It’s not so easy to get a read on customers any more. Sure, you can ask them for information via email, build that first-party database and even embrace zero-party data practices, but what works best? As part of the Drum’s Deep Dive into The New Customer Experience Economy, Reach3 Insights’ Matt Kleinschmit breaks it all down.
Covid and the fast-growing data privacy movement have combined to rattle the global consumer insights industry these past two years. Market research and customer data professionals have found themselves in need of ways to understand customers undergoing rapidly changing circumstances without violating their rights to data privacy.
But the industry has not yet settled on a solution to both these dynamics, and neither the old ways of collecting audience insights nor one of the hottest new ways – zero-party data – will stand up to the task. Consumer insights professionals cannot rely on mass emails or traditional surveys. They also cannot simply bypass the consumer by collecting data from public communications without the consumer’s knowledge.
The good news is that consumers want to be heard. The bad news is that they don’t want to be studied. This means there is no shortcut to understanding the customer. Rather, marketers need to go directly to the consumer, asking for her perspective on her terms, in ways that align with how she lives her life. Here’s why.
Traditional consumer research methods are still popular, but are becoming less effective
Believe it or not, most market researchers in the year 2022 still conduct their research via email-based surveys or rely on third-party datasets. But these methods are increasingly less likely to reach most consumers, do not reflect rapidly changing consumer communications preferences, and they introduce imprecision by disintermediating the consumer from the collection and use of their data.
Shockingly, email is still the primary method of conducting quantitative market research around the world. But consumers are suffering from email fatigue, few of them open unsolicited emails and increasingly more of them are shunning email altogether as a personal communications channel. In addition, static email surveys delivered en masse are often long and impersonal, failing to capture the context of a given consumer’s reaction in the moments when behaviors actually happen. The precision of this method pales in comparison to more individualized approaches that evaluate responses with the mindset and circumstances of the respondent in mind.
Then, there’s the longstanding third-party data dependency through which marketers, instead of directly soliciting their own customers for feedback, buy cobbled-together, often probabilistic data sets purporting to reflect the behaviors of their target audiences. The industry is supposed to be moving away from third-party data due to privacy concerns, but research shows the opposite is true. That’s a problem not only for regulatory reasons but also because third-party data is notoriously inaccurate – and will likely only become more so as its scale declines in the privacy era.
Scouring the web for data is not a bullet-proof approach
Faced with the declining effectiveness of traditional market research, many marketers are embracing a new trend some are calling zero-party data. Many are familiar with first-party data: information businesses collect directly from their customers. The idea of zero-party data is that no business party is involved in collecting it. Rather, the consumer willingly and publicly provides this data, for example by posting on social media.
Zero-party data is not a magic bullet for market research in the privacy era for both regulatory and tactical reasons. On the ethical and regulatory side of things, it is not clear that the use of zero-party data makes good on the core promise of the data privacy movement: forcing companies to get consent from consumers to collect and use their data. If a business scours the web for data on prospective customers and then uses that data to target them with ads, the use of data is still not consensual and it would be unwise of businesses to assume regulations will not eventually target that practice.
On the tactical front, sourcing data without involving the consumer introduces one of the same problems as relying on third-party data: it prevents the business from going deeper and determining why consumers feel the way the data suggest. For example, turning to zero-party data may reveal that a 40-year-old Asian female consumer dislikes a certain product. But why does she dislike that product? And is she representative of other consumers who are demographically similar to her?
The best path to authentic insights goes through the consumer
The core idea of the nascent privacy era of digital marketing is that consumers should have control over the data that businesses collect and what they do with that data. Due to both regulations and anti-tracking rules by technology platforms, the consumer is going to get more of that control. And that’s not a bad thing, because probabilistic third-party data sets were never the most precise way to understand consumers anyhow.
For marketers, the challenge and opportunity of the current sea change in data collection practices is to devise new modes of data collection that not only involve the consumer but also take the individual consumer’s context into account. Surpassing the decades-old conventions of mass surveys, market insights professionals should instead go straight to the consumer and ask them for crucial information in a convenient manner of the consumer’s choosing – such as emerging mobile messaging-based approaches. Marketers should also take advantage of this one-to-one connection to find out not just what the consumer likes but also why, powering more sophisticated business intelligence.
If marketers do that, the declining effectiveness of conventional email-based market research methods and challenges to third-party data in the form of privacy regulations do not need to be crippling headwinds. They can be spurs to action, transforming the market research industry into one that is more respectful – and reflective – of consumers.
Matt Kleinschmit is founder and chief executive of Reach3 Insights.
For more on The New Customer Experience Economy, check out The Drum’s latest Deep Dive.