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Personalization, privacy and trust in the age of the empowered consumer

Marketers are increasingly focused on personalizing customer interactions — everything from emails to product recommendations to in-store and online experiences. SmarterHQ reports that 51% of digital marketers say that personalization is their number one priority, and 92% of marketers have reported using personalization techniques.
 
Why? Because personalization is impactful: 88% of U.S. marketers have reported seeing measurable improvements due to personalization, with more than half reporting a lift greater than 10%.
 
But marketers aren’t the only ones driving the use of personalization; consumers are beginning to demand it. Accenture reports that 91% of consumers are more likely to shop with brands that provide offers and recommendations that are relevant to them. And Epsilon research reveals that 80% of consumers are more likely to make a purchase from a brand that provides personalized experiences.
 
However, there’s often a disconnect between marketers and consumers about what enables the personalized experiences people love. Although consumers enjoy and have come to expect some level of personalization in the ways brands interact with them, many don’t understand that they must provide personal data in order to receive personalized experiences.
 
Why does this gap in understanding exist, and what can we do to close it?

Do consumers understand sharing data = personalized experiences?

Evergage reports that 55% of marketers don’t feel they have sufficient customer data to implement effective personalization. This is due, in part, to consumers’ unwillingness to share the data.
 
Depending on geographical region, age range and other demographic factors, people have different levels of understanding about data privacy and varying levels of tolerance around sharing their personal data. That’s what was discovered when Microsoft Advertising conducted a recent survey with iProspect of consumers across 16 countries in North America, South America, the European Union, Asia and Africa. Our findings are summarized in the whitepaper, In Brands We Trust: The Intersection of Privacy and Trust in the Age of the Empowered Consumer.
 
According to our survey results, of the participants who acknowledge being asked to agree to a privacy policy online or in an app, only 22% confidently answered that they read the policy. Even more telling, our findings reveal at least two-thirds of consumers don’t understand how their data is being used. The survey results also revealed that only 24% of consumers see the value of personalization as the result of sharing data, and only 15% feel they’re getting good value from granting access to their data.

When are consumers more willing to share their data?

Consumers are more willing to share data in exchange for free services or products, personalized rewards and pricing, and less likely to share it in exchange for others such as automated product reordering or personalized notifications. The operative word here seems to be — you guessed it — “free.”
 
Nearly two-thirds (57%) of survey respondents said they are willing to share personal data in exchange for personalized rewards or discounts on frequently bought items and services. Receiving personalized pricing, free or upgraded shipping options, free samples of products and services, and free access to services were also cited by more than half of respondents as good reasons to share data.
 
Convenience, however, doesn’t seem to be a key driver of consumers' willingness to share their data. Survey respondents reported being much less willing to share data for things like automated reordering of frequent purchases, access to purchase history, access to service data, or personalized alerts and notifications.

The purpose behind personalization matters. The global total percentage of respondents who are willing to share their personal data with a company or brand varies widely. In exchange for personalized rewards or discounts, 57 percent are willing. For expedited purchasing, just 39 percent are willing.

Across various demographics, there were striking differences, as well. For instance, respondents in Latin American are more willing to share data in general. By contrast consumers in North America tend to be less willing overall. Millennials see more value in personalization and expect to get more from agreeing to share their personal data than consumers in other age groups.
 
The varying degrees of understanding about data privacy and the use of data for personalization creates a conundrum for forward-thinking businesses. When consumers choose to opt out of sharing data, marketers are limited in their ability to personalize experiences, products, and services. But if consumers don’t understand that sharing their data is required to create the personalized experiences they love, businesses won’t be able to deliver them and consumers may think the brands don’t understand their expectations.
 
What’s the solution?

Start with clear communication about the value exchange

Clear communication about data privacy and the reasons they’re being asked to share their data is critical to bridge this gap and raise awareness among consumers about the value exchange.
 
Here are some critical steps to take:
 
  • First, make sure your customers understand why data is needed and what they get in return. If your customers can’t see the benefit — you need to rethink what you’re doing.
  • Clearly articulate and demonstrate to your customers how you’re using data to create a more personalized and better customer experience.
  • Make sure that you really are using the data you collect to meet customer expectations.
  • Ask for feedback — and keep asking for it. Customer feedback is critical for keeping you on track and continuing to meet changing customer expectations.

Make personalization purposeful

Personalization can be a powerful marketing tool and enhance the customer experience. But using your customers’ personal data to personalize every aspect of the customer experience simply because it’s possible is both inefficient and ineffective. Too much personalization can seem intrusive and even creepy, leaving customers feeling as if their privacy was violated.
 
For personalization to be impactful, it must have purpose and add value to your customers — and that requires understanding your own brand, its values and its purpose. Knowing what your customers expect from the interactions with your brand and what they find valuable will help you make data-driven decisions about how you engage. It will help you fine-tune not only your interaction across touchpoints along the customer journey, but your products and services, as well.
 
When you can tailor personalization to meet consumer expectations at every touchpoint, you deepen your connection with your customers, strengthen their loyalty and trust, and ultimately, achieve better business outcomes.
 
Learn more about data privacy trends and purposeful personalization by reading our whitepaper.