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[22 comments]

How Much Do Consumers Want Personalized Offers?

December 11, 2013

According to ISACA's 2013 IT Risk/Reward Barometer, two-thirds (67 percent) of American consumers believe certain personalized promotional tactics are invasive when shopping at brick-and-mortar stores.

In the poll of 1,216 U.S. consumers, 46 percent said say they would find it invasive if a store texts them about specials as they walk past. The same percentage indicated they would find it invasive if a store clerk they didn't know greets them by name and knows they've been there before. Surprisingly, older Millennials (age 25-34) are the group most likely to find these actions invasive.

The survey also found similar apprehension around retailers' use of personal data when it comes to online shopping. Fifty-five percent regard personalized promotional tactics as similarly invasive when shopping on the web. Among online shoppers, 35 percent find it invasive when a website knows their city or zip code. Ninety percent indicate they are concerned that their personal information will be stolen.

The study comes as new technologies, such as facial recognition, geofencing and Bluetooth-enabled beacons, are enabling retailers to use more targeted marketing techniques, often tapping past purchase history and social/digital activity. Privacy concerns have also been heightened in part due to the NSA spying scandal.

ISACA, an association dedicated to the security of information systems, urged IT leaders to protect shoppers' privacy and security. It also highlighted the risks of data breaches, viruses and malware from employees using work computers to shop online.

"Despite how much information people share online, they still cherish the concept of personal privacy," said John Pironti, risk advisor with ISACA and president of IP Architects. "Retailers that use technology to try to save shoppers time and money without asking permission first may actually do more harm than help to their bottom line this holiday season."

The findings contrast with an online survey of Canadian shoppers conducted in the spring by Leger, the market research company in Canada, for SAS. At the time, the survey indicated that 58 percent of Canadians would be interested in receiving personalized promotions from nearby stores while out shopping.

Discussion Questions:

Are heightened privacy concerns making consumers more wary of personalized promotions? Are you okay with a store clerk you never met knowing your name and purchasing history?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

In the next few years, will privacy concerns hinder efforts by marketers to personalize in-store promotions?

Comments:

When I look for something on Amazon and don't buy it (there anyway), that item will show up in ads for weeks on any site I call up. The Weather Channel! Really?

That's wrong. Stop that.

Sooner or later, consumer groups will get over privacy, driven by demand. Recently, a few tech companies announced that they would set up preventative measures to keep their info private from government sources, etc. They should talk! We're only seeing the tip of the iceberg right now.

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Lee Peterson, EVP Creative Services, WD Partners

This train has left the station. Technology allows the industry to do this, and as many consumers want it, it will be done. Should retailers ask permission? Absolutely yes, and if you agree, then don't be freaked out when they greet you by name.

Seems like we've gone full circle. In our parent's generation and even when we were kids, the merchants in fact, did know our name and had a good idea of the products we purchased frequently, including specialty items for holiday feasts like Christmas and Easter. Now, technology does it for us and it creeps us out.

The genie cannot be put back in the bottle on this one.

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Zel Bianco, President, founder and CEO, Interactive Edge

From where I sit, this shows that the organization conducting the research gets the response they want. Leger finds a majority is interested in personalized ads, ISACA finds that a majority does not.

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Liz Crawford, VP, Strategy & Insights, Match Drive

The key operative word here is TRUST.

Even if retailers have good intentions of saving shoppers time and money, many will perceive it negatively IF the retailers don't genuinely ask permission first to make personal offers.

The key to positive consumer response is not only be creating an opt in scenario, but how retailers then create value for the consumer. If I'm merely bombarded by mobile text offers for low price, there is little personalization, value, or TRUST in a relationship that is only another ad channel.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Personalized promotions are still new to consumers. As a result, they can have a creep-out factor. The best way for retailers to handle this is to carefully explain the benefits of personalized promotions and ask consumers' permission first.

This is all part of building personalized relationships with consumers. Go forward at a speed the consumer is comfortable with, and be prepared as some consumers will share everything, while others want to share nothing.

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Max Goldberg, President, Max Goldberg & Associates

LoyaltyOne has run research for three years that looks at consumers' attitudes about privacy and data collection.

