Why retailers must balance personalisation and privacy

Retail has entered a new era: con­sumers want more than prod­ucts; they also want expe­ri­ences that con­nect them with their cho­sen brands. 

To meet this demand, retail­ers and mar­keters must dis­cov­er more about who their cus­tomers are. They are using data and per­son­al­i­sa­tion meth­ods to engage with shop­pers in mean­ing­ful ways, help­ing to build rela­tion­ships that feel authen­tic. Yet at the same time, con­sumers are gen­er­al­ly becom­ing more cau­tious about shar­ing their per­son­al infor­ma­tion, as their con­cerns about ensur­ing data secu­ri­ty increase.

“The abil­i­ty to per­son­alise allows a brand to dif­fer­en­ti­ate, cre­at­ing more expe­ri­ence and val­ue around its prod­uct in a com­pet­i­tive, price-dri­ven mar­ket,” says Andrew Frank, research vice-pres­i­dent at Gart­ner. “But con­sumers are real­is­ing that they’ve been giv­ing up more data than intend­ed – and that they have lit­tle con­trol over how it’s being used.” 

Per­son­al­i­sa­tion is an effec­tive mar­ket­ing strat­e­gy, but the feel­ing that a brand is fol­low­ing you around online, or even eaves­drop­ping on your con­ver­sa­tions, is a dis­con­cert­ing one. The neg­a­tive response from con­sumers to what many view as sur­veil­lance, rather than benign atten­tive­ness, has prompt­ed some reme­di­al reac­tion from the tech indus­try.

Google has announced that it will stop the use of third-par­ty cook­ies in its pop­u­lar Chrome web brows­er by the end of 2023, for instance. In the process, it will fall in line with Apple and Mozil­la, which have already ditched the track­ing tech­nol­o­gy from Safari and Fire­fox respec­tive­ly. Apple has also intro­duced a pri­va­cy fea­ture called App Track­ing Trans­paren­cy to iOS 14.5, the mobile oper­at­ing sys­tem used by its lat­est iPhones. And Face­book has dep­re­cat­ed the Advanced Mobile Mea­sure­ment pro­gram, which means that adver­tis­ers on the plat­form receive far less detailed infor­ma­tion about users than they had grown accus­tomed to.

But such moves present chal­lenges for both busi­ness­es and con­sumers, accord­ing to Gartner’s senior prin­ci­pal for mar­ket­ing research, Mike Gib­lin. 

“Cus­tomers are con­cerned about the way their data is being used, sold and oth­er­wise prof­it­ed from by com­pa­nies that they don’t believe have a right to it.” So says Jen­nie Gerum, chief mar­ket­ing offi­cer at soft­ware firm Voy­a­do, who adds that peo­ple have lit­tle recourse beyond choos­ing to shun a giv­en ser­vice, since these firms often do have a legal right to use their data. 

“We’re at an inter­est­ing point, where cus­tomers think they can get a good, per­son­alised expe­ri­ence while also being very pro­tec­tive of their data,” he says. “By pulling away data access, they will make their expe­ri­ence less per­son­alised and reduce its qual­i­ty.”

A glob­al sur­vey pub­lished last year by US soft­ware firm Acquia found that 40% of con­sumers didn’t trust all brands to han­dle their per­son­al data prop­er­ly. More­over, 82% of the respon­dents report­ed receiv­ing mar­ket­ing com­mu­ni­ca­tions that they couldn’t recall ever being asked to allow. 

Prioritising privacy

So how do retail­ers get the bal­ance right? Devel­op­ing cus­tomer expe­ri­ence (CX) strate­gies that don’t rely on third-par­ty cook­ies and ‘sur­veil­lance mar­ket­ing’ will show that you’ve heed­ed con­sumers’ con­cerns and it’s also the best way to future-proof your busi­ness, argues Niki Hall, chief mar­ket­ing offi­cer at web ana­lyt­ics spe­cial­ist Con­tentsquare.

“Online cus­tomers are pro­vid­ing a con­stant source of feed­back on your brand’s dig­i­tal expe­ri­ence as they nav­i­gate your web­site or use your app,” she says. “How they browse, what paths they take to achieve their goals, where they get stuck – all this data pro­vides clues to how good an expe­ri­ence they’re hav­ing.” 

Using such infor­ma­tion wise­ly and being trans­par­ent about requests for fur­ther cus­tomer data should be the cor­ner­stone of an approach to per­son­al­i­sa­tion that’s based on dig­i­tal trust and CX excel­lence. While there isn’t a firm answer for how much mate­r­i­al cus­tomers are will­ing to hand over, Hall says that the con­sen­sus is that they’d pre­fer not to share over­ly per­son­al data. Rather, they want to know more about what is being col­lect­ed from them and how it’s being used.

