helps with personalized interactions and experiences for customers, making data collection easier for your business.
To know more, contact our experts at XgenTech.
