Our latest episode of the Question Authority podcast features Gen Furukawa of Prehook, talking to us about zero-party data.

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Transcript

Gen (00:00): Hey guys.

Matt (00:01): Hey, what's going on?

Gen (00:03): Not much, not much. Doing well, thanks.

Mitch (00:04): Well Gen, thanks again for coming on the show and dropping knowledge on folks about zero-party data, which is about as hot a topic as it can get right now for DTC brands.

Gen (00:14): Is it? Man, I hope it gets hotter. I hope this isn't it.

Mitch (00:18): Nope, this is it. This is the peak.

Gen (00:20): Oh yeah?

Mitch (00:20): You should sell now.

Gen (00:21): All right.

Mitch (00:22): I'm always curious to hear anyone's definition of it given that it's still in its nascent state for a lot of marketers. So, not to put you on the hot seat but what's your current definition of ZPD?

Gen (00:37): Yeah, sure. So it sounds a little bit technical, but zero-party data is basically ... I think it was termed by Forrester a few years ago, and it's anything that a consumer proactively and willingly shares with a brand. So, normally you might think that 1st party data is where everything is... which is most important, and 1st party data is all transactional. That's like what products were purchased, how many products were purchased, when they were purchased.

Gen (01:02): And maybe you can also extract some other things like gender or location. But those are all kind of historic-looking. Zero-party data is actually asking consumers about the things that are maybe more interesting to a brand. And so that's things about purchase intent, interest, goals, challenges. And these are all the things that fill in the gaps of what would make a really compelling marketing campaign. I'm definitely knee-deep in this world of zero-party data.

Gen (01:30): And like I said, it sounds technical but I think more importantly, it's what can brands actually gather directly from consumers? And so, what you guys are working on, I think is as well, maybe on the post-purchase side, very similar to, "Hey, this is where we found out about your brand," or, "This is what we like," or, "This is why we didn't buy." And so, these are super helpful to marketers and we're trying to help merchants figure out how they can do that both to impact the onsite experience.

Gen (01:59): So you answer these questions. These were your responses and therefore we think that this is the most relevant product to your needs. But then also you capture a lead or you capture a phone number that becomes a more relevant subsequent campaign, whether it's SMS or email, paid ads, Facebook Messenger. So there are a lot of different gaps that you can fill in, but to answer your question, zero-party data is basically things that a shopper willingly and practically shares with a brand.

Mitch (02:24): Yeah, that's a great shortcut to it because that's a differentiator that makes the rather obscure concept of the phrase zero-party data so much more digestible. It's just information that the consumer willingly gave to you. And everything that goes around that, around how you build that data set and how you build those relationships, is sprung off of that very easy to understand concept. Conceptually, it's a binary thing that people are trying to bucket it, right?

Mitch (02:54): To say, "Zero-party data is this, and first and second and third is that." But in a large way, it's the best practices around zero-party data that really allows you to say, "Yeah, this is legit zero-party data." And one of those things to your point, I think is, if someone else went to that consumer after the exchange and said, "Do you know that you gave that information? And do you have some idea of what you think they might be using it for?"

Mitch (03:18): They should be able to say yes very confidently, right?

Gen (03:21): Yeah, absolutely.

Mitch (03:22): And the work you're doing with Prehook and the quizzes and stuff like that, a lot of times being able to have that deep conversation with the consumer is really helpful to zero-party data because it gives them a lot more opportunity for context, which a lot of times when you're trying to collect these microcosmic data points, it's difficult to squeeze in a lot of context there. And so, the more you can productize the experience, right, the more context you can add to it, which is helpful on both fronts.

Gen (03:50): Yeah, for sure. And I think that this is becoming more and more at the forefront of conversation, just in general when you consider what the macro trends are. And it's like iOS 14 is all of a sudden making it harder for Facebook to triangulate what some of these things are. So you don't know, and plus, in addition, third-party data is just generally going to be murkier and less precise because it's aggregated from different points.

Gen (04:14): And so you don't know, A, what the source is, or B, at what point this data was gathered and by what means. So, the zero-party data is something that there's this time element as well. This was a quiz that was completed within X number of days, months, weeks, whatever. But yeah, the use case of third-party data is certainly changing. And 2022, Chrome is going to be deprecating third-party cookies or that's going to be changing.

