A Renewed Focus on Zero Party Data and Artificial Intelligence creates a Greenfield for Loyalty Marketing.
The reaction by marketers over Google’s 2020 announcement that its Chrome browser would no longer accept third-party marketing cookies was akin to the desperate gasp of someone whose very life was under threat. As the initial shock abated, marketers channeled efforts into finding alternative solutions for tracking customers online for marketing purposes.
Personalization emerged as the most promising way for brands to connect with customers. Today, most agree that the future of Loyalty Marketing revolves around how to deliver on the multifaceted promises of personalization to engage customers and develop meaningful relationships that endure over time. But if you think like a consumer for a moment, a survey of your own shopping experiences reveals the impact of Personalization on our daily shopping to be muted at best.
More than any other ingredient of a future-looking Personalization strategy, the application of Artificial Intelligence (AI) into your data-driven strategy is the one that holds the greatest potential. Artificial intelligence enables the analysis of large databases, resulting in the delivery of a higher volume of relevant, personalized recommendations. But Personalization is not simply about data-mashing and delivery volume – customers want the brands they patronize to reflect a “digital recognition” of their preferences while maintaining authenticity and sincerity.
The question remains; how can you leverage AI-based hyper-personalization to establish friendly relationships with your customers? This series of articles is inspired by the eBook from Comarch How AI Personalization Drives Customer Loyalty. Throughout the series, we will be sharing fresh perspectives on the answer to this and other questions that marketers are hungry for today.
What’s the connection between the Cookieless future and Loyalty Marketing?
The market has created its own storyline regarding the Google announcement and the future of online shopping. And it’s not altogether correct. We’ve read several sources saying that the intention of Google to retire third-party cookies led marketers to spend countless hours in planning sessions and ultimately it was Forrester that coined Zero-Party Data as a term that became symbolic for an alternate data marketing strategy.
- Zero-Party is data knowingly and willingly given to a company by a customer (I.e., survey responses, profile attributes given).
- First- Party data is that which is collected directly from customers but not intentionally given (i.e., purchase history, website activity, interactions, mobile app data). Loyalty Marketers commonly refer to First-Party data as Behavioral Data.
Take a closer look at the timeline and you see the term “ZPD” created by Forrester Research in 2018, two years before Google made its first announcement. Forrester introduced the term in a report that highlighted the potential of zero-party data as an alternative source of customer data, one that would be more powerful than the first-party data most marketers relied upon. Forrester recognized that consumers were seeking a sustainable business model for the web that respects users’ right to privacy and delivers more safe, transparent, and trustworthy experiences.
As consumers continued to register their demand for a better online shopping environment, legislators have become increasingly willing (could we say eager?) to adopt standards that force marketers into specific actions. The target of their interests is the data that marketers collect unknowingly to consumers or as result of a permission-based marketing program. The focus on protecting consumers is skyrocketing the value of ZPD as it is the foundation on which marketers can build a true understanding of customer preferences to meet their needs as a modern, omnichannel shopper.
Forrester’s wisdom was welcomed by loyalty marketers, as it gave a new and catchy name to a concept that the industry has advocated for years – that a differentiating and powerful feature of permission-based loyalty programs was the ability to engage program members in trusted conversations to gradually understand their preferences and build a profile that would allow them to give customers what they truly wanted. Their timing was impeccable as Google delivered the softest of softballs that loyalty marketers were ready to “hit out of the park.”
Why did it take Google to sound the alarm bells for Loyalty Marketers?
As of August 2024, Google holds a 65.2% market share in browser usage. That dwarfs the collective 26.6% market share held by the next three competitors: Apple’s Safari, Microsoft Edge, and Firefox. While Firefox had restricted the third-party cookie by default in 2019 through its Enhanced Tracking Protection (ETP) program and Apple’s Safari followed in 2020 through its Intelligent Tracking Prevention (ITP) feature, the market didn’t pay attention until the dominant browser player, Chrome, was set to be impacted.
Huge retail dollars were suddenly at stake.
- The Global Retail Market size in US$ is 28 trillion as of early 2024.
- 73.8% of that figure goes through physical stores, but the remainder that is attributed to ecommerce sales is growing at a faster pace.
- The percentage of ecommerce sales in the US was 15% in 2022 and is expected to grow to 21% by 2026. Online sales growth accounted for 57% of total US Retail Sales alone in Q1 2024.
Apply Google’s influence on consumers to the massive size and growth of ecommerce and you understand why the announcement has merited so much attention.
Even though Google has delayed its plans to retire third-party cookies several times, change will eventually come. Most recently, Google had planned the elimination of cookies for one percent of Chrome users for early 2024, to be followed by a full phase-out in the second half of the year. In April 2023, complete deprecation was postponed to the beginning of 2025 as Google was forced to take the concerns of “industry, regulators and developers” into account.
For example, the United Kingdom’s Competition and Markets Authority (CMA) ordered Google to pause the process until competition-related concerns were addressed. As the CMA and other regulatory groups essentially view cookies containing identifiers as personal data, they seek to mandate stricter standards for consent before data about that user is collected and the user is tracked.
Personalization and Artificial Intelligence
Personalization plays a crucial role in loyalty programs as it helps build lasting relationships with customers and enhances positive customer experiences, thereby increasing customer engagement. The promise of Personalization is to deliver tailored offers, advertisements, communication styles, personalized rewards, and even the timing of communications customers with contextual knowledge of the customer that engenders authenticity, comfort and ease.
When done right, personalization leads to:
- Higher quality customer experience
- Increased customer engagement
- Greater satisfaction
This means creating longer-lasting partnerships based on mutual understanding, where the customer feels “known and valued” rather than simply used to generate profit.
As we mentioned, the importance of creating this trusted environment between brands and consumers has always been at the core of loyalty marketing best practices. Even though Don Peppers published his groundbreaking perspectives on what we now term “hyper personalization at scale” in his book The One-to-One Future in 1993, it is only with the availability of Artificial Intelligence and Machine Learning that marketers can realize the impact of these concepts to their marketing strategies.
But now in 2024, we are living the beginning stages of the era of hyper-personalization, where advanced algorithms can be used in real time to deliver better experiences and a more personalized approach, resulting in stronger, durable customer relationships.
Loyalty Marketers have been talking about building personalised profiles for many years. And even though Google’s announcement to retire the third-party cookie seemed ominous for many brand marketers, it may have been the necessary signal to garner an industry’s attention and prioritize the time as “NOW” to find a solution for Personalization. The first step in the journey to personalization is to create an effective ZPD collection strategy. Building a foundation in high-value, competitively defensible data will be the key to success in the future.
In the next article in this series, we’ll share the importance of permission based (Opt-in) marketing constructs to support Personalization at scale and go into more depth on how AI can be applied to generate the results that consumers demand.
Editor’s Note
We have tapped a wide range of resources to create this series on Personalization and Customer Loyalty. At the center of our inspiration is the new eBook from Comarch How AI Personalization Drives Customer Loyalty, which you can download here. We encourage you to read this eBook and combine its findings with fresh thinking in this series to accelerate your strategy to apply AI to your customer strategy.
