Are data sharing concerns still holding back true personalization?
What does being treated as an individual online mean for shoppers? According to a new survey from Cloud IQ, the leading answer is being rewarded with highly relevant offers, 77 percent.
That’s followed by being remembered, 60 percent; feeling listened to/understood, 59 percent; and feeling in control/opting in, 57 percent.
Overall, 69 percent of the shoppers surveyed from the U.S., UK and Australia said they want brands to offer them an “individualized experience online,” and 64 percent expect this.
Yet, while almost two-thirds (64 percent) recognize the value of exchanging their personal data currency for a more individualized experience, more respondents are reluctant (26 percent) than enthusiastic (20 percent) about allowing brands to use information to provide the best possible online experience.
Frequent shoppers who purchase online daily or every few days are more likely to consider themselves “enthusiastic” (26 percent) than those who shop monthly or less (14 percent).
For many, there is a happy medium, either being “brand selective” (28 percent) and allowing a few trusted brands to use this information, or “data selective” (26 percent) whereby they would like to control the amount of data brands use.
The types of data consumers are most happy for brands to use to get a great online experience are:
- Product preferences (85 percent say “yes, definitely” or “yes, possibly”)
- Previous purchase data with that brand (83 percent)
- Communication preferences (79 percent)
- Basic demographic data (79 percent)
The types of data that people are least happy for brands to use to get a great online
experience are:
- Mood/emotional data (50 percent)
- Friends/family contact details or referrals (50 percent)
- Political preferences/attitudes to societal issues (48 percent)
- Income data (47 percent)
- Identity data (44 percent)
Cloud IQ argues that, for many brands, personalization doesn’t go much beyond e-mails that address consumers by their first name. More transparency, safeguards and guidelines over consent, they argue, will be required for consumers to become more comfortable sharing their data to help brands deliver “real-time, highly relevant and meaningful experiences.”
Discussion Questions
DISCUSSION QUESTIONS: Are consumers getting more accepting of the exchange of personal data for greater personalization? What can retailers do to ease those concerns? How should retailers determine which types of data to use?
Poll
BrainTrust
Paula Rosenblum
Co-founder, RSR Research
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
In all honesty consumers desire a personalized, customized and curated experience, which naturally has to be powered by shopping insights.
Once that trust and confidence is built between a brand or retailer with a consumer, data sharing will occur more frequently and willingly. Especially since there will be a more personalized, value-added in-store and digital experience across the brand. We all are seeking experiences that remove the friction from the shopping journey.
When executed and operationalized properly, consumer insights will drive an enhanced shopping experience, yet none of this will be possible without the faith and confidence that your data is secure and being leveraged properly.
Transparency, safeguards and guidelines over consent is not what’s limiting personalization. I’m on the same page as Brandon in that all of that is cost of entry to being a retailer today and that has to be in place. As retailers 1. build the value proposition for which sharing data makes sense and 2. build trust and confidence with the consumer that they’ll deliver on that value proposition, true personalization will continue to be more broadly accepted.
This article does a great job of encapsulating the dilemma and also highlights why we seem to have so many disconnects around consumer privacy concerns.
Consumers will tell you, “Yes, I am willing to exchange privacy for relevancy” until you actually ask them what they are willing to share. This crosses all age demographics.
It’s a problem indeed, and playing it relatively safe is a way better idea than “going for it” for retailers.
I have a Facebook thread going where people swear someone is listening to their phone calls because within a couple of hours, they are being served up ads about a product they mentioned on the phone. That’s beyond creepy. None of them, regardless of age, think it’s cute, relevant or anything but intrusive. And since I know all of them, I can say definitively, most are not conspiracy theorists.
Tread lightly.
I’ve seen it in text messaging, too — even when I had yet not begun searching, but was just chatting about it with my wife.
It is a matter of perception driving reality, and most likely the people who talked to friends on the phone about the products also did searches about the product online or interacted with an article or an ad which triggered the conversation in the first place. The challenge is that as consumers are more aware they are leaving a digital trail, they are creating a causation relationship between activities, whether it is correct or not.