Gen (04:41): So all of a sudden, this need to have a direct relationship with consumers is elevating in importance, and it's almost an urgent situation for marketers when they consider there might be a reliance on ads and a calculated customer acquisition cost. Well, if the attribution and the ability to target is going to be totally pulled away, or who knows really what the outcome will be, it's just far more of a controlled environment if you can capture that lead yourself.

Gen (05:12): And that's been an old strategy and standby statement, like the list is the one asset that you own.

Mitch (05:20): Right.

Gen (05:20): But then to add color to that, what are you talking about? What points are you mentioning? How are you positioning your product? And speak around that and position the product appropriately, then it's just a far more compelling pitch.

Mitch (05:35): Yeah. And as you were mentioning before again about getting to purchase intent and tough questions like that, I think these kind of solutions are really interesting as they emerge in the face of third-party data, because as some of our other guests have said, just coming to that realization that a lot of the quantitative, deterministic third-party data, the stuff that we think is the foundation of your data set that you're going to work off of, still requires that you make assumptions at the end of the day. Right?

Mitch (06:07): And that's where we're realizing, "Oh, if we're making assumptions, maybe we're better off just talking to these people," because as much as we worked for so long ... I mean, honestly, it wasn't that long, but worked for maybe, I don't know, 15, 20 years on really becoming data-driven, we still usually used it to fuel generic assumptions that we had. And I think one of the really cool traits of, again as we were talking about best practice zero-party data is, it doesn't stereotype. Right?

Mitch (06:39): It doesn't attempt to make guesses. So, instead of saying, "Okay, we know you're a 35 to 54-year-old male, so we're going to make some assumptions." We just instead ask, "Hey, do you like this thing?" Or, "Is this the kind of stuff you're into?" And that's an interesting shift from all of the assumptions that we've made over the years and a lot of times have been proven wrong about, right? Like the old adage of women running the majority of financial decisions in a household was something no one ever gave a crap about in marketing for decades. Right?

Mitch (07:10): And it's like, "Oh, well, that was really dumb," but we all did it, right?

Gen (07:14): Totally. Totally. And one thing that we haven't really discussed yet is that there is a willingness on the consumer end to engage with us. It's not like ... There's ideally I think a quiz which is conceived in a way that's thoughtful and engaging. It's fun, it offers value at the end. So me as a consumer, I'm happy to do this. And some of the quizzes that maybe add the most value are when I'm stuck. I really want something.

Gen (07:40): Let's say, especially in the pandemic, this has far greater implications of foundation finders, for example. Like finding the right skin tone. These are things like in person are very hard to decipher because there are so many different variations. So if I can answer a few questions along the way, then in some way I've recreated the in-person experience that is no longer as possible in a quarantined pandemic.

Gen (08:04): So, yeah, the customer experience is far improved and there's an interesting study and a bunch of stats as well in terms of what customers are looking for and what they're willing to give in terms of willing to share their personal data, if on the other end, I can get a better customer experience. So I can get like personalized recommendations-

Mitch (08:25): Right.

Gen (08:25): ... or that I'm spoken to as an individual as opposed to a male, 35 to 54 living in the East Coast.

Mitch (08:31): Right.

Gen (08:32): So, yeah, the willingness of consumers to play along is great. And it's also a competitive differentiator for these brands, where if you do misstep, or if you do speak to a person, kind of one blasted email, that actually will undermine lots of the efforts in investments that you've made in marketing campaigns, because nobody wants to be one size fits all.

Mitch (08:55): Yeah.

Matt (08:56): Just going to say, we often talk about a few years ago or really up until recently, scaling a brand. Obviously I'd define some semblance of product market fit from the product side of things, but a lot of it was, "Okay, what Facebook agency am I using? And is that Facebook agency setting up my accounts correctly and optimizing my bid strategy and creative?" Et cetera, et cetera. And it was less so of, how well do I know my customer? Because Facebook knows my customer and I don't necessarily need to because they do.

Matt (09:27): So that's been the interesting thing of how that's changing recently, is like, okay, who knows your customer better? You or Facebook?

Mitch (09:34): Yeah. People getting sick of renting their relationships basically.

Gen (09:39): And at this point, is that even feasible going forward? Right? I think Facebook might be struggling in some ways in still trying to figure out how to maintain good targeting if all these inputs are no longer available.

