What Is Customer Data? Types and How To Collect (2025)

Retailers today face a major shift in understanding and reaching their customers. As third-party cookies fade away and browser privacy restrictions tighten, they are faced with the harsh reality of needing to find new, more direct ways to access customer data.

Forward-thinking businesses are moving away from traditional tracking methods, and building deeper relationships through first-party data. The results speak for themselves: retailers using unified systems that connect customer data across all touchpoints see 9% higher revenue on average.

Ahead, you’ll learn how to collect customer data and implement it in your retail operations with Shopify.

What is customer data?

Customer data includes the behavioral, demographic, and personal information businesses collect from their audiences. 

Brands collect customer data to better understand, communicate, and engage with target customers. Customer data helps businesses understand what customers want from their brands, the specific products they’re searching for, and how they prefer to engage.

Types of customer data

Customer data can be broken down into three main types, each of which has its own collection method and advantages. 

First-party data

First-party data is any information your business collects directly from your audience through channels and touchpoints you own. Customers who interact with your website, make purchases, or engage with your brand directly generate valuable first-party data that helps you understand their preferences and behaviors. Today, 78% of brands consider first-party data to be the most valuable source for personalization, up from 37% in 2022.

What makes first-party data so helpful is its authenticity and reliability. Since it comes straight from your customers' interactions, it provides the most accurate insights into their needs and habits. There's also complete transparency, as customers know they share data directly with your business rather than through third parties.

Brands typically collect first-party data through: 

• Customer accounts and profiles
• Transaction and purchase history
• Website behavior and navigation patterns
• Product recommendation quizzes
• Loyalty program participation
• Customer feedback and surveys
• Website analytics tools
• Point-of-sale transactions

Third-party data

Third-party data is information you get from a party that doesn’t have a direct relationship to you or your consumers. Think of it as data gathered by one company and sold to another, typically including information like demographics, behaviors, interests, and online activities. 

While third-party data has long been a go-to resource for marketers and businesses, its role is rapidly shrinking. The days of freely collecting and trading consumer data are waning, replaced by a new era of privacy awareness and regulation.

Several factors are driving this change:

• Consumers are more privacy-conscious than ever
• Major browsers are phasing out third-party cookies
• Privacy regulations are becoming stricter worldwide
• Companies are shifting toward first-party data strategies

There has been a big global push toward comprehensive data privacy legislation, and in the US 20 states, including California, Virginia, and Colorado, have enacted laws that protect consumers’ rights over their personal information as of September 2024. 

Meanwhile, international regulations such as the EU's Digital Services Act, effective from November 2023, mandate transparency in data-driven marketing, while China implemented its own strict frameworks through its Personal Information Protection Law (PIPL) in November 2021. 

Zero-party data

Zero-party data is data a customer willingly shares with a brand. This data may include buying intentions, preferences, personal qualities, and how they want the brand to interact with them. 

Zero-party data is also sometimes referred to as “explicit data.” Since customers proactively share it with brands, it’s considered to be more authoritative and trustworthy than other customer data types. 

Importance of customer data

Business intelligence and decision making

Customer data helps you see what’s actually working and what isn’t. When you collect and analyze customer data, you can make smarter decisions about everything from what products to stock to when you should run sales.

For example, say you notice through your data that customers who buy sneakers often come back within six months to buy new ones. You could use this info to:

• Send those customers a reminder email right when they might need new shoes
• Stock up on popular sizes before they run out
• Create special deals for repeat customers

Personalization and customer experience

Here’s where things get more interesting. With good customer data, you can make online shopping feel like having a personal shopper who knows exactly what you like. 

This is possible when operating within a unified commerce approach, which means all of your store’s sales channels and activities come together on one platform. According to the EY POS Market Report, retailers using Shopify's unified commerce approach see an average 8.9% increase in gross merchandise value (GMV).

