A young woman bakery owner stands behind the point-of-sale kiosk at her shop. She is smiling at the viewer.
Your business has customer data through sources like your point-of-sale system and social media. Learn how to use this data as a springboard to customize your marketing campaigns. — Getty Images/Miguel Angel Partido Garcia

First-party data is information you collect directly from your audience instead of relying on third-party sources. It is an extremely valuable type of data for businesses. With Google phasing out third-party cookies, first-party data is more valuable than ever. Here's how first-party data works and how to incorporate it into your marketing.

[Read more: 4 Sources of Customer Data and How to Put It to Work]

What is first-party data?

Because first-party data is gathered directly from your audience, it's more accurate and reliable than other types of data. Businesses collect first-party data from a variety of channels, including website visitors, email subscribers, and social media followers.

In comparison, second-party data is shared by a trusted source, while third-party data is data aggregated from other sources. Some examples of first-party data include the following:

  • Name.
  • Email address.
  • Age.
  • Location.
  • Interests.

[Read more: How to Protect Your Customer Data]

As a business owner, view first-party data as a starting point. Once you've established a relationship with your audience, you can learn more about them by sending surveys and polls.

How is first-party data collected?

Businesses collect first-party data from their audiences through a variety of ways, including the following:

  • Website: By tracking how your audience engages with your website, you'll learn more about their preferences and interests. For example, you can see which pages they visit most frequently and how they interact with your content.
  • Mobile interactions: If your business has a mobile app, you can track how customers engage with it. When new users register for the app, you'll gain user demographics.
  • Email marketing: Your email list provides valuable first-party data such as email open rates, purchases, and bounce rates.
  • Social media: Monitoring social media interactions gives you insight into the types of content your audience prefers.
  • Point-of-sale (POS) systems: Your POS software includes a complete purchase history from each customer.

Benefits of first-party data

Businesses can leverage the data that's right at their fingertips to create better relationships with their audience. Here are the four biggest benefits of collecting and using first-party data:

  • Accuracy: Third-party data sources aren’t always clear, but first-party data comes directly from your customers. That means this data is more accurate and relevant to your business.
  • Ownership: Collecting first-party data means companies don't have to rely on outside data providers and sources. Businesses own this data since it was given directly to you from consumers with explicit consent.
  • Trust: When you collect second and third-party data, consumers haven't consented to sharing their information with your company. First-party data, however, was given with their consent, which is a sign of trust.
  • Higher ROI: First-party data offers a higher ROI because you're marketing to consumers who are already familiar with your brand and purchase from you. Plus, the insights you glean from your data allow your business to create more effective marketing campaigns.

[Read more: How Data Provenance Can Be a Competitive Advantage]

Challenges of first-party data

One of the biggest challenges of first-party data is its limited scope. Businesses can only learn so much about their audience through basic demographic information like their customers' location and purchase history.

As a business owner, view first-party data as a starting point. Once you've established a relationship with your audience, you can learn more about them by sending surveys and polls. You can also encourage your customers to leave reviews or engage with your business on social media, giving you additional insights into their perspectives.

How to use first-party data in your marketing

Creating a comprehensive marketing plan is essential to growing your business. Here are three ways to use first-party data in your marketing:

  • Build customer profiles: First-party data can help you understand your customers' preferences and purchasing patterns, which in turn can help you create more accurate customer profiles and personas.
  • Segment customers: First-party data makes it easier to segment your customers based on their interests, buying behavior, and where they are in the customer journey. Segmenting your audience allows your business to create personalized messaging for different types of customers.
  • Improve your content strategy: The information you gather from first-party data can help you create personalized content that is relevant and interesting to your audience.

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