Leverage loyalty programs to unlock zero-party data and drive growth

Loyalty programs have long been a staple of many brands’ customer retention strategies. The promise of rewards and special perks for repeat purchases seems like an easy way to incentivize customer loyalty. But in today’s crowded marketplace, it takes more than points and freebies to truly understand customers and keep them engaged over time.

That’s where zero-party data comes in.

What is zero-party data and why does it matter?

Zero-party data (ZPD) is information that customers intentionally and proactively share with brands. This could include:

• Preferences
• Interests
• Goals
• Opinions
• And more

Unlike first-party data (past transactions and interactions) or second-party data (inferred insights), zero-party data gives direct visibility into what customers care about right now.

Forrester’s report, “Loyalty Programs Give You A Zero-Party Data Advantage,” dug into why this level of rich, voluntary data is becoming critical. As privacy regulations limit access to third-party data, ZPD gives brands transparent and ethical data to drive true personalization.

The challenges with current loyalty data

Right now, many loyalty programs struggle to move the needle on customer relevance due to:

• Privacy concerns – Customers are wary of sharing personal data, especially if brands have a poor track record of using data responsibly.
• Focusing on quantity over quality – More data doesn’t lead to better insights if it’s low-quality or inaccurate.
• Failing to activate insights – Rich data is useless if brands don’t have the skills and technology to turn insights into great experiences.

This results in cookie-cutter programs that don’t evolve with customers’ needs and desires.

How zero-party data changes the game

Zero-party data enhances loyalty strategies by enabling brands to:

• Build richer customer profiles – Detailed preferences power more precise segmentation and personalization.
• Drive sales – Recommend products based on interests for effortless upsell.
• Accelerate emotional understanding – Learn what makes customers tick through direct feedback.
• Respond to feedback – Show customers you value their opinions by acting on input.

Most importantly, volunteered data builds trust and transparency. Customers feel in control of their information.

Best practices for collecting zero-party data in loyalty programs

Loyalty programs are natural vehicles for collecting zero-party data. But it takes strategy and care to do this right. Forrester recommends using their POST framework:

Pick the right people

• Identify likely segments to share ZPD based on emotional loyalty and engagement.
• Meet customers where they already are – don’t force new touchpoints.

Organize your objectives

• Align goals to business objectives like driving enrichment or retention.
• Define specific use cases for each data point collected.

Set your strategy

• Map out the types of insights needed to meet goals.
• Collect feedback on both brand and program experience.
• Prioritize quality over quantity to avoid overburdening customers.

Take stock of your technology

• Ensure your team can manage incoming ZPD.
• Identify any gaps in your martech stack and loyalty platform.
• Don’t buy new solutions without a plan for using them.

Turn loyalty into community with zero-party data

Ultimately, zero-party data helps loyalty programs evolve from transactional rewards programs into true communities.

Customers who voluntarily share information feel involved, not exploited. Brands that listen and respond to feedback nurture emotional connections. And relevant experiences driven by rich insights make every touchpoint more valuable.

Community moves beyond points. It’s built on mutually beneficial conversations and caring about more than customers’ wallets. Zero-party data opens the door for brands to deepen loyalty in ways both sides appreciate.

It’s time for brands to have better conversations

Zero-party data gives brands permission to engage customers in two-way conversations to uncover needs, passions and opinions. But they must:

• Earn trust through responsible data practices and transparency.
• Listen more than talk by providing value in exchange for insights.
• Respect privacy and control by giving customers visibility into how data is used.

Loyalty becomes shared values and vision

Today’s consumers want relationships with brands that share their values. Zero-party data helps brands connect over:

• Common interests like sustainability, local community, or wellness.
• Shared priorities around things like ethical business practices and inclusivity.
• Mutual passions that ignite a spark of emotion – from sports team pride to pet parenthood joy.

Relevance drives lifetime engagement

When brands truly understand customers’ desires thanks to zero-party data, every interaction can be elevated from generic to relevant. This builds:

• Habit-driven routines with personalized recommendations and perks.
• Emotionally resonant experiences that show the brand “gets me.”
• Ongoing value that evolves as the customer does via feedback loops.

Zero-party data helps loyalty stop living in the past. By fueling mutual understanding today, it creates community and lifetime loyalty tomorrow.