Concerns about the quantity and type of data that organisations hold are having increasingly adverse effects on customer experiences. On the one hand, brands’ access to information about their customers allows them to personalise every touchpoint for an individual. Yet, on the flip side, consumers can be alarmed that a company knows too much about them and has access to information they didn’t knowingly disclose. Here, the relationship between brand and consumer is not balanced, a situation that breeds distrust. The consumer, customer, or prospect may simply walk away.

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To understand how this situation arises, we need to distinguish between data types: first- and second-party data, for example. Plus, we should examine the concept of zero-party data. To help us demarcate data types and explore the implications of the relationship between customer experience and data, we spoke to Glenn Gore, CEO of Affinidi. (Read about the Affinidi Trust Network here and here for background.)

Defining data

Zero-party data is preference-based or intent-based and is held by the individual to represent the different online versions of themselves. Those different versions could be categorised, for instance, as an individual who is, depending on the context, an employee, a gamer, a charity worker, and a fitness fanatic.

This is the type of information that may help determine broad preferences for interaction with companies and brands. For example, someone who identifies as female in their zero-party data could be shown a women’s clothing line by default when they land on a clothing website.

First-party data is the information gathered by an organisation when an individual interacts with them. That could be a list of foodstuffs bought at a store. What’s interesting, Mr Gore told us, is that zero and first-party data are sometimes contradictory.

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He said: “I say that I don’t want to eat sugary products; that’s zero-party data. But my shopping history says that’s an outright lie because I buy chocolate and fruit juice all the time! So now you can start seeing something really fascinating.”

In that context, a brand could show a message at checkout offering alternative, low-sugar products. That might lower their revenues, assuming diet alternatives are cheaper, but it would be a better customer experience and a net gain for the relationship.

Second-party data is information that’s shared, with approval, between the first party and another. “Let’s say I’ve engaged with a nutritionist and I’ve decided to help with the nutritional accuracy,” said Mr Gore. “I share what I buy at the supermarket. So, that data from the grocery store, which is first-party data, is shared with my new nutritionist.

“The difference here is that it’s with my consent, my knowledge. Nothing else is going to be shipped. The grocery store is not going to share the videotapes of how long I stood staring at the chocolates even though I didn’t buy any.”

Third-party data is the type of information that is collected and often sold and is “kind of the one that gets everyone in trouble.”

Mr Gore said: “This is where data that’s been collected about myself is aggregated with lots of other data sets combined and then sold without my consent, without my knowledge. To stay with that same example, my nutritionist says, ‘Well done, Glenn, you’re buying kale, you’re eating lots of healthy things. But I see that you’re not going to the gym?’ How do you know I’m not going to the gym? I never gave you access to my gym membership! I’m not going to be very happy about that. That’s the invasion of privacy that occurs.”

As awareness of data privacy among consumers grows and increasingly strict laws about data governance fall into place, third-party data not only begins to look less attractive as a concept for the individuals it’s describing but as a potential destroyer of trust and, therefore, customer experience. It’s also a burden of responsibility on organisations that hold it, as it also represents an attractive target for bad actors and legislators.

Consenting data exchange

The key to better customer experiences, and ones that are truly personalised, is the combination of zero and first-party data, which combines intent with action. Then, multiple second-party data instances form a network of consensual data sharing, building mutual trust between the consumer and other organisations.

Mr Gore sees the future of what we now call the ‘data economy’ as one where consumers can join or create their own versions of trust networks, parties with whom they consensually share and receive value in return.

The Affinidi Trust Network is the system that Affinidi is building, comprising a “duality of innovation, the two sides of the same coin.” Developers can already build the components of the Trust Network into vendors’ and service-creators’ offerings. For end-users, the arbiters of their own data, Mr Gore envisages services that will help with the minutiae of zero-party data interactions.

“They will be custodial hub managers of your data,” he said. “These custodial holders who manage how you represent and manage yourself will help you do this on your behalf. That app will be driven by a personal AI capable of sifting the many digital interactions that take place online for each user every day and remove much of the detail of personal data management which is cumbersome.

“You don’t want to wake up every morning with an app saying, ‘We just found another 60 pieces of information about yourself out there on the internet. Do you mind just cataloging those 60?’ Personal AIs will help you with cataloging on your behalf.

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“The worst they may do is to ask about instances where there’s some conflict resolution needed. For example, ‘I’ve automatically organised these 180 different things for you, but these two look like they’re in conflict’, or ‘I know that you might be in the process of changing how you think about this. Can you just help guide me?'”

As personal data privacy issues accelerate and big tech companies work actively to discourage privacy-focused tools – Google’s intended ban on Chrome ad-blockers later this year is a fine example – solutions like the Affinidi Trust Network and the concept of Holistic Identity make increasing sense.

Consumers don’t have to subscribe to every aspect of Rana Foroohar’s ‘Don’t Be Evil‘ to feel that information about them is being misused. That’s already apparent in so-called customer experience platforms that present personalised interactions that are too all-knowing. Representations of prospects and customers derived from bought, aggregated third-party data produce ‘personalisation’ that’s inaccurate because every individual presents multiple versions of themselves online according to context.

Allowing individual users to consensually share relevant information with trusted organisations and brands is the way to build a relationship and establish trust. Those are the relationships that will endure and will produce long-term results for commercial entities. The move to consensual (and profitable) provision of customer experiences begins with becoming part of the Affinidi Trust Network, and you can read more here.