What Shopify brands should know about first-party data

How DTC brands are adapting

In short, first-party data is information collected directly from customers or website visitors. This could be on your website, in your app, or through channels such as email and text/SMS.

This could include information like contact details, purchase history, or even browsing habits. When random web visitors make a purchase and become your customers, they are often happy to opt-in to receive communications from you and share data to help you optimize their experience. In contrast to third-party data, which is collected through cookies that track a user’s activity across the many websites and pages they visit online, first-party data is collected through the user’s browser directly and is shared by the user with their consent.

As a result of this direct collection method, first-party data is generally considered to be more reliable than third-party data. This means that ecommerce businesses relying on it will be able to get a better understanding of their customers’ wants and needs.

Additionally, first-party data can be used to create more targeted marketing campaigns, leading to increased sales, conversions, and, perhaps most importantly, to help you upsell and retain customers over time.

How we got here

The internet as we know it today is largely shaped by third-party cookies. These are the small pieces of information stored on your computer when you visit a website. They allow companies to track your online activity from site to site, create a profile based on what you’ve been browsing, and serve you targeted ads based on what you’d most likely be interested in.

However, things are changing dramatically in the modern age of the internet. Regulations like the European Union’s GDPR crack down on sites using third-party cookies by default and require a visitor to opt into tracking.

We’ve all seen the consent notifications when browsing online. Similar tracking prevention methods like the opt-out system introduced in iOS 14’s, adblockers, and intelligent tracking prevention tools further render third-party cookies fruitless.

Nowadays, third-party cookies are all but dead as
a reliable way to gather information about potential customers. That’s where first-party data comes in and helps you both respect your visitors’ privacy while still getting the crucial information you need to target the right buyers for your product.

First-party data: What is it good for

Among all the tools in your toolbox as a store owner, marketing manager, data scientist, or first-time ecommerce founder, first-party data is one of the best.

Let’s break down some of the key areas where first-party data shines.

Accuracy

Because first-party data is collected directly from the user themselves, it’s the most direct way you can get a correct picture of a customer. Imagine asking every customer who enters a physical store what their contact info is, what specific products they are interested in, and where they would like to get products delivered. All of that comes as first-party data for ecommerce stores.

Third-party data can fall apart accuracy-wise because it is not given first-hand from a customer to a business. The first-party data relationship is a personal one—you receive information from your potential buyers and they in turn trust your brand and start a relationship with you.

Personalization

Consumers are accustomed to personalization. Years of the top companies pushing ahead by truly knowing their customers—and offering products that not only meet but create demand—have set the bar high.

Once you know about your customers or potential buyers, you can tailor product offerings to their interests. As these visitors give you information about themselves, you can build a profile and provide a better shopping experience for them from acquisition to retention.

You can also use trends you find in the first-party data you collect to inform your decision-making when building product pages, creating marketing campaigns, and deciding the overall direction of your store.

Privacy

Internet users want privacy, that’s no secret. Just how much do they want it? After Apple released tracking opt- outs in iOS14, the early data showed 96% of users opted out of third-party tracking. Those rates tend to slowly decline over time as more users opt-in to some tracking, but it’s clear that third-party cookies and tracking apps are nowhere near as reliable as they used to be.

First-party data respects the privacy users want by asking for consent. It also builds trust as they know exactly what information you are collecting about them.

Businesses we’ve spoken to ” understand that this shift away from third-party data is the new normal.

DTC brands are adapting their tools, processes, and skill sets to first-party data so that they’re still able to tailor the customer experience to their interests in a cost-effective way.

Optimizing ROAS is especially important in today’s environment where companies have a renewed focus on achieving profitability early.—Ben Brachot, Co-founder at Dwight Funding

What using first-party data looks like in practice

Overall, using first-party data means not relying on third- party cookies and tracking to get information about customers.

There are many different ways to collect first-party data, each brand will develop its own strategy based on the data and strategy that serves its goals best. However, there are some foundational methods any business can make use of.

Let’s run through a few of them and look at how they work.

Collect data directly

A common—and quite easy—place to start collecting first-party data is by asking for it from potential buyers.

Specifically, that means having a store visitor create an account to speed up checkout and manage orders. It benefits the shopper and gives you valuable first-party data like location, buying preferences, and contact information.

You can also collect emails and phone numbers by offering discounts for shoppers who join your newsletter or opt in to receive SMS messages. Adding a direct
chat widget works similarly and builds trust with your customers by giving them a direct line to speak with you.

