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Personalization Marketing First Party Data Zero Party Data

Hyper-personalization is here, but how can brands use it to boost retail results?

By Federico D'Uva, Lead marketing strategist



Opinion article

September 22, 2022 | 7 min read

Personalization in e-commerce is nothing new, but as strategies mature some say we’re entering a new era of ‘hyper-personalization.’ For The Drum’s e-commerce deep dive, Rawnet’s Federico D’Uva investigates how brands can jump in.

A swirl of oil-based paint, resembling the star at the center of a galaxy

Hyper-personalization is an opportunity for retailers – but how can they make the most of it? / Daniele Levis Pelusi via Unsplash

Retailers have been able to create personalized customer experiences for some time now. By tailoring products or services to individuals based on what they are affiliated with or their previous purchases from the company, brands are driven to connect better with their consumers.

But there’s still a common misconception that personalization is simply ‘Welcome, *firstname*’ – in fact, it’s much more about understanding customers and ensuring they consent to the business using their data to enhance users’ future experiences.

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Google recently reported that on average retailers only invest 0.7% of their revenue into personalization, while best-in-class retailers are investing 30% more. Consumers are demanding personalized experiences; it’s up to organizations to build a granular understanding of customers’ needs to meet those demands.

Brands can leverage business data collected over time to adjust their marketing strategies; for example, if a customer hasn’t made a purchase in a certain amount of time, they can offer discounts. It’s not just about personalizing the homepage but adapting search functions, product landing pages (PLPs) and product detail pages (PDPs).

Hyper-personalization and how it benefits brands

A recent report from McKinsey found that 80% of consumers are more likely to make a purchase when brands offer personalized experiences. The challenge for retailers is ensuring that they have the relevant data to provide this level of user experience.

Allowing a customer to consent to having their data used is critical; often there’s a lack of understanding around why a business needs it. Whether it’s first-, second-, third- or zero-party data, organizations need to make sure that they’re clearly explaining data use, collection methods and benefits to the customer’s experience.

Going further, some retailers are considering introducing hyper-personalization: the most advanced way to tailor marketing to individual customers with customized, targeted experiences using data, analytics, artificial intelligence (AI) and automation.

Hyper-personalization requires significant planning and data mining, but it can streamline the customer journey by removing obstacles (such as irrelevant products) and letting retailers guide customers toward the items that provide the most value and satisfaction.

Tackling zero-party data

As we move toward a cookieless future, retailers are evaluating options for collating customer data to deliver customized experiences that add value and convenience. Many businesses are turning to zero-party data (data that a customer proactively and deliberately shares).

This approach doesn’t come without challenges. Brands will be looking at a well-rounded approach to enhancing the user experience, which raises a few questions that retailers need to address – namely, how does consumer data feed into marketing communications channels and into the website itself? And how do brands translate that into a seamless experience from one channel to another?

This impacts retailers’ multi-channel strategies and opens up compliance challenges. Businesses need to make sure that they have consent – and the functionality for individuals to change their minds at any time.

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It’s no secret that retailers’ personalization can flourish when they have consent from their customers, which is the case with zero-party data. But there’s another side to the equation: brands don’t want to waste resources in making sure that they have a robust cookie management platform and can leverage this with their internal legal teams to make sure that everything is watertight.

Brands need to balance personalization with the emergence of zero-party data and maintaining a positive customer experience. Retailers want to showcase new products and top sellers; with a data-driven approach, they can build an understanding of what consumers are looking for at a given time. With this information to hand, they can create meaningful relationships, win loyalty and stay relevant by providing personalized experiences with the help of first-party data.

For more data, personalization and commerce, head over to our e-commerce deep dive hub.

Personalization Marketing First Party Data Zero Party Data

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Rawnet is a digital agency that defines, designs, delivers and drives strategic products and services that create a long-term positive impact.

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