First-Party Data & UGC: How Data Privacy Trends are Impacting Customer Trust

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As with any advancement in technology, regulation is very often slow to catch up. The internet has been around for over three decades at this point. It’s an invention that has undeniably broadened personal and professional opportunities and experiences. The success of the internet has largely been down to how quickly it has been able to keep up with user expectancy.

In order to keep us coming back for more, businesses have realized that personalized experiences online are what keep people engaged. There’s no great surprise in this. We’re bound to take note of something that speaks to us directly more so than that which is general. One of the ways in which the internet does this is by collecting data on us.

Doing so has enabled buying experiences to feel more like having a personal shopper. Which is great. But, in a landscape where this data harvesting was not regulated, all sorts of dark practices took hold. And suddenly it becomes less about customers leaving reviews of your service, and more about their data either being lost or mishandled. 

Over the last decade or so, restrictions have come into force that have aimed to give the ordinary browser greater agency over how they are tracked online.

This may be great for safety and security. However, it requires businesses to look at how they can adapt their automation test model to comply with new requirements, whilst also maintaining the level of service that their customers, no matter how far along the relationship funnel they are, have come to expect.

In this article, we’ll take a look at a very particular type of data and how the privacy trends which surround it have impacted customer trust for both good and bad.

What Is First-Party Data?

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So, first-party data. That’s what we’re all here for, right? Right. So, let’s take a look at exactly what we mean by the term and how it differentiates from the other types of data out there.

“First-Party Data”, as an umbrella term, refers to data that is collected by your company. If it comes from visitors to your website, people who have used the things that you sell, or those patrons of your physical stores, it’s first-party data. With this being understood, it’s not difficult to see why it’s the kind of data that best helps build trust from prospective customers. 

Whether you sell cosmetics, phone systems for small business, or own a restaurant, gathering first-party data though python pandas dataframe should definitely be a consideration of yours. As we will see in a moment, it’s also the most effective type of data in complying with the newly-emerging regulations that have sought to empower the average internet user.

For now, though, let’s take a look at how first-party data is different from other kinds. This should provide a better perspective on the other data sets your business may be using, and how to compartmentalize them.

“Second-Party Data” is, quite simply, another company’s first-party data. Sometimes, companies find it beneficial to share their first-party data with other companies – you see where the need for regulation has come from, right? It’s a straight-up transaction that involves two businesses no more.

Unsurprisingly, given that setup, “Third-Party Data” refers to that which is purchased from sources who haven’t collected the data themselves. They act as “middlemen” and distribute the (often) larger blocks of data to their purchasers.

Now that the definition of first-party data is understood, let’s take a look at some of the ways in which it is collected.

How Is It Collected?

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First-Party data is collected by companies through interactions on their digital platforms, for the most part, at least. By enabling functions on your website known as “pixels”, you can be granted access to data that takes a look at all of their activity on your site. 

No matter whether you sell SaaS products or camping equipment, this can prove invaluable in making future marketing, exploratory tests, or customer care decisions. It may come from a range of different sources, but the one that is most often used in this case is a data management platform.

Should you have one of these, it can act as a great homogenizer of first-party data, bringing together, as it does, first-party data from several different sources. Doing so with the ease of HDFS, a lot of the gathering is done automatically. Having this all available in one space makes it easier to utilize and analyze when it comes to making business improvements.

It is also true that customer data can be sources from customer relationship management systems, and information may also be volunteered by customers in the process of subscribing to a mailing list. 

This data, in its original form, is offline data. To make the whole process of storing and navigating your first-party data easier, by bringing it to Apache Hadoop, it can be “onboarded” via cookies or mobile IDs. 

What Is UGC?

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“First-Party Data” isn’t the only term in this article that needs defining, though. Let’s also make sure, before we take a look at the customer trends surrounding trust in this area, that we understand what is meant by the abbreviation “UGC”.

UGC refers to user-generated content. As a feature of most businesses modern content strategy, user-generated content includes, but is not limited to:

  • Comments
  • Reviews
  • Social Media Posts

A lot of companies see this as a more engaging and authentic source of marketing copy, and as such, have incorporated it into their wider strategy. With social media practices integrating with customer service channels, if you operate this arm of your operation via remote call center management, asking them to collect this data makes the whole process a lot more efficient.

Now, having gone through all of these terms, let’s take a look at the effect all of this is having on customer trust.

Customer Trends

Often, especially in business, when we talk about impact, that term tends to come with negative connotations. As in, the decision to make a change that impacts another area of your business is very rarely a case of improving the fortunes across the board. From Google bounce rate to a decline in sales, no one wants to see these issues become terminal.

However, statistics show that, in the case of first-party data, this seems to be bucking that trend. As greater data privacy regulation has come in, and as consumers have gained a better understanding of how data is used online, trust is on the increase. It’s the digital commerce equivalent of number porting, the more you do it, the easier it is to trust.

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If we take a look at the main reasons why consumers distrust brands when it comes to providing personal information – or first-party data – you’ll find that, in the vast majority of cases, they’re reasons that the use of first-party data can avoid. 

To carry out a useful analysis that you can use in marketing to a customer, you don’t need to ask for copious amounts of information. As long as you’re keeping your practices legal, then there shouldn’t be any event that results in a scandal. Ensuring that your privacy policies are thorough yet written in language that anyone can understand is also something that most companies should be striving for.

From another perspective, first-party data also comes up smelling of roses, at least in comparison to your other options. As legislation like GDPR in Europe and CCPA have come into force, the consent issue has been a prevalent one in this area of digital business.

Where second or third-party data requires the transaction of customers’ data who haven’t had to interact with your business at all, gaining consent for the use of first-party data is relatively straightforward. This also makes your ability to prove consent later, should it be called into question, a much easier thing. If you’ve written the terms and they’ve been agreed upon, and been reviewed to ensure their legality, then this should never be an issue.

Conclusion

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In this article, we’ve looked at the history of data online. We’ve explained both what first-party data is, what differentiates it from other types of data, and how it is collected. We’ve also taken a look at user-generated content and the purpose that serves in the modern reality of business.

Following this, we took a look at the customer trends that have responded to the regulation in this area, and how trust has been impacted. It’s going to be interesting to see how this evolves in the coming years. Even five years ago, the picture looked very different from how it does now.

As long as businesses remain agile, they should be able to keep in touch with the neat balance between conforming with regulation and providing great service to their customers. As soon as either of those things begins to outweigh the other, problems will almost certainly arise.

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