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What is zero-party data? An overview (and a hot take) for hoteliers

Last Updated: October 25, 2023|Categories: Blog|Tags: , |5.9 min read|

Third-party data… second-party data… first-party data… and now zero-party data?

Yes, there’s another kind of data you need to be aware of — and not just so that you can sound smart at the next hospitality conference, but so that you can bring in impressive business results for your hotel. (Though hopefully, after reading this article, you’ll be ready for both).

If you came here for the textbook definition of zero-party data, we’ll quote Forrester, who minted the term a few years ago:

“Zero-party data is that which a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize [them].”

Before we get into what that means (especially vis-à-vis third-, second-, and first-party data) and why you should care, maybe you’re wondering — why are we putting data into different parties?

These categories are important because these data types have big implications for what software tools you should invest in. Not to mention data privacy regulations, and your overall marketing strategy. No big deal, right? Wrong – huge deal, of course.

But in my view, some of these divisions are more meaningful than others. Third-party data vs first-party data? Big difference. First-party vs zero-party? Close cousins. And when it comes to choosing the right data platform, there’s something even more important than what party your data is in.

But we’re getting ahead of ourselves.

What you’ll see here:

Counting down: third-party data, second-party data, and first-party data

A quick recap:

Third-party data is data that you purchase from a vendor on an open marketplace. The vendor is often a data aggregator who has no direct relationship with the customers whose data they’re selling, and they can sell the same data to anyone willing to buy.

For the last several decades, third-party data has been the main way businesses have used digital data for marketing, especially targeted advertising. They would purchase large quantities of data and use it to inform their marketing strategies. Hospitality businesses operated the same way.

But with the rise of privacy concerns and increasing regulations, the technology that fuels third-party data — third-party cookies — is being phased out by big tech players like Apple, Google, and others. Now, companies are increasingly turning to other sources of data to inform their marketing strategies.

Second-party data is data that you purchase in a private transaction with another business, likely a trusted partner. It’s typically made up of customer data from the selling party. For example, hoteliers may purchase customer data from airlines ‌because these travelers are a relevant persona for hospitality businesses.

In short, second-party data is first-party data that you purchased from another business.

First-party data is data that you collect directly from interactions with your customers. As long as you have their informed consent in compliance with regulations like GDPR and CCPA, you own that data and it is unique to you. And because it comes straight from your customers, this data can give you the most accurate and reliable picture of your guests’ behaviors and buying patterns. AKA, marketing gold.

So if first-party data is so great, why haven’t marketers been using it all along? Why did they wait until regulations and tech giants forced their hands?

Because many companies’ first-party data was siloed in different tools, and it was difficult to consolidate into a single platform where it could be used for analysis. And working with the data required a high level of technical know-how. But that’s changed.

Enter the Customer Data Platform.

The CDP is sophisticated software designed to collect and analyze large amounts of first-party and zero-party data. It allows you to create a comprehensive, accurate view of your customers and to activate their data for advanced segmentation and personalization in your marketing campaigns.

There’s a lot more to say about these data types and the evolution of the tools used to manage them — and we say it all in our resource, “The complete guide to first-party data for hoteliers.” Check it out for a deep dive on how hoteliers can generate more direct revenue with their data while respecting user privacy.

What about zero-party data?

Like first-party data, you get zero-party data directly from interactions with your customers. You could say (and we would) that zero-party data is a subcategory of first-party data.

The difference is one of emphasis: zero-party data includes only information that your customers share with you proactively. Think survey responses, polls, preferences — basically anything your customer had to intentionally type into a form and hit submit. People freely share this information with the explicit promise of a more personalized experience.

First-party data, meanwhile, also includes passive interactions with your customers, like what pages of your website they browsed, what emails they opened or clicked on, etc. It covers purchase data — booking data and stay data — as well.

Both first- and zero-party data are essential for personalization in marketing. And both require the benefits of a CDP to reach their full potential.

There are nuances in how to collect and activate different kinds of zero- and first-party data, especially within the hospitality sector. And we’ll definitely get into that another time.

But before you can actually make use of first-party or zero-party data, you need to have the right tools.

And unfortunately, when many hoteliers are selecting a CDP or other data platform, they are asking the wrong questions. The first and most important thing to consider when choosing a data vendor is this:

Can this platform process MY customer data?

Hospitality data, specifically

Think about where your customer data currently resides. Your PMS, your CRM, your call center software, and your email marketing platform. Your spa, restaurant, and golf platforms. Your website, booking engine, and social media.

Do you have a tool that can ingest and analyze all, or even most, of these data sources?

Most horizontal, industry-agnostic CDPs are built to easily integrate with first-party data sources like your website or app. But when you get into hospitality-specific software like your PMS or spa booking system, they come up short. And you’re likely to end up missing out on extremely valuable zero-party data that is essential to understanding your guests.

Unfortunately, hospitality is not a large enough segment of their business to put in the engineering resources to build multiple custom integrations. But at Revinate, we think hoteliers deserve the most advanced technology available. That’s why we built our data platform specifically for hospitality data.

When you’re choosing a partner to manage your guest data, do your due diligence on their integration capabilities. Can they capture data across the entire guest journey, from inspiration to post-stay?

Hospitality professionals know what it means to put guests at the heart of their business. Bring that same prioritization to your guest data, and you’ll be well on your way to a powerful marketing and revenue strategy.

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