Source: iStock | JuSun
Are Privacy Concerns Undermining Personalization?
CI&T’s Personalization Survey found a majority of consumers more “excited” (56 percent) than uncomfortable (44 percent) over the idea of retailers using their personal information to tailor their shopping experience. Paradoxically, it also found a continued high reluctance to sharing personal data to make that happen.
The four pieces of information consumers are most open to retailers knowing are gender, the city they live in (both only 14 percent openness), how much they are willing to spend and their age (both 11 percent). Coming in lower was the person’s browsing history on a retailer’s digital channels and their generation (both seven percent), race (six percent) and annual household income (four percent).
Only one percent chose “I am not ok with any of these data points being shared with a retailer.”
CI&T said in the study, “If brands articulated or demonstrated value to shoppers in collecting their data, there might be greater comfort in knowing what retailers can access.”
Twilio Segment’s The State of Personalization Report 2023 found 23 percent of consumers have become less comfortable about their personal data being used for personalization purposes compared to the prior year. Only 51 percent trust brands to keep their personal data secure and use it responsibly. Still, 56 percent say they will become repeat buyers after a personalized experience, a seven percent increase year-over-year.
Coveo’s just-released annual Ecommerce Relevance Report found 62 percent of consumers are concerned about how personal data is used by online retailers and 57 percent are unaware of how much data they share when shopping online. Fifty-two percent, however, are willing to share data when shopping online if it means they get better deals and offers.
A Gartner study last year found high-profile data breaches and data ethics scandals elevating privacy concerns and accelerating the desire to withhold personal information.
“By 2025, 75 percent of the world’s population will have its personal information covered by modern privacy regulations,” said Brad Fager, Gartner Senior Director Analyst. “This reiterates the need for brands to leverage customer data with a proper understanding of customer preferences, terms of service and relevant regulation.”
Discussion Questions
DISCUSSION QUESTIONS: What will it take for consumers to become more comfortable sharing their data? Do you see personalization getting any easier for marketers in the years ahead?
Poll
Loading …BrainTrust
Personal data means it’s a personal decision – there is no one right answer. This all comes down to trust. If consumers trust the brand and know what data is being collected and how their data will be used, there are no issues with sharing. The problem is that often data is collected and used in ways that the customer wasn’t aware of, but found out later. That compromises trust not only with the retailer in question but with retailers in general. Personalization will remain an important imperative, but it should be considered a journey vs. a destination. AI and better data will make it better.
I don’t think retailers have come close to cracking the code on personalization, and while lack of customer tastes and preferences are part of it, I do think there are financial concerns on the retailers part. How much will true personalization cost?
Several years back, I was at a blockchain conference and there was an app that allowed a consumer to enter all relevant information about her/himself into a series of screens. That data would be made available to retailers online if they were willing to pay for it – in this case through a token – but that’s not the relevant part. The relevant part was “Make it worthwhile for me, the customer.”
I don’t think retailers are willing. It requires a lot of programming to truly personalize a site (to me, they all seem like department stores – “take me to the ladies department “) but, again, real personalization isn’t cheap.
Will it get easier? It’s totally up to the marketers. Can they make it worth the consumers’ effort?
Personalization is a favorite topic but is it really happening? I have shared information with many brands and still the most personalized things I get are emails with my name thrown in there somewhere. The personalization isn’t really personal, so what’s the point? It needs to be fine tuned to really be of value to a customer.
Consumers are leery about sharing private information. Once we are comfortable with how it is really being used, and there is technology in place that protects us from data breaches, more people will be more open to sharing the info brands need to personalize the customer connection.
The study is correct; no one has yet articulated to consumers why they should share their personal data. Why should my grocery store know where I live, or our household income? Until that’s explained, I’ll be keeping it private, thank you.
In the minds of Millennials and Gen Z shoppers, the benefits of data sharing far outweigh their privacy concerns, which is a harbinger of where personalization is heading. Giving shoppers some control over what and how they share, and giving them high value in exchange for that information will make more shoppers comfortable with data sharing. This will also enable retailers to unlock new revenue streams like digital media and additional product recommendations that — in theory — could offset profits to allow retailers to keep product prices reasonable.
Personalization and Privacy have always gone hand-in-hand from a retailer and customer perspective. And it ultimately boils down to two critical factors: trust and value. 1. Is the retailer doing what it needs to in order to protect customer data and earn their trust that they will safeguard any personally identifiable information. 2. Is the retailer providing value in exchange for this information that will create a personalized experience that ultimately benefits the customer experience.
Personalization, localization, and regionalization remain the holy grail for driving an outstanding customer experience. The challenge in the personalization space is the perceived value that customers receive in exchange for their personal data. Data privacy and governance is also a critical element that retailers and brands need to ensure is in place and that there is trust and transparency between the retail companies and customers on how this personal data is being leveraged,
There are also risks associated with misusing customers’ personal data. By violating this delicate trust and bombarding the customers with spam-like personalized offers and pop-up ads across websites and creating the wrong kind of experience, customers may opt out and drop your brand.
Getting personalization right is a delicate matter, as there is a fine line between outstanding experiences and overwhelming the consumer.
I’m with Paula and Georganne on the topic of personalization. I think retailers have a long way to go. I’ve given lots of personal information to several retailers and I still get generic, impersonal promotional emails that make no sense. In this age of mature analytics and AI, one would think retailers should be able to crack the code on fairly easy stuff, but several have not. On the other side of this are the growing concerns of hacks and data attacks that spook everyone, especially, when you receive mail saying that your personal information has been hijacked and shared with who knows who!