Mitch (09:53): Yeah.

Matt (09:53): Yeah, exactly. Mitch, I don't know if you could just hear that. There was someone moving chairs up above me.

Gen (09:58): I thought it was a whale.

Matt (10:02): That is what I heard too. Yeah.

Mitch (10:02): Matt's actually on an Arctic cruise right now, and all of that behind you is all set up to pretend like he's actually in a room. Well, again, one of the great points I think you made back there again was about the customer experience and the ability to use platforms, whether it's Prehook or Fairing or any such platforms that actually help build some experience and some context around the data.

Mitch (10:26): I think what I find really interesting about that is, and we talk a lot about the convergence of departments on this show, whether it's talking marketing, finance, customer service, product. But as you productize the conversational data process, right, as you build platforms like both of you guys are building to productize data collection and that relationship and that exchange, you start to converge on the user experience concept of surprise and delight, right?

Mitch (11:00): And so now you start to become this hybrid of product and marketing where it's like ... And it makes perfect sense that you would end up working a lot with product on that front to say like ... I mean, surprise and delight, as far as I know, is a concept that marketers stole from product developers years ago. And it was always a little bit dubious that they use that term. But in this case, I think it's actually true.

Mitch (11:23): That's so much of, as you mentioned, the power of inserting your brand into it and how you engage with the customer dictates a lot of what their experience is going to be. And if you can deliver that surprise and delight to them in the midst of collecting the data, then you're really starting to build something up there. And to the point I was making, you're just starting to blend into product a lot where it becomes almost kind of ...

Mitch (11:44): If you're doing it well, a lot of times it can become indecipherable between what is a product experience and what is the marketing experience?

Gen (11:51): Yeah.

Matt (11:52): Mitch and I have really started talking more about this whole concept of "direct from consumer", DFC. The whole idea is to get people to start thinking less in a sense of selling directly to, and more around building relationships, and how can I gather data directly from my consumers or directly from my customers rather? And I'm just curious, if you were talking to a brand today, how would you be pitching more from a macro level as ...

Matt (12:19): Less so of, let's segment your emails better, but more so where things are going and why this type of strategy is so important.

Gen (12:27): Yeah. Man, DFC, that's great. I wish I had thought of that. Yeah. I think business wide, and like I said, I've spent so much time in this software space; software-as-a-service space, e-commerce in particular, talking with a lot of direct to consumer brands, and really the differentiator of those that do well and those that are able to stay ahead of the curve is really like, how close they can be to the customer. And what kind of conversations and learnings can they gather from the customer?

Gen (12:58): That's good if you're having one-off conversations with a sales team or support or inbound whatever. But if you're able to scale that, you can get a lot from that. And I think that might be one of the biggest takeaways, is this constant stream of what your customers are thinking, what they're looking for, what pains they're experiencing. Or even if they're not signing up, why didn't they sign up? And so you're getting the positive side, those that did sign up, why they actually did, or where they heard about it.

Gen (13:26): What about those that didn't? And so that's an insight into what competitors are doing or where there might be holes in your strategy that can be plugged. One really good example of this is ThirdLove and Heidi Zak. ThirdLove is a direct consumer, lingerie brand, and maybe seven years ago they were started really from this pain point of, bra shopping is such a hassle. It's a challenge to find the right fit. Heidi Zak was experiencing this herself.

Gen (13:57): Realized that there was a better opportunity to find better fitting, more comfortable bras. They realized that one of the big challenges that their customers were having was finding the right fit. And so people would buy a bra and it still wouldn't fit. And so they came up with this notion of a fit finder. So this was maybe one of the first direct to consumer quizzes and they just recently updated it. So I was doing a lot of digging into it and research.

Gen (14:21): And I think that it's a great quiz, both visually, but then also what happens on the backend with a quizzer results. So I think they've had maybe 18 million people take the quiz and like 100 million data points. And so from that, they're able to identify where there are gaps in the market. For example, they now have 80 different sizes and they've innovated with this half size, which didn't exist before. And so that's something that came out from people saying, "Hey, these don't fit.

Gen (14:49): Do you have this size or this size?" And so they came up with the half size. And so it's this foresight into the customer's shortcomings and where they can have those needs met by a product that ThirdLove would give. So Matt, to answer the question, I think that is the biggest value prop of a quiz, is just a constant stream of usable data that's easy to analyze and pull out where there might be opportunities in the product or the messaging or the marketing.

