Reducing Customer Acquisition Costs Comes Down to Zero-Party Data

By Jay Kulkarni

Customer acquisition costs are growing. Some have estimated that it costs five times more to acquire a new customer than it does to retain an existing one, as reported by Forbes. With big changes on the horizon such as the deprecation of third-party cookies and a possible economic slowdown, marketers are trying to determine smarter and more efficient ways to acquire and keep customers.

Reducing customer acquisition costs ultimately relies on your ability to holistically understand your ideal consumer, where they spend their time and what they are looking for, and your ability to build a connection to them through information and empathy.

One of the best ways to do this while keeping the consumer and their evolving request for personal data privacy in mind is by implementing an effective zero-party data strategy; thus, allowing your customer to share relevant information about themselves with your brand, on their terms.

Zero-Party Data is the Answer to Reducing Acquisition Costs and Understanding Your Customer

Customers expect more from brands now than ever. If your brand still uses outdated acquisition funnels to attract and maintain customers, that's a problem. The best way to stay in business and compete against other savvy brands is to focus on retention marketing — retaining your existing customers by even 5 percent could help your brand see up to a 25 percent to 95 percent increase in profit, according to Harvard Business School.

For brands that have yet to utilize zero-party data to their advantage, it's becoming imperative to explore and implement this methodology. Integrating a zero-party data strategy into your marketing methodology will allow you to not only reduce the cost of acquisition without sacrificing customer engagement or loyalty but will also answer the call from consumers for more transparency with their data.

While marketing has always been built upon consumer demand, the industry is shifting from the traditional method of marketing telling consumers what they need to customers telling marketing what they want.

Marketers must create ways to let audiences and consumers tell you, the brand, what their interests are and what type of content they want from your brand and where they want you to offer it to them. Giving modern consumers control over their digital property helps brands aggregate content and messaging the audience wants to interact with and monetizing on zero-party data actually increases consumer trust.

But what's the best way to collect and leverage this zero-party data?

Collecting and Leveraging Zero Party Data Establishes Trust and Lowers Churn

Ultimately, the best way to learn more about what your audience wants, and needs is to ask them directly. This straightforward approach underscores your brand's authenticity, provides transparency, and encourages customer loyalty, which achieves the goal of lowering churn and reducing customer acquisition costs.

Creating a user-friendly preference center that allows your customers to tell you what types of content they want, where they want to receive messages and the frequency of those messages, is one of the easiest ways to collect and leverage audience zero-party data.

Preference centers help brands collect the data to understand how to best leverage the consumer blueprint to their advantage. Use these preference centers to ask personalized questions. The key to a successful preference center is asking questions that will help to build a complete customer profile that can be leveraged across your brand. Incorporating these answers into outreach efforts guides your brand toward serving its audiences the most tailored, personalized content possible, and ensures engagement.

Effectively Communicating through Engagement Maintains Customer Retention Rates

Creating a personalized user experience for customers means engaging with customers when, where, and how they prefer across a multitude of channels. Engagement is where brands can implement learnings from their audience's zero-party data into omnichannel strategies to see the best results and increase the lifetime value of a customer.

Effective omnichannel strategies are those that enable brands to engage consumers with authentic, interactive content across a variety of channels and mediums. Interactive content such as customer reviews, polls, and shoppable media posts are usually the most engaging for consumers; findings from these interactions can help bolster your zero-party engagement strategy. These ultra-personalized approaches establish an effective line of communication and instill trust between your brand and your consumer.

Social media is a central element of every modern omnichannel strategy, as it provides several methods to authentically reach your customers with interactive content that allows them to engage with and share what they want, when they want.

Encouraging customers to leave reviews on social channels is a great example of driving engagement because it allows your brand to communicate directly with your audience and allows audiences to gain valuable insights into your products from trusted sources and their peers.

It's essential for brands to use these consumer-driven interactions to build relationships with their existing customers as well as potential new customers. Creating a humanized and empathetic voice for your brand can be easily achieved by directly answering customer comments and engaging with users who tag your brand on social media. This creates a more genuine relationship, which in turn, increases customer confidence and familiarity with a brand, all while collecting zero-party data.

Marketers must aggregate the zero-party data gathered into a centralized system to better understand their customer profile on a holistic level. Building out these holistic consumer profiles into a centralized system like a CDP, will enable cross-functional teams within your brand to make informed decisions.

An ideal marketing strategy that streamlines customer acquisition and increases customer retention is what all brands want: high levels of engagement across their brand marketing initiatives that results in increased ROI, brand loyalty, and customer lifetime value.


The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.


Jay Kulkarni is the CEO of Theorem.