MarTech Basics #2: What Are Customers Telling You?

Understanding 1st-, 2nd-, and 3rd-Party Data

Photo by Tyler Nix on Unsplash

In this post, join me discussing what kinds of customer data are out there, some common categories, and examples of each of them.

We’ll be covering the first step in making your customers feel seen: Understanding your customer data

If you haven’t seen the first post in this series, start here:

MarTech Basics #1: What is MarTech?

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You’re back at the coffeeshop…

…and a regular customer tells you that he’s been to the doctor recently. The doctor told him to drink less caffeine.

The customer in question before going to the doctors office (Futurama S4:E16 “Three Hundred Big Boys”)

The next time that he comes in and asks what he should get, you recommend a “Jump Start”, a double shot of espresso in a black drip coffee.

How does he feel when he gets that response?

He feels like he isn’t seen at your business.

This is a problem.

A Big Problem

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Obviously you shouldn’t do this to your customers in person, so why would you build a bot to do it a thousand times more digitally?

Don’t fight with things meant to make life easier (SNL ”Old Glory Insurance”)

Ok, I see the issue. How do I fix it?

Ensure that your customers feel seen by managing their information. Customer data management is a multi-part process.

• The first step is understanding what kind of information your customers might give you so that you can build strategy to manage it¹

• Next, gather and process this information so that it’s useful across multiple business areas²

• Finally, determine the best ways to use your new data to improve the customer’s experience

In this post, we’ll be covering just the first point.

Understanding Your Customer Data

Customer data is a very broad category. It can include anything from preference information, to demographic information, to financial information.

The goal of all customer information is get a better idea of your customer.

All customer data gives an incomplete picture of your customers, no matter what that smooth-talking new tech startup’s salesman says.

There are multiple correct, but incomplete ways to look at a customer (Source: Sketchplanations)

Like the story of the blind men and the elephant, any particular customer data type can be correct, but not show the whole picture.

A great way to get a more full picture of your customer is to collection from a variety of separate sources.

Let’s dive into the broad strokes of data source categories.

Understanding Data Based on Source

One of the most common ways of describing customer data is by grouping information by where it comes from.³

In this case, there are 4 main categories:

• Directly told—what the first customer did: shared a preference with you directly⁴

• Gathered from business interactions—when someone orders a daily black coffee, assuming that they like black coffee makes sense without them telling you

• Shared from your business partners—your pastry provider might give you an extra cupcake and tell you its for a specific customer’s birthday

• Heard from someone else—a wife worried about her husband’s love of sweets might ask about a sugar-free syrup replacement for him

All four of those are based on the person or party giving you the information. Generally, they’re referred to as 0th⁵, 1st, 2nd, or 3rd-Party data respectively.

Common kinds of customer data with example situations

Check out this great article from Databeats for more detail on data types sorted by source.

We Need To Talk About Customer Data

Recap

Listen to what your customers are telling you. They may literally tell you, give you hints from their actions, or you could hear information from a 3rd party.

No matter where you get it from, if you think it gives you a better idea of your customer, don’t let the chance slip by you.⁶

All of the blind men have useful information here, but don’t ignore the elephant’s perspective for those of the blind men

We've covered the 4 common data groupings (0th, 1st, 2nd, and 3rd party data) at a high-level, and will be continuing to dive deeper into customer data next time!

Now that you know the broad groupings for customer data, keep an eye out for them in your daily life. You’ll be amazed to see how much information is floating around in casual conversations, especially gossip, that you can now categorize into one of these categories.

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If you think this is useful, stay in the loop by subscribing now and letting me know what other ways you’ve seen data usefully categorized

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1. It can be something as simple as posting a monthly calendar with customer birthdays below the checkout area so that employees know whose birthday is coming up.

2. Imagine a website asking your birth year and date when creating an account, then asking how old you are because they didn’t bother to calculate it.

3. Other common ways of grouping data are by the content of information: Demographic, Psychographic, Geographic, Financial, etc are also commonly seen.

4. “Zero-th party data” is only somewhat used in general discussions. Much of this data is deemed “1st party” depending on the industry

5. See Footnote #1

6. Advanced data managers will add a tag to their data that expresses the confidence that data from a given source is correct and up-to-date