Marketers have long relied on third-party data to target and acquire customers, personalize messages, and drive growth. However, those days are numbered. Increased digital privacy concerns are driving investments in new data sources, customer content, and community-building programs.
Data collection and the understanding of customer identity is changing. Marketers are discovering that first-party and zero-party data are invaluable tools for building consumer trust. Truly knowing your customer requires higher quality data and people-first solutions. So where does that leave marketers: standing at a crossroad in peril or on a path to greater opportunity?
The Quest for Consumer Trust
The CMO Club, in partnership with SheerID, recently surveyed 44 chief marketing officers (CMOs) across a broad range of B2B and B2C organizations and industries to understand where marketers are in this quest for trust.
The survey included interviews with CMOs and senior marketers from leading brands such as DuPont, McDonald’s, NAPA AUTO PARTS, Petco, and Tempur Sealy International, to gain better insight into how these brands are transforming their businesses and building trust with customers.
The research project culminated in The Quest For Consumer Trust, a CMO solution guide that reveals how marketers are developing new ways to engage consumers without relying on third-party data.
The guide also explores how leading CMOs are drastically transforming their businesses in their quest for consumer trust by making strategic digital investments that build consumer trust, deepen customer relationships, and improve ROI.
This post highlights some of the survey results and offers five tips for building trust with your customers. Make sure to download the full report here.
First, Know Your Data
Data quality plays an important role in a majority of CMOs plans for building consumer trust. To understand how to assess the data you collect, you need to understand the different types. Here’s a quick summary.
- Third Party: Consumer information passively collected from website cookies, social media, app
- Second Party: First-party data shared with a brand partner
- First Party: Opt-in data provided directly by customers on a brand’s website
- Zero Party: Opt-in information given explicitly by the consumer in exchange for a more personalized recommendation or reward
Trust is Key but Not For Short-Term Growth
Building consumer trust is front and center for successful brands. In one-on-one interviews, every CMO said that it’s foundational to the success of the brand.
When you’ve built a brand that consumers trust, you build brand equity and pricing power that can sustain growth for the long-term. Just like building a personal relationship with someone new, consumer trust is earned by demonstrating that you are reliable and have your customers’ best interests in mind.
To build consumer trust, the top three areas CMOs are investing in are:
- Customer content, such as testimonials and videos (73%)
- Higher quality data collection, such as opt-in data directly from consumer (55%)
- Customer reviews (48%)
And a deeper dive into the role of data in building trust revealed a vast majority of CMOs want data that comes directly from their customers:
- 84% are moving away from data sources with privacy concerns (third-party data) to data sources that accommodate more stringent privacy requirements (i.e. first party and zero party).
- 77% are investing more in zero-party data sources.
- 86% are increasing spending on first-party data.
We also wanted to know from CMO’s where they were planning to invest to drive growth within the near term. And while consumer trust wasn’t front and center, (because as we said, it takes time to accomplish this goal), many of the investments CMOs are making intrinsically build trust by providing better customer experiences across channels and product innovation.
More specifically, CMOs said they are planning to invest in the following areas to drive growth:
- Create omni-channel experiences (59%)
- Improve product differentiation (55%)
- Increase advertising performance, gain actionable customer insights, and drive digital transformation internally (all 41%).
Increasing Confidence in Data
Almost half of the respondents indicated that they were not confident in the data sources they currently use to create relevant and personalized messages. The real challenge for marketers, however, is gaining confidence in their ability to refine the data into useful insights.
“It is important to be authentic, relevant, and to get involved in the community and with issues that draw in the younger generation,” said TARIQ HASSAN, Vice President-Marketing at Petco.
And while there is a growing awareness of the limitations of third-party data, CMOs realize it’s not going away. In fact, it still has an important role to play.
As Marti Walsh, CMO of NAPA AUTO PARTS explains, “Being able to layer third party data with first party can fill in the holes in our insights and allow us to create a more robust consumer journey.”
Offering Value in Exchange for Data
The need to move beyond third-party data providers is motivating leading brands to make significant strategic shifts towards relationship-based business models that offer consumers something of value—like an offer, reward, or special promotion—in exchange for their data. Consumers opt in to redeem the offer because they recognize that their data is protected and that the process is transparent, which increases their trust in the brand.
These kinds of exchanges allow marketers to develop meaningful, personalized experiences while obtaining quality consumer data.
The CMO Framework for Consumer Trust Success
Marketers believe that zero-party and first-party data offer a critical opportunity to shift from being a transaction-based organization to one that fosters a closer relationship with customers based on their lifestyle, affinities, and experiences.
To that end, here are five actions marketers can take to create more trust within their customer communities:
1. Up Your Data Game
In the digital world, data equals opportunity. But it’s quality, not quantity, that matters. The best data for building brand trust is the data your customers provide directly to you. For your consumer community to grow and thrive, you have to invest in zero-party data.
3. Optimize Experiences, Not Just Transactions
The digital economy has neutered traditional differentiators like price, selection, and access to stores, and now requires brands to “give to get”. To rise above your competitors, it’s crucial to offer your customers experiences that meet their expectations and create moments that make you stand out.”
4. Look For Digital Opportunities To Say, “Hello, How Can I Help?”
Historically, it was third-party data that enabled personalization. Today, a brand relationship begins the moment your customer is online, and marketers need new ways to introduce themselves. Creating a special offer for your high-value consumer communities, such as an exclusive discount for the military community, is a great way to welcome new customers into your brand.
5. Invest In Communities That Can Spread Your Message
Consumers want to know your brand cares about them. Supporting causes they care about builds trust, ensures your brand promise is kept and creates a good news story that customers will share, raising brand awareness and goodwill.
A great example of this from the past year is the special offers that many brands gave to first responders, health workers, front-line workers, and other groups most impacted by the pandemic. They garnered significant attention and represent a trend that’s here to stay.
Consumers today have countless purchasing options. Finding privacy-friendly ways to offer them real value will build brand trust, create emotional connections, and encourage them to give you personal data you can use to engage them for years to come.