The key is building what's called a "360-degree customer view," which includes:

• What customers buy both online and in stores
• How they like to shop (online, in-store, or both)
• Their preferred payment methods
• Their shopping patterns and preference

This helps you offer customers:

1. Personalized websites that show products they are most likely to love
2. Custom checkout experiences that remember their preferences
3. A smooth experience whether they're shopping online or in a physical store
4. Location-specific content and products that make sense for where they live

Marketing optimization and ROI

Nobody likes wasting money on ads that don't work—and good customer data helps businesses spend their marketing budget more wisely. Our data shows that businesses can actually see up to 20% more sales per order when they use unified customer profiles.

Some ways to use customer data for smarter marketing include:

• Creating super-targeted advertising lists using Shopify Audiences, which uses machine learning to analyze shopper behavior and can drive up to 2x more retargeting conversions 
• Teaming up with other brands through Shopify Collabs, which lets businesses connect with influencers and run affiliate programs all in one place 
• Segmenting customers into specific groups using Shopify's segmentation tools, which let businesses build unlimited customer groups based on behavior, purchase history, and demographics, then create personalized marketing campaigns for each group 
• Studying customer behavior patterns to understand what products people like, then using tools like Shopify Collective to work with brands that can provide them 

When businesses understand their customers better, they can create experiences that actually make shopping better for everyone. 

How to collect customer data

Through direct interaction

Direct customer interaction provides first-party data directly from your customers through various touchpoints in their shopping journey.

Quality customer data enables personalized marketing and better customer experiences. According to the EY report, enhanced customer data collection and segmentation lead to higher returns on marketing investment and more frequent customer interactions.

Some ways to collect this data are:

1. Setting up in-store feedback systems at checkout
2. Creating post-purchase surveys
3. Training staff to collect customer information during interactions
4. Implementing feedback collection at key touchpoints (returns, customer service)

Using technology tools

A comprehensive technology stack includes customer relationship management (CRM) systems, data management platforms (DMPs), and customer data platforms (CDPs) working together to collect and manage customer data across all touchpoints.

Unified data management through proper tech implementation decreases use of technical resource time by up to 60% by eliminating middleware needs. This also eliminates the "game of telephone" in which data gets missed, delayed, or miscommunicated between systems.

Here’s how to set up your tech stack:

1. Implement a unified CRM system that integrates with your commerce platform.
2. Deploy a CDP to create unified customer profiles across all channels.
3. Create automated data collection workflows between systems.
4. Configure front and back office centralization for both retail and ecommerce operations.
5. Set up automated reporting and analytics across all platforms.

💡 Tip: Avoid "stitching together" separate systems that don't share the same core data foundations.

Encouraging account creation

Today’s retailers incentivize customers to create accounts and share their information willingly. Building a unified customer profile, rather than fragments across different databases, enables better personalization and retargeting while establishing control over customer data.

Improved customer data collection drives more frequent customer interactions and repeat purchases. Businesses turn basic account creation into the foundation of lasting customer relationships by offering real value in exchange for data sharing (like self-serve functionality and personalized experiences).

To encourage account creation: 

1. Create clear value exchanges through immediate benefits, loyalty programs, and exclusive features that make account creation feel worthwhile to customers.
2. Enable self-serve functionality like order management, wishlists, and saved carts to build regular account usage habits.
3. Deliver personalized experiences through product recommendations, relevant discounts, and tailored communications that demonstrate the ongoing value of having an account.

Most importantly, make signing up super easy—like, two-clicks easy.

Ecommerce and POS systems

Integrated systems that unify customer data collection across online and physical retail touchpoints create a single source of truth for all customer interactions. 

On Shopify POS, Oak + Fort reported saving approximately:

• 50 hours per week in headquartered staff time
• 40 hours per week for customer experience teams
• 10 hours per week in IT support
• 80 hours per week of shop floor employee time across 42 retail locations

“Our retail stores have historically been the number one driver of omnichannel customers who shop both online and in-person, so they are critical to our growth. To continue offering shoppers a cohesive experience, we needed a POS system that offered more synergy with our ecommerce channel,” says Guillaume Jaillet, chief omnichannel officer at Frank and Oak.

