Are Privacy Concerns Making Personalization Passé?
By Tom Treanor, Treasure Data
Delivering personalized experiences to customers in real-time is absolutely necessary right now. Yet people are still worried about privacy and how their data is being used. When you really think about it, sharing the right amount of personal data is a win-win for everyone: Marketers get the data they need to reach the right people, and customers get more relevant suggestions and offers.
So why are pundits talking about personalization as a doomed practice? In a 2019 report, Gartner, a leading global research and advisory firm, predicted that 80% of marketers will abandon personalization efforts by 2025.
Here’s the problem: It’s clear that people like personalization. Just try to browse Amazon while logged out; it’s horrifying! But we’re also becoming more aware of how personalization requires a tradeoff in data privacy.
However, “tradeoff” is a misleading term. It’s not personalization or privacy, it’s how to create lasting, trustworthy relationships that leverage the best of both.
Here’s how your business can earn customer trust while still getting the data you need for proper personalization.
4 Steps To Yes
Privacy settings can be thought of like subscription plans with direct correlations between personal data sharing and benefits to the customer. The customer “pays” by sharing their personal and behavioral data and receives personalized experiences in exchange. It is possible to show customers that exchanging some degree of privacy is worth it for the increase in personalization. Here are 4 ways to reassure and incentivize your customers to opt-in.
- Transparency
It shouldn’t take 4 hours, a law degree, and a magnifying glass to read a privacy policy. Explain as simply as possible how customer data is collected, used, and stored. A hard-to-find or overly complicated consent form can make customers feel like the company is trying to pull a fast one. In other words, customers increasingly assume that if you don’t care about their personal information, you don’t care about them. Show your customers you understand them and respect their boundaries, too.
- Explain What Data Will Be Collected & How It Will Be Used
Make it clear exactly what data will be collected based on each customer opt-in choice. Explain how that data will be used. If customer data is shared with third parties, be upfront about it. Large data breaches and privacy scandals are practically daily news and have made it clear that it is better to ask permission than forgiveness. Being open about how data is used helps build trust and persuade customers to opt-in.
- Give Customers Choices
Allowing customers to opt-in, opt-out, or change their preferences at any time empowers them and engenders trust. Customer opinions on data privacy and security are always in flux so an opt-in should ever be permanent.
Keep privacy policies à la carte as much as possible, too. For example, let people opt into emails but opt-out of receiving third-party texts, for example. It doesn’t pay to force customers into communications; what might be gained from their data can easily be lost by alienating them. Conversely, letting customers choose exactly what data is collected builds trust and confidence even if they decide to opt-out completely.
Go a step further and ask your customers how satisfied they are with the privacy policy along with how they feel about your products or customer service. Reassure customers that your company is on top of regulatory issues because privacy is a priority.
- Explain The Benefits Of Sharing Data
Once customers can trust in your data policies and choose their level of buy-in, show them the benefits of sharing their data. Give clear and explicit examples of the benefits of data sharing, such as app notifications that generate personalized coupons. Shopping apps that use behavioral data can offer rewards based on visits.
Just as you advertise the value of your products, show the value of sharing data by connecting it directly to relevant, personalized experiences.
Use Automation To Deliver Personal Experiences That Respect Customer Choices
It can be challenging for businesses to keep up with privacy settings and data streams for thousands of customers. That’s where the right technology can make a difference.
Customer Data Platforms (CDPs) collect, centralize, and unify all types and sources of customer data. From this data, CDPs can create complete customer profiles that provide valuable insight for market analysis.
The right CDP also can manage privacy settings automatically: storing consent centrally and using it to ensure compliance across all connected systems. It can collect metadata such as timestamp and channel where the consent was created and can make real-time updates, helping you take control of your data privacy, security, and consent management challenges to better serve customers.
Personalization in Action
PARCO Co. Ltd. is an established Japanese shopping mall and department-store chain using data from many sources to stay competitive. PARCO needed a solution using all available data points to increase customer satisfaction and lifetime value (LTV). They didn’t lack sources and used everything from geolocation, Internet of Things (IoT) devices, loyalty programs, cell phone apps, and even weather sensors on mall rooftops for their data-driven strategy.
PARCO introduced a shopping app, “POCKET PARCO,” which generated additional customer data and highlighted untapped opportunities for personalization and engagement. Their CDP combines POCKET PARCO data, along with IoT data from shopping center weather and geofencing sensors, for real-time analysis and activation through the app.
The resulting personalized marketing led to a 35% increase in store visits, a 25% purchase rate with an increase in store traffic, and an 8% increase in repeat store visits.
Personalization Isn’t Passé
We want to build long-term, positive, and profitable relationships with customers and like any relationship, this involves trust and give and take. Conceptualizing customer data collection as a negotiation between equals, rather than a marketing tool, can help shape policies that actually increase customer loyalty.
Show customers the benefits of sharing data: fast and easy purchases, timely and relevant promotions, and heads up about new products. Then let individual customers decide what matters most to them. Don’t force customers to choose between a good experience with your company and their own data privacy.
About The Author
Tom Treanor is the CMO for Treasure Data, a leading enterprise Customer Data Platform (CDP) provider. Previously, he was on the product team at Amazon's Alexa Internet, Director of Marketing for Wrike, and Head of Digital Marketing for Meltwater. He has an MBA from the Wharton School of Business.