The retail industry is primed to continue its growth trajectory, with the global consumer class (comprising of consumers spending US$12 or more per day) reaching 4 billion in the previous year, and 5 billion people by 2031. In Asia-Pacific, the retail e-commerce market size is expected to grow by 8% CAGR from 2023 to 2028. These numbers reflect a growing appetite around consumer spending, but are retailers able to keep up?
With the latest technology trends diving into how consumers’ lives continue to merge with the digital realm, personalised experiences are beginning to see even stronger demand, with 90% of businesses acknowledging that these experiences play a pivotal role in increased sales and even repeat business. However, figures show that only 35% of marketers say their customers have personalised experiences, illustrating a gap between perceptions and reality.
Personalisation – How Challenging Is It, Really?
For retailers to even begin looking towards personalised experiences, they need valuable data and insights which they can tap into to develop their marketing strategies. However, the concrete data they require from their customers are stored in existing silos such as social media platforms or respective e-commerce sites, leaving the wider pool of retailers with a fragmented view of a customer’s behaviour, and in turn, inaccurate data.
Imagine a tailor creating a suit without considering the client’s budget, the suit’s purpose, skin conditions, or the climate it will face. This is akin to businesses ignoring key consumer insights. Without understanding these crucial factors, they struggle to offer truly customised solutions. Relying solely on partial data leads to misguided marketing strategies and product offerings that miss the mark, resulting in wasted resources and lost opportunities. Just as a perfectly tailored suit requires more than a good fit, businesses need a holistic view of their customers to deliver truly personalised experiences that resonate and satisfy.
In the competitive retail landscape, where standard data is widely accessible, retailers must differentiate themselves by offering exceptional consumer experiences and personalisation through deeper insights. Failing to do so risks leaving consumers feeling undervalued, dissatisfied, and disengaged, while competitors who prioritise up-to-date customer data will excel and dominate market share.
The Band-Aid Solution At Present
To grasp any form of insights about consumers, retailers at present typically turn to first-party, second-party, and third-party data. First-party data, collected directly from customers, is highly accurate and compliant with privacy regulations like GDPR and CCPA, making it a reliable source. However, its scope is limited to the existing audience database, and it can become outdated if not regularly refreshed. Second-party data, shared between trusted partners, provides additional perspectives but may not perfectly align with a company’s specific needs and can also suffer from data staleness. Third-party data, quite commonly used, is often viewed as a cost-effective method for expanding audience reach, is collected from a wide array of sources across the digital landscape, including websites and social media platforms.
However, third-party data is fraught with challenges. It often contains incomplete or outdated information, making it less reliable for strategic decision-making. Additionally, it raises significant privacy concerns, as it is typically gathered without direct consent from the individuals, making it far less accurate and trustworthy than first-party and second-party data.
The Gold Standard of Data Collection
For the uninitiated, zero-party data, a term that has gained traction in recent times, is defined as information shared directly by customers, with transparency and knowledge on how their data will be used. Differentiating this from first- to third-party data, zero-party data is intentionally shared by customers themselves, delivering unmatched precision and relevance in grasping their needs, preferences, and expectations.
Consider Lily, a fashion enthusiast who visits an online apparel site to cart out new outfits. By sharing past shopping information, and current style preferences with the site, Lily gives the company valuable insights into her interests – a prime example of zero-party data.
On a grander scale, businesses that utilise zero-party data will be able to foster healthier and more positive relationships with their customers, increasing their brand loyalty and building trust.
Holistic Identity – What Is It?
The Holistic Identity concept is designed to return data ownership from centralised platforms back to individuals, allowing them to securely manage, store, and share their information. This approach empowers individuals to control what they share and with whom, ensuring a unified and accurate representation of themselves are shared.
For e-commerce businesses, these solutions also streamline onboarding by enabling efficient identity verification and data sharing with a. single click, providing customers with a frictionless experience. This approach allows companies to gain deeper insights into their customers, enabling personalised product recommendations and marketing, which enhances satisfaction and loyalty.
Businesses that adopt Holistic Identity technologies into their technology stack reduce their liability by gathering only necessary customer data through zero-knowledge proof methodology, minimising the risk of data breaches, and ensure compliance with privacy regulations.
The Future and Beyond
In today’s competitive and rapidly evolving market, businesses must be proactive in meeting consumer demands for personalisation and privacy. By leveraging zero-party data through Holistic Identity, businesses can unlock new opportunities, craft highly effective marketing strategies, and build stronger brand loyalty—all while ensuring strict adherence to privacy regulations. Embracing these advanced technologies is not just an option; it’s essential for retailers aiming to pivot effectively and lay the groundwork for sustainable, long-term growth.
This thought leadership is written by Glenn Gore, Chief Executive Officer at Affinidi