Steps to collect this data include:

1. Centralizing front and back office operations for both online and in-store channels
2. Creating and maintaining unified customer profiles across all channels
3. Tracking all customer touchpoints including purchases, service interactions, and loyalty activity
4. Enabling real-time data synchronization for inventory, orders, and promotions
5. Capturing returns and exchanges data to complete the customer journey picture
6. Sharing customer profile information consistently across in-store and online experiences

Leveraging social media and online engagement

Digital channels can provide insights into customer behavior and preferences through their interactions. Social media, for example, is gold for customer data. It allows businesses to:

• Watch how people interact with their posts
• Pay attention to comments and messages
• See what content gets the most likes and shares
• Use social media insights to understand what their customers care about

Customer interactions on social platforms feed into the same customer profiles used in-store and online. In this way, social media becomes a part of the unified customer view rather than a separate silo. 

Challenges in collecting and utilizing customer data

Privacy and security

Getting customer data is clearly important for business growth, but keeping it safe is a bigger deal. Brands must be careful to follow data protection rules like GDPR and CCPA. 

Businesses have to be transparent about what data they're gathering and how they use it. This is why having a unified system like Shopify's makes sense, since it helps keep all that sensitive customer info in one secure place instead of scattered across different systems where it could be at risk.

Data fragmentation

When you're running both online and physical stores, customer data ends up everywhere. Businesses are dealing with a real headache trying to piece together customer information from different places. 

Oak + Fort was spending about 40 extra hours per week just dealing with customer experience data across different systems. When your data is split up, it takes a lot of work to get a clear picture of how your customers shop and what they want. 

Accuracy and relevance

Keeping customer data fresh and useful is another big challenge. Retailers see about a 9% revenue bump when properly collecting and using customer data, but that only works if the information is current and meaningful. 

Customer preferences and behavior change all the time, so you need a way to update this info constantly. Having real-time data sync between your channels helps solve this in a few key ways. 

Since Shopify's platform has what we call a "single brain" approach, where POS and ecommerce share the same core platform, everything stays in sync automatically. When someone buys something in your physical store, your website instantly knows about it, your inventory updates automatically, and your customer profiles stay current. 

Real-time sync helps stores show accurate inventory to customers, personalize shopping experiences based on their latest purchases (no matter where they bought), and make smarter decisions about what products to stock.

Utilizing Shopify as a platform

Shopify makes handling customer data simple and more efficient than traditional platforms. Most platforms try to piece together customer data from different systems, like trying to solve a puzzle where the pieces come from different boxes. 

But Shopify takes a different approach. We’ve built a "single brain" system where all your customer data flows from one source of truth. 

What makes this work?

• One central system handling all customer data permissions
• Consistent data collection standards across all channels
• Safer data handling with fewer transfer points
• Built-in compliance tools that work across your whole business

Everything is designed to work together from the start, with unified customer profiles that respect privacy preferences across all your channels. Whether customers are shopping online or in-store, the system automatically handles data collection in a compliant way, while making sure your marketing tools can still do their job effectively.

This unified approach makes it much easier to stay on top of changing privacy laws and regulations. Future-proofing your business becomes simpler because Shopify handles regular updates to match new privacy standards, and offers built-in tools for data protection and compliance.

Usher in the new era of customer data with Shopify

In the past, brands could rely on third-party data providers and cookies to educate them about their audiences. Cut to the present, and increasing privacy regulations and privacy-conscious customers are signaling an end to cookie-based marketing. 

Brands who want to delight customers with personalized experiences will need to leverage first-party data to stay ahead of the curve. Looking ahead, unifying customer data across physical and digital channels will become increasingly critical for retail success. 

Companies must audit their current data collection methods and technology infrastructures to ensure they can capture customer information effectively while respecting privacy preferences. Those who fail to adapt risk falling behind as personalized experiences become the standard rather than the exception.