And we’ve all heard about pricing going up when a site detects that you’re using a Mac browser, because hey, you’ve got the income to afford an Apple. Retailers have to demonstrate trustworthy behavior first before shoppers will carefully parse their details out.
personalization might be a trade off for privacy if it really worked. At the receiving end of personalized offers all I see is that if I ever buy product A, I’m going to be hounded relentlessly to buy more of it until the end of time. Why give up information for a very blunt set of targeted offers and reminders.
I don’t think retailers have truly harnessed the power of personalization as it could be. And that means that customers aren’t seeing as much value as they could be in sharing their information. Thus, they are concerned about or choose not to share.
Also, there are definitely generational differences in how people see the balance of privacy and personalization. In my experience, Gen Zs are more accepting of the tradeoffs.
The challenge with personalization has nearly always been that of prioritization and discipline within the retailer, more so than consumer acceptance or reluctance. There has always been an abundance of data underscoring that consumers will pay a premium for a better experience, and that they expect such when they share data. The problem is the retailer’s unwillingness to send fewer, more relevant emails versus a “more is better” mentality (it’s not accurate to describe that as a strategy!).
The virtuous circle/opportunity is that if a retailer is willing to do the right things, consumers will appreciate it and ultimately, respond in a more profitable way than they do to mass marketing through direct channels.
Will it get easier? Will people become more comfortable sharing PII? It’s all contextual. And it’s all built on trust and transparency. The degree of personal information I’m willing to share when buying a shirt is a lot different than if I’m searching for a mutual fund. But it all gets lumped together under ‘personalization’ in most media. In most consumer retail use cases, good behavioral AI without PII can provide an identical experience with just as much accuracy and relevant messaging as PII-based engagements. And the risk of alienating customers is much lower as well.
Personalization and privacy are two sides of one coin. As every loyalty card holder and online shopper knows, you can’t get the deals without giving up your identity.
The trouble starts when retail and brand entities accrue so much customer information that their data bases become tempting targets. This circumstance is the rule, not the exception. The experts admit that no data is safe.
Which means its simply too late to talk about privacy with any consumer who has ever paid with a card, joined a loyalty program, shopped online, owned a driver’s license or a cellphone.
Your personal data is already in the wild many times over.
Which is why I find talk of privacy regulations to be rather sanctimonious. Sure we can put opt-in notifications on web pages, but that changes nothing. If you want the deals you have to give up the data.
As usual, Paula brings a wise perspective to this thread with her observation that companies could be required to PAY consumers every time they access their personal information. Web 3.0 and blockchain have potential to enable personal datal ockers with crypto micro payments. Such a system might make corporate databases obsolete one day. But your locker would still need to reside in a computer somewhere.
Personal data lockers
The issue has always been transparency. Customers are quick to click the I AGREE button on every app and every website without actually knowing what they are agreeing to. Perhaps if retailers were more forthright with what they need to best serve customers, they would have less surprise and concern. Telling customers that if they have their location they can offer available inventory options or if they knew their spending capacity they could curate assortments to their budgets could help.
The issue has always been transparency. Customers are quick to click the I AGREE button on every app and every website without actually knowing what they are agreeing to. Perhaps if retailers were more forthright with what they need to best serve customers, they would have less surprise and concern. Telling customers that if they have their location they can offer available inventory options or if they knew their spending capacity they could curate assortments to their budgets could help.
Yada, yada, yada: it sounds like people are comfortable with vague bits of info – gender? city of residence ? – that really have little to do with “personalization” in a meaningful way. What we’re really talking about, is intimate details of people’s spending habits and personal lives; they’re reluctant to give that up, as well they should be, because once it’s surrendered, there is no getting it back.
What privacy? Recently a major retailer announced a data sharing arrangement with a huge entertainment concern, both of which my family has frequented, yet I seemed to have missed the “ask” from both to use my personal data.
Starting simple and being honest would be the likely ask of most shoppers who allow a little personalization in exchange for their loyalty. Most customers are time-strapped, and just want to save a few steps, save a few bucks, or to make things a little easier at home. That’s where the center is. Marketers can and should be able to create a good customer experience, and provide solutions like saving time, steps, and money without being too invasive or set off alarm bells.
I think that people will continue to be on both sides of this argument. Many GenZs and Millennials could care less about privacy and prefer personalization in their ads. But as they get older and have more to protect they may change their minds. Keeping privacy as a choice and not forcing one or the other should remain the norm.
For customers to become more comfortable sharing their data, they will need to actually see the payoff of it. While most digital-savvy customers understand the data exchange that comes with digital transactions and interactions, the payoff to these personalization efforts is not always what a customer expects or wants.
For example, when a customer gets an email with sales on vacuums right after the customer purchased a vacuum, handing over their data feels pointless. Technically, this might be personalized because the customer’s purchase history includes vacuums, but it does not offer useful or relevant options.
An AI-powered personalization solution, however, has the ability to take into account customer preferences, past purchase history, and buyability. So instead, the customer may receive an email with accessories for the specific model of vacuum they just purchased, additional cleaning supplies and an offer for an extended warranty on the vacuum. That feels truly personalized, and that customer experience is far more likely to make customers comfortable with disclosing their personal data