Why is 1st Party Data Important to Loyalty and How Do You Use It?

by Natasha Ambavle |

Why is 1st Party Data Important to Loyalty and How Do You Use It?

We all have ‘accepted cookies’ hastily while browsing through websites. Most of the time even without giving it a second thought. What we seldom realize is that with just one click we are sharing information with a person, team, a company, or more. Sharing information is not necessarily a bad thing; provided that the data is collected with consent, used ethically and in compliance with data protection laws.

In 2021, data became big and everyone has started talking about it. Why you ask? First, you need to know what data exactly data is.

In simple terms, data in marketing linguistics refers to customer information. It is information collected through various mediums that companies use to analyze customer behavior and formulate strategies that suit the sensibilities of their audience. Data can be categorized into four kinds based on the mediums it’s derived from. Zero-party data is where users share their information intentionally with you in exchange for a better customer experience and engagement. 1st party data is when brands collect user information through their own channels viz. websites, apps etc. 2nd party data is when two companies share their data with each other. 3rd party data is data that is aggregated by a vendor or a company and later sold to others.

With a growing number of brands capturing and selling 3rd party data, it has become increasingly important to safeguard the privacy of the users. In the past few years, there has been a paradigm shift when to comes to data accumulation practices. Global brands are now leaning more towards 1st party data because of its accuracy, quality, ethical practice of data capture, and high ROI. A study by Boston Consulting Group (BCG) found that brands using 1st party data for key marketing functions achieved up to a 2.9x revenue uplift and a 1.5x increase in cost savings. Another recent E-Consultancy Report “The Promise of First-Party Data,” reports that companies with the highest ROI from their marketing programs used 1st and 2nd party data more regularly than companies whose marketing programs underperformed.

Now, let’s get to the big question: How does 1st party data impact brand and customer loyalty?

Marketers and strategists, constantly strive to inculcate loyalty among their customers towards the brand. You may ask, why is loyalty so important? Brand loyalty distinguishes a brand from another. It helps in creating a niche and a distinct identity with a strong brand following. Loyal customers are an asset. According to InMoment, 77% of customers have strong relationships with specific brands that lasted for 10 years. Your loyal customers not only repeatedly purchase from you, but they also represent your brand to others and influence potential customers while improving your brand’s credibility in the market. Loyalty is the result of the emotional bond a brand works towards creating with its audience.

How can you create an emotional bond with your audience when you don’t even know what they really prefer, want, dislike or expect from you? This is where 1st party data comes into the picture.

After 2020, customer expectations have increased from the brands. Customers are now wiser and want you to use their data viz. 1st party data to improve engagement and customer experience. Enhanced customer experience, targeted campaigns, and relevant engagement activities help to retain customers and improve the overall brand value in the long run.

Loyalty Programs As a Means to Collect 1st Party Data

By now, everyone is aware of the many strategic advantages that a loyalty program has to offer, but did you know, that loyalty programs are a smart medium for capturing 1st party data? In this day and age when data is money, you simply cannot expect customers to share their data for you, just like that!

A Data Axle survey found that consumers are more willing to share personal data if they receive something of value in return. Loyalty programs become an excellent medium that extracts information and simultaneously rewards customers. It is a lucrative barter with the brand and the customers are more than willing to share their information with the brand in exchange for incentives and rewards. Often customers are hesitant to share information when they are unsure about what the company intends to do with their data but with loyalty programs there is complete transparency and customers look forwards to the barter. According to Salesforce State of the Connected Customer Report (2nd edition), “86% of customers are more likely to trust companies with relevant information if they explain how, it provides a better experience.”

Click here for an in-depth study on 1st party data, its correlation with loyalty and why it is the way of the future.

How Can You Use 1st Party Data?

1st party data capture is perhaps the most reliable and authentic way to accumulate data.

  • Understanding Your Audience – What if you could peek inside your customer’s psyche? With 1st party data, you can! 1st party data gives you deep and meaningful insights into your customers. It allows you to accurately gauge your customer preferences, purchase patterns, and many other things.
  • Creating an Omnichannel Experience – Salesforce’s State of the Connected Customer report indicates that 79% of customers are willing to share relevant information about themselves in exchange for contextualized interactions in which they’re immediately known and understood. Omnichannel experiences are the way of the future. They are created by mapping the customer’s digital footprint and proving proactive service to them. This is only possible with 1st party data analysis. The prime requirement to create omnichannel experiences is quick analysis of data and swift strategy execution.
  • Designing Targeted Campaigns and Strategies – Brands invest heavily in marketing and promotions and fail to receive the anticipated ROI. One of the main reasons for this is because your campaign doesn’t appeal to your audience. With 1st party data, you can understand the pulse of your audience and design targeted campaigns that are sure to strike a chord with your audience.


There has been a conscious migration of dependence from 3rd party to 1st party data, especially in the last couple of years. According to eMarketer, 85% of US marketers and 75% of respondents in Western Europe said that increasing their use of first-party data is a high priority. Loyalty programs could provide vital 1st party data that could bolster your marketing strategies; however, you will need the expertise of a loyalty partner. Annex Cloud can help you collect 1st party data. By using loyalty technology like Annex Cloud’s Loyalty Experience Platform™, you can improve your business.  Annex Cloud’s platform integrates at the backbone of your tech stack and goes to market with modules; allowing organizations to pay and use only the features they need. Connect with our team to learn how you can empower your brand with 1st party data capture through your loyalty offerings.

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