Any marketers who aren't convinced of the importance of consumer privacy should keep one figure in mind: 72%. That is the percentage of people who would be willing to share ADDITIONAL personal information if they had more control of their data. However, more than half of consumers surveyed said they do not trust their data in the hands of companies.

Our research consistently has shown that consumers want an element of control. Whatever leads to a business looking into the mirror and saying, 'Have I supplied consumers with an element of transparency and control?' Those are the benchmarks to achieve.

And relevancy is key: 63% of surveyed consumers said they would be willing to share more personal information with companies if it meant they would receive more relevant offers.

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Bryan Pearson, President and CEO, LoyaltyOne

It's interesting that online consumers are more willing to be tracked because it happens on just about every website, but there appears to be more discomfort with this in the physical world. This has to be permissions based, meaning a consumer has to provide their permission, and for that to happen there has to be some sort of value provided for the consumer.

Personally, I am fine with a store clerk knowing my name and purchase history, but what would make it better is if I received a contextually relevant offer based on that information.

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Bill Davis, Director, MB&G Consulting

Data is a wonderfully malleable tool in the hands of researchers as some panelists suggested above. What I do see is that technology creates possibilities and just because you can do it, doesn't mean you ought to. And it also matters greatly HOW you do it!

In the case of 1:1 personalized offers, there must be respected opt-in mechanisms for shoppers, otherwise we cross the spooky divide. Successful retailers in this decade will take a longer and more respectful view of what customer privacy means and how to make it a pillar of their business strategy and not run as a rogue initiative.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

I'd combine Mr. Pearson's and Mr. Petersen's comments and add one more component:

TRUST (Mr. Petersen) is required in order for the customer to react positively; you need to ask permission and be clear with how you are going to use the data, and why.

CONTROL (Mr. Pearson) is necessary to give the consumer the power to decide how much they will share, and for what purposes.

And, I'd add:

BENEFIT to the consumer, explained clearly, can dramatically lower people's level of concern. If you framed the question as "would you like to receive mobile notifications from your retailer as you enter the store about products you buy that are on sale?" I suspect you'd get much warmer responses.

If you are missing any or all of the above, consumers will react with suspicion or anger.

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Ben Sprecher, Business Development, Google

It's logical to believe that recent press about the National Security Agency's proclivity to collect and track both email and telephone communications has some consumers a bit restive about retailers and CPGs leveraging their shopping data. With that said, my experience tells me that if the offer is truly compelling and has value to the consumer, most shoppers will reconcile the exchange of their personal information with meaningful savings.

The problem lies in the dearth of "compelling" content. Once retailers and brands have the means to target shoppers, and now even has they shop, the offers must worth the shopper's time and effort. Unfortunately, many retailers have been unable or unwilling to re-direct meaning discounts to these targeted efforts and are relying on the CPG brands to provide the offer content. CPGs have in turn populated the offer banks with a combination of new items and many offers from the higher margin, but less popular items from low household penetration categories such as HBA, household cleaners, and general merchandise.

As long as this is the case, targeted programs and technologies will struggle. Conversely, if the quid-pro-quo is worth the exchange of information, I still maintain that shoppers will engage with targeted, data-base driven programs.

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Mark Heckman, Principal, Mark Heckman Consulting

There are many more studies that show consumers are willing to use their private shopping information as currency to get better deals and service through personalization.

Retailers need to get (1) permission from each customer to use the data (opt-in) and then use that data to (2) deliver personally relevant offers (3) in a comfortable way for the consumer.

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Todd Sherman, CMO, Point Inside

This is 100% about the compromise of personal information and privacy in exchange for relevant and meaningful benefits for the customer. If there is a tangible value associated with personalized promotions, and the benefits and privacy issues are communicated in the proper way, many consumers will opt in to these promotions.

If retailers are starting to equip employees with private information about customers without their consent (or properly communicating the process), then this will absolutely turn customers off and they will more likely forgo personalization because it will feel too unsettling.

Personalization consistently ranks high on what customers seek in stores, so as long as the execution is done properly, this will take retailers in the right direction. Finally, an opt-in system is always the way to go. If not, they will risk alienating potentially loyal customers.