Mass personalization and the ability to tailor personalized offers to each consumer based on his her preferences, purchase history and other data is key to increase customer LTV (Life Time Value) for the retailer, but also to being able to give more attractive offers to customers. To gain this value, retailers should use the right technology and should communicate to the customers in a transparent way “what’s in it for them” and why they are better off sharing their personal data (within well defined boundaries) in order to get more value for them. Retailers should focus on purchase and preferences data that can be extracted and avoid using sensitive data that may cause more concern to consumers.
You are absolutely correct Nir. Great comment. Retailers are wasting resources trying to “reinvent the wheel” with shotgun approaches to personalization. When staring them in the face are silos of unique to each retailer, individual customer preference intelligence.
I think consumers today are accustomed to giving standard information like name, email and possibly a phone number. However, they also quickly get annoyed when they become inundated with useless emails and texts. Retailers have an excellent opportunity to build relationships with willing customers through the practical use of personalization. But they need to be more careful with how they use the information they receive from the customers. They need to understand how often they should reach out to the customer and make sure that what the retailer is offering the customer is going to be something the customer finds interesting. Otherwise, it will become a quick delete and, if bothered too often, the customer will opt-out entirely. Retailers when asking customers for information need to create a series of smart, easy to answer, quick questions to better understand how often the consumers want to receive a message from the retailer, and for what purpose. We have the technology today to make personalization very customized and not generic so use that technology wisely, and you will build a long-lasting relationship with your customers.
Yes. Personal data collection is the new normal. What might have been unthinkable in the past becomes de rigueur in the present. The horror over seeing a banner ad suddenly appear in our browser the moment we have done an Amazon search has abated.
The responsibility for retailers is to use the data collected to make the relationship with the customer/prospect personal and important. If it is not designed to simplify and make any transaction better — from the customer’s perspective — it is an annoyance. The bond of trust is broken and the relationship (read preference) ends in divorce.
Consumers are willing to give their information to companies for purposes of personalization, but only if they ask for it in the first place and brands are honest about what they are going to use it for.
Many of the PR scandals over the last few years have been about companies using personal data in ways that they didn’t expect. And I think that this bad publicity has put many retailers off asking for customer data. A recent study of retailers found that only 14 percent of brands view personalization as essential to their customer strategies — which, when you think about it, seems insane.
The thing is, consumers are willing to consent if asked, but retailers are just worried to ask in case customers say “no” in reply. Brands are also not good at laying out the benefits — what the customer will gain in return. At the moment, customers are still suspicious but only because retailers are not confident enough about the benefits of personalization.
Great insights from the Cloud IQ study. I think every manufacturer and retailer runs into this with their shoppers wanting a unique experience but not wanting to supply the necessary data points to execute it properly.
With big companies continuously getting hacked consumers will continue to withhold these data points. However, retailers and manufacturers can’t stand idly by but rather need to look at the data they can obtain and utilize it in a new unique way.
Moving forward retailers need to spend time testing a variety of strategies against small pilot groups and segment them out not just by age but by buying patterns and categories shopped to fully understand what their shoppers want.
Consumers are more aware of the value exchange of sharing their data for personalization. The rush to personalize shouldn’t disregard the value exchange that has to happen and how easy it is to lose that exchange.
Retailers need to tune in and do things that make consumers feel at home. Beyond that, it’s baby steps to ensure that retailers get consumers comfortable before jumping into too many things.
It’ll be fun when retailers take the things they know (merchandising, basket upsell, etc.) and figure out how to pair that with personalization.
I think these types of concerns are quite valid and something of a challenge for retailers. A lot of it comes down to the value exchange — at the moment a lot of customers aren’t seeing the benefit from giving away information like their email addresses, as the result is usually a load of generic offer emails. In order for customers to trust a retailer enough to give them more information, retailers have to start doing better with the information they do have. I’m sure a lot of shoppers have no issue with a brand using data about what they’ve bought before to personalize emails and offers, and yet we don’t see much of this happening. And of course there’s always going to be a line that shouldn’t be crossed — no-one wants to be wiretapped in order to have a relevant offer sent to them!