Sending out a survey to existing customers can be an opportunity to gather more information and build more complete customer profiles.

Use compliant cookie banners

New privacy laws have cracked down on cookie tracking—but it’s still possible to do. In the same way iOS users now need to opt into tracking, visitors to your website must also opt in specifically before you track them using third-party methods.

All you need to do to create this opt-in on your site
is set up a cookie banner that complies with privacy regulations. You’ve seen these before on many websites that ask if you want to reject cookies or accept all.

Have this banner appear right way on your homepage to ensure you can track most of a potential customer’s visit, as tracking can’t begin until they’ve opted in.

Single sign-on

Single sign-on allows visitors to create an account with you using their existing Google or Facebook account.

The obvious benefit to the user is that sign on is much quicker than creating a new account and doesn’t require them to remember or store another password. It benefits your business by giving you a complete ready made profile on a potential buyer.

Create dynamic ads

Facebook and Instagram ads have proven their worth for years as a highly effective way to bootstrap ecommerce business promotion on a manageable budget. But because these ads relied so heavily on third-party data, many were worried immediately after the iOS14 and privacy law rollouts that these ads would lose their effectiveness.

However, Littledata has a solution—using the conversions API (CAPI). Replacing the old pixel setup, the new conversions API is a server-to-server connection that can link events to visitors from Facebook, Instagram, TikTok,and Pinterest. Independent of their browser sessions.

This first-party data solution brings a handful of upgrades on the pixel as well, including:

  • Linking delayed conversions back to the original campaign
  • Making nearly 100% of purchases from your store shareable with social ad channels.
  • Capturing user information like email address, physical address, and phone number, even if a customer opts out of marketing cookies

CAPI’s server-to-server connection is critical to capturing the events you need to create dynamic product ads—or ads that promote a product to a social user that they’ve either seen before or one that is similar. These ads have a high clickthrough rate and can multiply revenue from ads significantly, making CAPI a must have in your first-party data approach.

Server-side tracking

The method we recommend most—thanks to its ability to keep crucial events while complying with privacy regulation and avoiding tracking prevention—is server- side tracking. As we’ll explain in the next section, server-side tracking can act not only as your solution to maintaining accurate customer profiling, but also as the foundation of your first-party data strategy.

The impacts of Google Analytics 4

Google loves two things more than anything: data
and ads. The goal to increase conversions presses
on regardless of what has happened with third-party cookies to capture customer information. Google isn’t going to let privacy changes slow down advertisers. Google needs effective advertising—CNBC reports that 80% of their revenue comes from ads—and abandoning tracking for merchants would be detrimental to their own success.

Instead, Google has embraced privacy changes and revolutionized their analytics platform trusted by over 28 million users. With the sunsetting of Universal Analytics and the uptake of Google Analytics 4 (GA4) brands

have migrated to the new version of Google Analytics. GA4 also puts privacy at the forefront of its event-
based reporting tool. GA4’s launch presents an exciting opportunity for data-driven marketers to take advantage of flexible, event-based tracking and reporting.

Littledata’s customer base is ahead of the curve, yet
still only around 20% of our merchants have set up their GA4 property by now, even though it’s fast and easy to track data in parallel with UA. GA4’s next-generation analytics solution gives brands an advantage over
those who haven’t switched as they can build their own reports based on first-party data they’ve collected, allowing for a deeper understanding of unified customer journeys through metrics around behavior, purchases, touchpoints, and other types of engagement.

Building a firm foundation for collecting first-party data will help marketers and ecommerce managers garner more accurate data for the development of creative collateral and more effective campaigns, as well as audience building in tools like Google Ads. Google Analytics is still deemed by many as the gold standard for analytics and advertising—especially Shopify and BigCommerce.

As the crackdown on third-party ” data continues, concentrating on first-party data is the most effective way to futureproof your ecommerce business against further changes.

In many ways, first-party data is stronger than third-party data as it’s generated from your current customers, cost-effective and you control it so you don’t need to worry about waking up one day and the rug being pulled away.—Harvey Hodd, CEO and cofounder at Relo

At Littledata we stay at the forefront of ecommerce data, technology, and integrations that the lion share of Shopify merchants use. With our plug-n-play app merchants can install to capture both client-side and server-side tracking that we update, host, and manage through our smart technology.

If you want to learn more about first-party data, server-side tracking, and utilize our mini-data process worksheet you can download our recent white paper, How Shopify stores can boost sales with first-party data, here.

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