Personalisation vs privacy: why brands must get the balance right

The way we shop is changing. Consumers now enjoy a multitude of new options at their disposal, whether buying online, on a smart device or in-store.

But there is a gap between the brands looking to engage, and the consumers looking to buy. More than a third of shoppers abandon a purchase after a bad experience - in fact retailers are losing $18 billion a year this way. Abandoned purchases are nothing new, but they do have a knock-on effect, with one bad experience affecting the likelihood of a customer purchasing from the brand again. 

Organisations must accept that traditional brand loyalty is being overtaken by “experience loyalty”. Digital-savvy shoppers don’t care much for heritage or expertise. They are more easily guided by the experience of their most recent purchase, price or convenience – and with rival products only a click away, brands cannot afford to ignore the new direction of travel.

While brand loyalty is driven by differentiation, experience loyalty is driven by personalisation. The key to personalisation is data.

The rise of social media, and other channels, has resulted in a proliferation of data, providing consumer product companies and retailers with an unprecedented opportunity to tap into a wealth of insight. Could a shopper’s geographic location improve their experience? Which mix of stories on a news site encourages the most clicks? Which colors (of shoes or phones) does this user tend to favor?

Yet while there is a hunger for data, the flipside is a mismatch between personalisation and privacy. Anecdotes such as the one about the father who discovered that his teenage daughter was pregnant through a targeted mailer are plentiful. A Capgemini report found that while personalisation initiatives are received positively across the world (80 percent), only 14 percent of retailers are perceived positively by consumers on both personalisation and privacy initiatives.

How can organisations perfect this balancing act, collecting enough data to enhance the experience without collecting too much data, or the wrong type, in a way that treads on the privacy of consumers? This conundrum has prompted The Consumer Goods Forum to develop a set of ‘Consumer Engagement Principles’, designed to act as a framework for how companies engage with consumers and to promote an environment of trust. In an effort to build said trust, one solution that brands such as Nestle and Unilever are trialing is increased transparency in their communication with customers.

Nestle put video primers on its website with some basic questions that would be top-of-mind for consumers, using employees rather than professional actors to better engage and create a sense of trust. Unilever set up a dedicated website to explain its privacy policy, answering the most common questions and concerns to make everything as clear as possible.

This open dialogue between brand and consumer creates trust. But it can’t balance the scales of privacy and personalisation on its own. How many of us actively interrogate an organisation’s privacy policy before engaging with that company? Not many. Consumers are both wary of their privacy being exploited and apathetic over the small print that keeps the system in balance. The complex job of retailers is articulate the true nature of the relationship between user data and the services that depend on it.

This is of course in direct contrast to many existing privacy policies, which are shrouded in legal jargon and hidden away in the far corner of corporate websites. To successfully engage customers in the value of sharing data, companies must not only push privacy policies out of the shadows, but also actively explain the deal customers are getting, quantifying the link between what they share and what they stand to gain.

The nature of the new relationship between customer and brand will vary depending on user preferences and the value the organisation places on different types of data. How much is knowledge of marital status worth, to customer and to retailer? Is postcode more valuable than GPS location?

Those who share basic information should receive a basic level of enhanced personalised service. Sharing more data should result in greater reward. Although the retailer sets the framework, it is the customer who must ultimately retain control.

Retailers face a difficult question. All customers want better service, tailored and personalised to their needs. But not all are willing to share the data needed to make it happen. The only route to a mutually valuable relationship is greater transparency and a more proactive approach to communicating and managing the balance of privacy and personalisation.

By Kees Jacobs, Digital Proposition Lead, Capgemini