Do we need to give up privacy to feel like a retailer is listening to us and making our experience personal? I don’t think so.
But I do think retailers and data scientists and opportunists have turned this into an execution of technology rather than a way to more deeply engage a person’s reason for buying.
Whenever asked about this discussion I go back to my department store days and think about the trust one must build with a customer in order to sell them something. I use purchases such as a men’s suit or a wedding gift as an example.
It comes down to preference. Asking and listening and bringing relevant offers to the forefront. Any good sales person will agree.
I think retailers and brands should focus on their customers’ preferences and the tactical data will come naturally from the relationship. And the tech can do the heavy lifting in the background.
I am confident that at least most self-actualized and stable-minded consumers have adapted to the brave new world of data sharing with retailers. I think resistance today is more two-fold:
If retailers and their data partners can give assurance to consumers about how the data will be used, and not used, I think there will be less resistance.
Over the past two decades, shoppers have increasingly shared more and more data. The vast majority of shoppers may say they’re concerned about privacy, however their actions prove they really aren’t, via the use of easy-to-hack passwords or no passwords at all. It’s amazing how many people still don’t even lock their mobile phones.
Retailers can make and are making real reasons to be loyal to their brands by using value-driven promotions that also require personal data. Even without all the personal data, though, retailers can leverage some new tools that make the shopping journey far more personalized just by asking shoppers to sign in and using their past purchase data alone. If you can get more data than that, then the relationship can be truly personalized in real-time.
It’s about trust and transparency. Offer consumers the option to opt in or out with a clear and compelling reason why they can’t miss out on that offer. Ask for what you want, and see what you get. And if consumers say no to your personalization efforts, take that data point back to your team, learn, innovate, test.
The research examined consumer attitudes today AND how they will be impacted by GDPR (General Data Protection Regulation). While not as well known in the U.S. and Australia, GDPR is a big change in the EU that gives control of personal data back to individuals and prevents export of personal data outside of the EU. It takes effect at the end of May 2018.
Companies anywhere in the world will have new rules to follow if they process data from EU residents, including name, address, photos, email addresses, social posts or even IP addresses.
GDPR will also cause consumers will be more sensitive to the data they share. Once GDPR comes into force, 53 percent say they would opt out selectively based on brands they trust and 24 percent say they would opt out of as many brands as possible. Retailers now have new impetus to become trusted brands, and to provide enough value back in return for shoppers providing their personal data.
Consumers aren’t yet ready to give up their personal data because retailers aren’t demonstrating real value to consumers with meaningful personalization. As Cloud IQ points out, getting an email with my name on it does not equal personalization. In fact, it reinforces the notion that individuals should remain very guarded in giving up personal data or allowing personal data to be used.
Taking a more empathetic stance is required of retailers. Retailers need to start being more forthcoming in explaining to customers what data they are collecting and using. They need to explain a clear benefit to the customer in how this data will be used. And then they actually have to show proof via high-value personalized offers and content to customers.
This issue is incredibly impactful in my world of health, healthcare and wellness. Patient/person-generated data like mood and stress, eating habits, activity and financial health all shape peoples’ health status. Having a 360-degree view of the person beyond the healthcare claim (that is, what’s in the pharmacy and health plan database) can help coach and nudge people toward health. If consumers aren’t willing to share these data due to trust barriers, we’ll not be able to move the needle on health care costs. Self-care and health engagement/activation underpin our ability to reduce unnecessary healthcare spending, as well as promote prevention and add life to years, not just years to life. Unfortunately, HIPAA doesn’t cover patient-generated data from wearable tech, retail receipts, and other important information that represent the social determinants of health.
Instead of “ready, set, shop” the offer of deep personalization has been more like “ready, set, stop.”
We’ve been hearing about personalization for years and so far it has only been lip service. I get daily email blasts from retailers that think they are personalizing the experience by addressing me as “Dear Bender.” They still can’t seem to get my size right and I am rarely interested in the items that are “selected especially for me.”
