CX personalization drives strategy for customer data mining
Users are more likely to engage with custom-made, exclusive digital experiences, which ease the flow of zero- and first-party data back to the vendor for improved CX strategies.
BOSTON – As users choose to engage with personalized, multifaceted digital experiences, vendors hope to build better brand loyalty and CX by collecting and analyzing zero- and first-party data.
Personalization -- crafting online marketing messages targeted at specific personas -- has long been a marketing tool for gathering data and is becoming more immersive, according to IDC analyst Tom Mainelli.
"We know that personalization helps drive sales," Mainelli said during a presentation at the IDC Directions conference here on March 7. "Most consumers are more likely to purchase from brands and personalize."
Getting personal to get better data
Among the direct-to-consumer digital retailers that have been focusing intensively on personalization is Lumen, which sells a fitness monitoring tool that couples an app with a device.
The device measures the carbon dioxide levels in a user's breath to analyze metabolic deficiencies. This measurement tells a user the proportions of fat, protein and carbohydrates to help users adjust diet and exercise habits to meet their goals.
"Here is a service that is tied to a piece of hardware that is completely bespoke to you," Mainelli said. "Personalization is going to impact all of the future consumer categories."
Companies like Lumen hope to attract users with a hyper-personalized experience and bring them into a closed loop where, ideally, better personalization equates to better sales. Vendors are betting that immersive tech experiences such as Lumen's metabolic tracking service, which incorporates both hardware and software, will bait users for better data mining.
"It forces the creation of new types of data collection and processing and necessitates a willingness to find a smart balance between trusting the data and your training, your team's knowledge," Mainelli said. "It has the potential to drive greater trust or to damage that trust."
IDC research vice president Marci Maddox presents 'Customer Data: The Revenue Engine' in Boston on March 7.
Not all data is created equal
Data collection is a keystone in today's digital-first economy. Zero-party data and first-party data are eclipsing third-party data as the most desirable data to capture, said Marci Maddox, an IDC analyst, during another session.
Zero-party data is unsolicited information that users volunteer intentionally. First-party data is shared through solicitation such as a form or online transaction. Third-party data is gathered from an external organization.
Maddox discussed the rise of consumer data as a revenue engine, incorporating exclusive experiences that require user signup and multi-platform user engagement to garner more zero-party and first-party data collection.
It comes down to data quality -- the quality of the information. Get rid of all the noise. Don't think about what we could be doing. Do something with what we do have.
Marci MaddoxResearch Vice President, IDC
After signing up, members can join experiences called Journeys, which include offerings like virtual tours of Starbucks coffee farms in Costa Rica. Completing a Journey yields a collectible NFT "Journey Stamp" that can be exchanged for another exclusive experience, such as an espresso martini making class.
"You can then use them for other experiences that you're not able to get anywhere else," Maddox said. "This is the value exchange between Starbucks and the data that you're giving them as you go through these Journeys."
But aiming for reciprocity of personalized, exclusive goods for personalized, exclusive data is not without difficulties. The biggest challenge is data quality, according to Maddox. Data parsing has not yet evolved enough to sift out only the most useful data and then fully maximize its capabilities. It's still a work in progress, she said.
"It comes down to data quality -- the quality of the information," Maddox said. "Get rid of all the noise. Don't think about what we could be doing. Do something with what we do have."
Mary Reines joined TechTarget in October 2022 as a news writer covering networking. Prior to TechTarget, Reines worked for five years as arts editor at the Marblehead Reporter, her hometown newspaper.