Gen (15:19): But basically, the customer experience as a whole.

Mitch (15:22): That's awesome. And again, I think that's another great example, because think about how many millions of women that don't feel comfortable going through the process in a brick and mortar store, especially when it's not like the right fit is out there and they just haven't found it yet. It could easily be that the answer is, "There isn't one for you. So this is what you get." And contrast that old-school approach of, "Oh, it's just a rite of passage, or this is just your life as a human being.

Mitch (15:51): You have to deal with it", with "Nope, here's a bunch of really useful, detailed information that will help you get the answer that you want and then we will make the thing for you." That's like what kings of England used to have. Now I have it on my computer. Yeah. That, to me, is a great example. Whether it's shopping for bras, whether it's hair loss stuff, things like that, car buying. Anything that people are like, "I don't even want to do the thing that I'm supposed to do to get the right product from this."

Mitch (16:22): And that's always a good sub-sector to dive into and be like, "We could probably solve this with a better customer experience."

Matt (16:30): I was curious, now that we're talking about quizzes, pre-purchase quizzes, do you have any off the cuff best practices for this? Like, "Hey, ask an email within the first three questions, so it's not too low in the funnel if you're trying to increase list growth or ... " Just kind of curious, because with these quizzes, there's just so many different ways that you could build these. It could be two or three questions. It could be ... I actually just helped do some consulting project for a brand. I think their quiz is like 30 steps.

Gen (17:01): Oh, yeah, yeah, yeah.

Matt (17:01): I was just going through and I was like, "This is too much for me just to do once. The completion rate can't be more than 20 basis points for this thing." So, yeah, I'm curious ... And I guess it all depends on the brand and what they're using it for. But just curious if you've ... just general recommendations.

Gen (17:16): Yeah. So, something like that, Stitch Fix is an example. They're a subscription clothing brand and they have a quiz that's like 80 questions or something, but-

Mitch (17:26): Wow!

Gen (17:27): ... think of the value that it's adding, and it's not that hard. A lot of those questions are like Tinder; swipe left or swipe right. But my rule of thumb for how long a quiz should be is really as short as possible while getting everything that you need. So Stitch Fix is basically like a data science company. They're aggregating so many data points, because if you think of on the business side, they need to make sure that every single month they're sending a box of goods that is right on point with what I as a consumer are looking for.

Matt (17:56): Sorry, sorry to interrupt you again but I'd argue that Stitch Fix has done a good job of aligning their brand in what they are as a company with that quiz.

Gen (18:06): Yeah.

Matt (18:06): Go to Stitch Fix, like, "Oh, I need to answer all idea of these questions," because I don't want them to send me-

Mitch (18:10): Right.

Matt (18:11): ... I don't know, something for big and tall and I'm only five, six, kind of thing. So, yeah. No, that's a interesting thing I haven't thought about more of. How other brands too outside of Stitch Fix could probably do a better job with that in just including some of that in their marketing copy.

Gen (18:27): Yeah. Absolutely, that's a great point. But if you break it down, it's really, what's the exchange of value?

Mitch (18:33): Right.

Gen (18:34): That's exactly it, which I'm happy to answer those 80 questions because at the end, every month I'll get a box that's right on point with what my tastes are. If I say, "Forget it, I don't really care," and just click the same button every time, I'm going to have a shitty customer experience on the backend and that's just a wasted effort, and more of a hassle return and whatever. So, yeah, I think Stitch Fix does a good job for a longer quiz. There are other quizzes that are almost like clinical.

Gen (19:01):** If you look at some of the medically-based, [Kim's Roman 00:00:19:05], those kind of things, that's almost like a medical intake form. And so it's a little bit of questionnaire to survey.

Mitch (19:14): Even that is arguably probably done from a branding perspective because it's like, "We want you to think." Not that they're wrong but, "We want you to think this is a legitimate health product that you could get prescribed from a doctor," rather than a thing that you were drunk and tapped on Instagram at three in the morning.

Gen (19:35): Totally.

Matt (19:36): One or two of those questions might actually really matter and there's like 30 just to create that level of confidence.

Mitch (19:40): Yeah.

Gen (19:42): Yeah. Well, Mitch, I guess at three in the morning we know which product you're looking for.

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