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Unleashing the Potential of First-Party Data with Summary on Retail’s Future Growth Engine by Boston Consulting Group

A look at retailers’ growing focus on first-party data strategies and management. Read on to learn best practices and what tops the agenda for maximizing value from consumer data relationships.

First-party data collected directly from customers is becoming increasingly valuable for retailers due to declining third-party data availability and usefulness. Retailers are investing in methods like loyalty programs, private labels, and in-store sensors to gather more first-party data on customer preferences, purchases, and pathways.

Unleashing the Potential of First-Party Data with Summary on Retail's Future Growth Engine by Boston Consulting Group

Analysis of first-party data using AI and machine learning can provide valuable insights for personalization, promotions, supply chain optimization, and new product development. Customers are generally willing to share some data in exchange for rewards and conveniences, but clear terms and controls are important to maintain trust.

Leaders are treating first-party data as an asset to continuously refine customer understanding and experiences over time through iterative feedback loops. Standardized policies and technologies are needed for data governance, while balancing privacy and partnership opportunities will be key challenges.

In summary, the article explores how savvy retailers are pivoting to first-party data to deepen customer intimacy and fuel innovative new services.


Marketing, retail, data analytics, artificial intelligence, customer experience, business strategy, data privacy, technology, e-commerce


Due to consumer privacy concerns, collecting consumer data through the traditional use of “cookies” is becoming an obsolete practice, prompting digital marketers to search for new ways to access first-party data. Most retailers “are sitting on a fortune of data,” but are failing to capitalize on this resource. Learn how to transform your customer data into new revenue streams by switching to a first-party data business model. Dramatically improve the value of your data through state-of-the-art loyalty programs, AI-enabled personalization, retail media opportunities, and monetized data insights and analytics.


  • Drive engagement and boost data quality with a state-of-the-art loyalty program.
  • Create a “virtuous flywheel”, continuously improving your personalization efforts.
  • Leverage retail media opportunities and monetize data insights.


Drive engagement and boost data quality with a state-of-the-art loyalty program.

Many retailers have access to a wealth of personal data, yet fail to leverage its full potential. Missed opportunities result when retailers don’t collect first-party data in a structured way. You can begin harnessing the potential of this data by adopting a first-party data business model. The first step involves creating loyalty programs with AI-enabled personalization or dramatically updating existing programs. Loyalty programs should engage consumers seamlessly across channels, at all points of their customer journey, leveraging tactics such as gamified challenges and surprise offers. Boston Consulting Group research shows that grocery retailers will likely see revenues and profits increase between 3% and 5% when they set up state-of-the-art loyalty programs to collect first-party data.

“Many retailers are sitting on a fortune of data, yet most neither collect first-party customer data in a structured way nor leverage its full potential. The missed opportunities are massive.”

Kick-start or update your loyalty program, maximizing the potential of first-party data, with the following steps:

  1. Choose your partner network (or go at it alone) – Which potential partners have the right brand fit and could help you drive the most earnings? Who will host your customers’ data, and how can you maintain customer access? Alternatively, would your organization prefer to run a stand-alone program?
  2. Establish base incentives – How will you leverage personification to harness both long-term rewards (rewarding loyalty) and short-term rewards (for example, instant discounts)?
  3. Ensure program profitability – How will you leverage personalization to create targeted, cost-effective incentives? How will you attract supplier funding to co-finance member discounts and cover a significant percentage of loyalty program costs?
  4. Engage customers – How will you continuously generate interest across all customer touchpoints, encouraging consumers to interact? Your customer experience should align with your brand positioning and provide each customer with a unique, personalized experience. How will you ensure this?

Create a “virtuous flywheel”, continuously improving your personalization efforts.

When you combine a strong loyalty program with an AI-driven personalization engine, you can build a “virtuous flywheel”. Aspire to continuously improve personalization use cases through experimentation, leveraging data insights from reporting dashboards to improve solutions. Getting personalization right requires a mind-set shift: Stop thinking about the product you’re trying to sell and start centering the customer’s needs and preferences. You’ll also need to feed the appropriate data to the right analytical models, ensuring correct execution and measurement. Set up cross-functional teams to help you navigate the shift toward personalization, ensuring each team has workers with different levels of expertise and perspectives on marketing, technology, category management and analytics. Each cross-functional team should have clarity on its specific objectives and KPIs, and focus its efforts on specific customer segments within your loyalty program.

“While many retailers have the ability to personalize offers and communicate on a proof-of-concept level, most fail to do so at scale.”

Most retailers fail to personalize offers and communicate on a proof-of-concept level at scale, as they lack the organizational and technical capabilities required to continuously engage their customer base in a meaningful way. Identify easy-to-implement use cases, where you engage customers and work toward your corporate goals, as well as the “loyalty data” that powers these use cases. Teams should execute “test-and-learn” sprints, measuring the impact of personalization on actual consumer loyalty and refining use cases and process-based outcomes. Once you’ve established proof-of-concept, you can start scaling your use case.

Leverage retail media opportunities and monetize first-party data insights.

Consider harnessing retail media opportunities by selling your first-party data and advertising space to other companies. Ads, designed and targeted using your first-party data, can appear on your on-site channels, such as mobile apps, and on non-owned off-site channels, such as Facebook. Global retail media revenue is rising rapidly: Boston Consulting Group estimates that global retail media revenue will grow 25% per year, reaching $100 billion in the next five years, with retail media accounting for over a quarter of all digital media spending by 2026. Consider offering value-added services when launching your retail media business, such as product campaign tests. Create a clear road map for scaling the tech solutions, organization and governance you’ll need to run your retail media business. Identify team members capable of working in cross-functional capacities, as expertise is needed in media execution, sales, data and analytics.

“Success with retail media depends on having substantial offerings across on- and off-site media from the start to improve reach, audience and data quality, cost per mille (CPM), and media spend.”

There are a number of ways you can monetize your first-party data insights, which include: offering self-service dashboards that analyze customer segments, behavioral insights, profiles and baskets; providing customized customer insights; conducting product tests with small groups of your loyalty members; and offering product launch tests online or in-store, using loyalty data to identify buyer types, target audiences and shopping missions. Remember, first-party data is only relevant to buyers when it’s set up to generate insights that drive certain actions. When you leverage a combination of loyalty programs, personalization efforts, retail media and analytics, you can begin capitalizing on your customer relationships in new ways.

About the Authors

Christina Mühlenbein, Finn Ruthenberg and Julia Hohmann-Altmeier are professionals with the Boston Consulting Group.

Read the full article at First-Party Data Is Retail’s Next Growth Engine

Nina Norman is a certified book reviewer and editor with over 10 years of experience in the publishing industry. She has reviewed hundreds of books for reputable magazines and websites, such as The New York Times, The Guardian, and Goodreads. Nina has a master’s degree in comparative literature from Harvard University and a PhD in literary criticism from Oxford University. She is also the author of several acclaimed books on literary theory and analysis, such as The Art of Reading and How to Write a Book Review. Nina lives in London, England with her husband and two children. You can contact her at [email protected] or follow her on Website | Twitter | Facebook

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