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Jesse Karp, Omnichannel Consulting Manager & Loyalty Practice Lead, Cognizant Business Consulting

Emotionally from the consumers' perspectives, yes, this makes most nervous. Should retailers stop trying so hard to sell their stuff? NOPE! Get better at targeted offers and the delivery of them. There are truly great tools available from several vendors that will address this challenge. This need not be invasive.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Without writing a long op-ed or white paper, personalization technology relies too much on previous history data mining versus predictive analysis of social trends.

For example, a customer wants to buy a blue shirt for their nephew but recommendation/personalization technology assumes the customer loves blue shirts and recommends blue items to the customer everywhere he or she goes.

Nordstrom using Pinterest pins to show customers what products have the most social network interest, employs the wisdom of the crowd to deliver real-time and trending data.

Mining past data history of an individual or leveraging the wisdom of the social crowds for real-time data - retailers should consider these factors on the topic of personalization technology.

Ed Dunn, Founder, (Stealth Operation)

Many shoppers are concerned about privacy issues. From one perspective, it certainly seems that "personalized promotions" are sent far too frequently - daily emails and texts, and the personal information is extensive. When a retail clerk knows your history and more, it can take you out of purchase mode right to "what else do they know?" and "my information does not seem well protected." As other panelists have discussed very well, it's all about trust.

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Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

My great grandfather owned a local mercantile back in the day. Mr Bob was 'expected' to know that a wedding was coming up so he would have bolts of fabric to choose between. He knew birthdays, anniversaries, preferences, habits of most of his customers so he would have what they wanted, when they wanted it. Nothing wrong with that, people expected it!

The issue today is that we simply do not know if our information is just being kept by Mr. Bob, in order to better serve us or Uncle Sam, in order to 'survail' us. Think I made up that word but hey, you get it!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

Since the NSA scandal broke, consumers are now really starting to wake up to the privacy issue. Early industry attempts, like reminding consumers its time to buy X or Y product, failed. While we have the power of one-on-one promotions, that may not be the best approach. I have no problem with a store clerk thanking me by name for shopping at the store. Further, if they go the extra mile because I am an A, not C customer, that also is acceptable. Telling me it's time to buy toothpaste is not acceptable. It's how you use the information that is important.

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W. Frank Dell II, CMC, President, Dellmart & Company

Personalized pricing is a great way to create value for the consumer, but retailers must be careful to maintain a sense of trust. Data is powerful and every retailer wants more, but consumers should have the option to opt in or not. Retailers must frame the tactic in terms of benefits to consumers (better, more relevant offers) and communicate clearly what their information will be used for.

Arie Shpanya, CEO, WisePricer

The world will quickly separate into two camps:

1. Those who love all the interconnectivity that technology can provide and who will gladly opt-in for close tracking and communication from their favorite brands and retailers.

2. Those who carefully guard their privacy and rarely, if ever opt-in to brand or retailer offers to connect.

Either way, the key will be "opting-in." I imagine it won't be long before this is legislated. The faster legitimate brands and retailers focus on seamless, easy opt-in/out choices, the more trust will be built. Those that don't, won't survive as legitimate entities.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

There is no way that the NSA breaches could not heighten American concern about privacy and personal information. Yet at the same time, there has never been such an opportunity for consumers to receive information, offers and content that directly relates to them, as today.

Transparency is the key to gaining buyin about personalization. If the store associate reveals that they have a record of a consumer's purchase history and use that information to help the consumer avoid repeat trips and returned orders, then the benefit is clear and few will object.

The key is in the delivery.

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Mark Price, Managing Partner, M Squared Group, Inc.

The way the information is used will make consumers wary or delighted. Amazon.com is the king of personalized offers. They track every purchase and even prior page views. Their customers don't find that invasive.

Regarding a store clerk knowing the customer's name and purchasing history: if handled well, it will build the relationship. Let the customer know how you know. You may ask them their name, pull up their history and start helping based on that.

The best companies know what to do to gain a customer's confidence. They know how to handle their personalized marketing and offers.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I think that those shoppers (most) who want a bargain are willing to accept personalized promotions.

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Jerry Gelsomino, Principal, FutureBest

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