First-party data is your own contact/customer data that you have acquired through your own business activities. Ideally, it should be going to a centralized and shareable system, such as a CRM, so your company can fully leverage it. But SMBs don’t always have time to coordinate these things. Putting some focus on data quality reaps big rewards in the present and as you continue your relationship with your customers.

Here’s an intro to the value of first-party data for entrepreneurs, small business proprietors, and any sales or marketing professional who’s looking for high ROI on their budget and time investments.

What is first-party data (and what other “parties” are out there)?

First party-data is all yours. You know exactly who you got it from and where you got it. In most cases it also implies permission to sell or market to the person, at least on a personal level if not at the organizational level. That’s what really makes it so special. For a small business, the simple fact it’s in abundant supply and potentially free makes even more sense. Unlike second- and third-party data, which you may deal for or purchase, and which isn’t yours, you’re in control. This comes with responsibility, but it’s manageable.

Second-party data, which is essentially someone else’s first-party data, has value as well. It’s data granted to you through a legal arrangement. It can help you collaborate with partners in your marketing efforts. And even third-party data, which is aggregated and acquired from another source, can enrich your own data and let you tap new audiences unavailable internally or through direct partners.

Here’s a quick overview of the three parties of data.

Type of dataDefinitionProsCons
First-party dataData you directly acquired. Can be from behaviors and actions on your web page or app, in your CRM, in subscriptions and social media, and from business cards and contacts.‣ You acquired it yourself.

‣ In principle, consent to receive marketing is given.

‣ Fresh, accurate, immediate, as personal as you can get.
‣ Scope limited to what you can acquire.

‣ Amount may be limited.

‣ Could be siloed in departments or among individuals.
Second-party dataSecondhand data that someone else collected (i.e., someone else’s first-party data). Purchased from or shared from first to second party. Can be from the same sources as first-party data, but you didn’t acquire it.‣ Accurate, reliable, and generally quite fresh.

‣ Can be well-targeted, as you know the source and its initial intent/needs.

‣ Can build relationships, such as with trading data among groups or with partner companies.
‣ Not your own.

‣ Risk alienating your own customers if you pass on their data.

‣ Gray area surrounding privacy laws like GDPR.
Third-party dataData bought from outside sources that didn’t acquire it themselves. The data may be collected initially in the same ways, but then aggregated.‣ Can be used to enrich current data, giving a much bigger picture of the customer.

‣ Lets you create new segments for better targeting.

‣ Access to new audiences you may not be able to reach on your own.
‣ Questionable age/freshness and accuracy.

‣ Others may be using the same data.

‣ Questions about consent and actionability.

In sum, each has its place, but with first-party data, you hold the cards. So…

Where can you get it?

  • Web forms
  • Business cards
  • Your CRM or contact management system (CMS)
  • Onsite activity on your homepage
  • Event speakers and audiences
  • Survey data
  • Social media data
  • Customer service interactions

You probably noticed the commonality is that they’re all direct contacts with the customer. Direct in the sense you (or your systems) are acquiring the data, not someone else.

None is more direct than a face-to-face meeting and a good old handshake. Yes, those are in shorter supply these days, yet even before the current climate, business was routinely conducted at a personal level through other media.

That’s all first-party data, and ideally you’ve covered the bases as far as doubly ensuring you’re transparent about data use.

As a small business, hopefully the economic advantages of all of these will spark some joy. Yes, you need to put in the investment of crafting your landing pages, managing your events, and pooling your data, but cost-wise? Tough to beat.

How can you use it?

For starters:

  • Personalization in your marketing. With greater details in your data, you can streamline campaigns and customize messaging.
  • Segmentation using a customer’s behavior and transaction profile. With insight on what they buy, you can anticipate what they’ll need in the future, and segment them in your offerings.
  • Audience insights for efforts such as lookalike marketing and anticipating times of heavier/lighter ordering, such as seasonal purchases or demand in a certain region.

But handling others’ private details is an increasingly important business issue. When you don’t have a team of corporate lawyers…

How should you manage it?

Very carefully! Especially if you’re in Europe with the GDPR or the growing number of countries that are implementing data laws. The most recent large economy to roll out a big data policy is Brazil, with its General Data Protection Law.

The GDPR was a new level of personal data protection. It required essentially any European firm or any firm doing business with Europe had to meet its standards. For a small business, this was intimidating, but it seems it hasn’t been as exacting as many expected, especially the non-European firms.

Key principles in safeguarding first-party data are grounded in technological security and transparent ownership. Leave the legal specifics to your legal team, but generally wise tips include:

  • Have a secure, modern server environment.
  • Define the roles of data custodian and data steward.
  • Have a clear and public data privacy policy.
  • Make it clear how and where you’re collecting data; don’t hide it.
  • Understand the limits of how you can use first-party data. For instance, if you’ve acquired someone’s business card, it typically means the card owner, rather than the entire organization, has implied consent to market.

Again, consult with your legal counsel to find out which data rules apply to you and the extent of how you can use your first-party data. Once you get this straight, you’ll be able to put your customers at ease while improving your own marketing and sales approaches.

Time to party. Responsibly, of course.

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