Until retailers can get this tiny amount of personalization right, as a consumer I am not ready to give them more. Participants in our focus groups seem to agree – what’s really in it for them? Perhaps consumers will be willing to share more when they see what sharing will actually do to make their lives easier.
Consumers are generally adrift in a sea of different terms of service, privacy policies and services — nobody has time to map out all their personal data and the people that are gathering it and even if they could, they can’t know who’s getting the data second hand.
That all adds up to say that consumers are generally resigned to the idea that if they participate in the digital world they’re going to be tracked. The question isn’t whether consumers will let you have their data — they will — it’s whether they’ll feel good or bad about it when you personalize.
Good personalization gives the consumer a sense of what data was used to make a recommendation. A good rule of thumb is to tell a consumer why something was personalized to them. For example, “recommended because you liked X and Y” etc. People don’t want their data used to stereotype them, “recommended because you’re an old white guy” is not gonna feel right — but they’re happy to be personalized on more truly personal criteria like previous purchases, etc.
We conducted a customer panel discussion at GlobalShop on “Technology and the Path to Purchase,” and the message we walked away with was clearly stated: “We want to date technology, not marry it.” Brandon is right, it does come to trust and experience with the brand. And the acceptance of sharing of personal information will continue to roll out. We always say that 10% of your business changes every year. Think of it: When credit cards first hit the scene (remember?), many people insisted on never using anything but cash. And ATMs were greeted with “I only do business with real people.” Again, experience will create the growth.
We should always think about personalized data that users would be happy to share, data that is not sensitive and should be kept “secret.” Then the whole question is how to present it. I believe a personalized video is a great tool. It talks to each of your clients, surprises them with personalized data and is fun to watch.
Perhaps retailers should be asking themselves what data would their customers willingly share with friends vs strangers. Somewhere in the middle lies the answer for personalization. Most consumers wouldn’t share personal information about political preferences, family contact info, or social issues with anyone other than their closest friends or family. So why would a retailer think they would rank in the same category with their shopper? That said, it’s pretty clear the majority of consumers now expect some level of personalization when shopping — certainly something based on knowledge of past purchases with the retailer as a baseline.
Your customers share their most inner, personal sensory and aesthetic preferences with you, their retailer in each and every purchase they make, keep or return. Daily, individual customers tell you, their retailer, what they like and do not like, in real time. Retailers have had no means to translate this treasure trove of individual customer preference intelligence into individually relevant offers, until now.
Preference Shopping Science knows why a customer “loves” a product, translating individual customer preferences into highly relevant, individual product recommendations. All the demographics, political party, social posts are distractions from the bottom line of why people buy a product. Highly unique, highly subjective, individual human sensory preferences. Have you ever gone through a rounder of 150 jackets in under a minute? Did you consciously have to stop and think about each jacket? No! Your unique, individualized, systematic biases [aka individual sensory preferences] automated 95% of the process. Answering the sensory preference question? Why we fall in love with things.
You’ll also want to look at the current study results of SAP Hybris, “Top Reasons Why Consumers Break Up With Brands,” described in Marketing Charts this past week. Top reason why consumers break up with brands was: “Used consumer’s data without their knowledge.”
There are two hurdles to get over the consumer’s fear of sharing data. The first is a breach that leads to identity theft. The second is that the consumer doesn’t trust the retailer enough to not spam or waste the customer’s time. Assuming the first hurdle isn’t an issue, it is up to the retailer to prove value in exchange for information and a right to send relevant (personalized) marketing messages. If the retailer doesn’t abuse the privilege, then there is an opportunity to get more business and build a trusting, loyal relationship.
My advice is a simple one, start slowly with your requests for information. Show you can be trusted and build up the value over time with customers. Once a retailer has established contact with the initial data request, a fair return, then the retailer has earned the opportunity to ask for a little more information to develop the offering. Don’t start with a Spanish inquisition. It will simply drive people away.