“Brands must close­ly scru­ti­nise what data they’re ask­ing for and why,” stress­es Stephen Gilbert, loy­al­ty solu­tions direc­tor at CX spe­cial­ist Collinson in EMEA. He adds that retail­ers need to ask them­selves what the pur­pose of each piece of data is – and what val­ue the cus­tomer gains from shar­ing it. This could come in the form of tar­get­ed offers and exclu­sive rewards – or sim­ply a bet­ter shop­ping expe­ri­ence. 

“It’s cru­cial that each data point serves a tan­gi­ble pur­pose that ulti­mate­ly adds val­ue to the busi­ness and/or its rela­tion­ship with the cus­tomer,” Gilbert says.

Tailoring your approach

It’s a strat­e­gy that’s work­ing for Vic­tor Lug­ger, co-founder and CEO of restau­rant group Big Mam­ma and hos­pi­tal­i­ty pay­ment app Sun­day. He reports that he only uses opt-in data to improve the CX his busi­ness­es offer. 

Lug­ger explains: “A veg­e­tar­i­an may want to see only the veg­e­tar­i­an options on a restaurant’s menu. Some­one with a par­tic­u­lar food intol­er­ance will be keen to look only at the dish­es they can enjoy. Does the restau­rant need to have their full per­son­al data for this? No. But a cus­tomer who dines there reg­u­lar­ly may ben­e­fit from a loy­al­ty pro­gramme and be reward­ed with spe­cial offers, so they may share their email address. Each case is dif­fer­ent and must be treat­ed dif­fer­ent­ly.”

This is where strik­ing a bal­ance between a tai­lored approach and one that might be con­sid­ered inva­sive is key.

One of the pri­va­cy func­tions of Apple’s iOS 14.5 oblig­es apps to seek per­mis­sion before they can col­lect track­ing data from iPhone users. Of those with the new oper­at­ing sys­tem installed on their devices in Sep­tem­ber 2021, about 21% had opt­ed to allow such track­ing, accord­ing to Sta­tista. Com­pa­nies such as Face­book have been hit hard by this increase in pri­va­cy, yet there has also been a boom in hyper-per­son­alised sub­scrip­tion ser­vices over the past 12 months. These busi­ness­es rely on col­lect­ing per­son­al data from cus­tomers and, in many cas­es, far more sen­si­tive data than Face­book can access, such as infor­ma­tion about people’s health.

“The dif­fer­ence is that they’re not col­lect­ing data to tar­get adverts,” explains Lee Wil­son, head of ser­vices at mar­ket­ing agency Ver­ti­cal Leap. “They’re doing it to build unique expe­ri­ences for cus­tomers and help indi­vid­u­als to find the per­fect prod­ucts for them.”

Wil­son cites the exam­ple of sub­scrip­tion com­pa­ny Vit­a­min Bud­dy, which uses the infor­ma­tion sup­plied by a cus­tomer to build a two-way rela­tion­ship. “Every piece of data sub­mit­ted by a user improves the qual­i­ty of the prod­ucts they receive. At the same time, this allows the com­pa­ny to increase the rel­e­vance of each rec­om­men­da­tion and so retain the cus­tomer for longer,” he says. “Intent is impor­tant – and so is val­ue per­cep­tion.”

A busi­ness can tack­le the issue of rel­e­vance head on by con­duct­ing a data audit, sug­gests Rodolpho Car­de­nu­to, pres­i­dent of appli­ca­tions at US tel­co Von­age. This would entail an exhaus­tive review of all the points at which it obtains and process­es per­son­al data, along with the legal jus­ti­fi­ca­tions used and per­mis­sions gath­ered, he says. This can pro­vide an informed start­ing point to ensure that any data col­lect­ed is seen to be serv­ing the cus­tomer first and fore­most.

In addi­tion, Car­de­nu­to advis­es com­pa­nies to give cus­tomers the option of decid­ing when their data is erased. This can empow­er them to man­age their com­pli­ance needs more eas­i­ly and reframes the col­lec­tion of data as a con­sen­su­al ele­ment of the busi­ness-cus­tomer rela­tion­ship. 

Although pri­va­cy mea­sures will only become more strin­gent in the com­ing years, firms that are already build­ing rela­tion­ships around the exchange of data and show­ing the val­ue of per­son­alised expe­ri­ences are like­ly to gain a com­pet­i­tive edge.