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Maintaining the Balance of Personalization and Privacy

Personalization is a marketing technique that creates an individualized consumer experience through data collection and analysis. This approach to marketing is becoming increasingly popular, as consumers want to feel heard and catered to during their shopping and purchasing experience. Statistics say that 50% of consumers have found that personalized ads helped them discover goods that were useful to them. While it has become a wildly successful marketing strategy yielding a 10% uplift in revenue, consumers are concerned about the privacy breach associated with data collection. This dilemma creates a thin line where companies must balance personalization and privacy.  

Personalization requires disclosure of personal information like demographic, gender, search history, and purchasing habits. With this information available, companies can create targeted and individualized ads that appear on a consumer’s phone or computer, often being a product that they’ve previously shown interest in. However, there’s concern surrounding websites accessing personal information when customers use their website or app. Consumers lack the knowledge of how and to what extent their personal data is being used and accessed. In fact, 69% of consumers report they are concerned with how their personal data is being handled and 54% of consumers find that personalized and targeted ads are “creepy.” 

Contributing to a growing skeptical consumer base is the lack of transparency provided by companies and their intentions with consumers personal data. For example, the Terms and Conditions document is often too long and technical for consumers to understand what they are agreeing to. Consumers are frustrated with the unclearness surrounding the collection of data, and the lack of consent in retrieving it.  

Along with growing skepticism, consumer privacy regulation laws are already underway in several states driving businesses to prioritize data security. This includes the General Data Protection Regulation (GDPR), one of the world’s most extensive reforms in consumer data privacy, which forced businesses to reshape their engagement with shoppers and consumers.  

Best Methods 

There is consumer demand for brands that practice ethical data collection methods. Consumers expect their data to be protected, even avoiding companies that could exploit their information. Over-stepping personalization could result in a creeped-out consumer base, so learning how to manage data collection and applying it correctly is necessary. With that, consumers also expect an experience where they feel their needs and wants are being listened to. Maintaining a balance between both will guarantee a satisfied consumer base.  

Transparency plays a key role in data collection. Companies should inform and educate their customers about what information they will be accessing and how they will use it. Incorporating a user-friendly explanation of how your personal data will be accessed and treated will decrease consumer anxiety and skepticism. Long-term relationships with customers are built through transparency and personalization, creating a unique and safe experience for the customer.  

Personal choice is also important in implementing personalization. A consumer should be allowed to deny access to information and still be able to use the app or website. The consumer should be able to make informed choices to consent to data collection policies, including withdrawing consent. This demand for consent in data collection is driving websites into a cookie-less future 

Personalization and Privacy in the Cookie-less Future 

Cookies are text files with small bits of data that websites send to your browser. Often, you will get a notification that asks to allow cookies when using the site. Cookies remember your internet browsing activity and personal information to facilitate internet surfing. However, cookies can make you vulnerable to cyber-attacks, and they jeopardize releasing your browsing history to unwanted parties. 

The movement away from cookies, however, has facilitated the prioritizing of first-party data. First-party data collects accurate data that users allow sites to use like surveys, customer feedback, and email information. Despite email marketing falling out of popularity in recent years, it will remain a staple for safe data collection and first-party data practices. To maintain consumer trust, companies should prepare by starting to understand the implications of prioritizing first party data and safe data management.  

When implemented correctly, personalization is a win-win strategy for both businesses and consumers. Companies will need to assess discrepancies in their data security and explore strategies to balance personalization and privacy. Gaining the trust of your consumers by meeting expectations for safe data collection will be important in implementing personalization. Personalization coupled with safe data collection and management is a profitable marketing strategy.  

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Contributions from Leah Harding

Tags: Sales and Marketing Technology, Marketing and Media Services, Customer Experience