Privacy is Overrated: Ask Your Customers and They Will Tell

6 minute read
David Roe avatar

IBM Retail Whatinformation consumers will share.jpg

Guess what? New research from IBM shows customers are willing to share their personal information, especially if they get something in return.

Excuse us while we yawn ... But doesn't it seem like anyone who ever signed up for something as innocuous as a store loyalty card could explain the same thing? How many people registered for a website during the heady dot-com days, just to get a free water bottle?

And don't even get us started on the phenomenon of too much information on social media, where everyone shares just about everything, for nothing but 15 seconds of fame in return.

So let's overlook the obvious, and see if there are any deeper insights in the research IBM released this week at the National Retail Federation's 103rd Annual Convention and EXPO in New York City.

The Price of Personalization

Say what you want about the unauthorized snooping by the US National Security Agency, Facebook's creepy practice of combing through your unpublished posts and comments, the way companies like Apple tracked the location of its customers without their consent.

Remind someone how Google and Microsoft machine scan email to harvest information for personalized advertising — or the fact that Gmail users have no right to expect privacy. Or explain how retailers use super spy cams and other technologies to analyze store traffic, set staffing levels, reduce check-out line backups, monitor inventory and "improve the overall customer experience."

Most people don't seem to care.

Oh, sure, there are select minorities: vociferous privacy advocates, technophobes — Utopian dreamers. But then there is everyone else. And most people seem willing to tell you just about anything, even before you ask, with little regard for privacy.

As big data has ballooned, so have the options to create more targeted and almost intimately targeted messages, in the online world and beyond. Companies claim customers not only prefer personalized marketing: they expect it.

IBM — which, we might add, sells marketing software "to help you deliver a personalized conversation across all channels and gain deep insight into each customer's interests and interactions" — is just the latest company to confirm the obvious. According to the research previewed at the NRF show this week, many consumers are prepared to compromise some of their privacy in exchange for a better customer experience.

Checking the Numbers

IBM has already published an executive summary and plans to release the full report in March, which is based on a survey of more than 30,000 global consumers. 

According to the report, the number of people who are willing to share their GPS coordinates with retailers has doubled over the past year to 36 percent. Another 38 percent of consumers are prepared to provide mobile numbers to receive text messages, and another 32 percent are prepared to share their social media handles.

IBM, as might be expected, is using the findings to promote its big data and analytics business. Jill Puleri of IBM Retail said today’s consumer has been "conditioned by multiple industries — from healthcare to travel — to expect personalized interactions across different channels."

And while she stressed the study shows consumers are willing to share details about themselves, particularly if they receive a personalized experience in return, she added:

It’s imperative that retailers enact a big data and analytics strategy that ensures they use consumer information wisely, gaining their customers’ trust and loyalty by providing value in exchange.”

In other words, show a little respect — both to the customers who are willing to share their personal information and for the data itself. Nothing can cause a brand more damage than a data breach, as Target recently learned.

After a massive security breach, Target's brand took an equally massive hit, according to the YouGov BrandIndex, a daily consumer perception research service. And YouGov’s 2013 BrandIndex has more bad news for the retailer.  After consistently ranking in the BrandIndex’s top 10 brands, Target has now dropped out of the top 20, the company reports. BrandIndex ranks more than 1,100 brands, interviewing 4,300 people each day on their views.

Learning Opportunities

Consumer Expectations

While retailers are investing millions to provide personalized experiences across online, mobile and in-store channels, it seems that customers don’t really expect that per se. They simply expect to use technology in this part of their life, in much the same way that they use it in other areas. 

This is where the IBM research gets a bit more interesting. For example, the five most important omnichannel capabilities for consumers are, in order:

  • Price consistency across shopping channels
  • Ability to buy products online that may be out of stock in stores
  • Ability to track online orders
  • Consistent product offerings across all channels
  • Ability to return goods online if they are not happy with them.

The study also found shoppers are not equal in terms of technology. Rather, they can be divided in four groups:

  1. Traditional (19 percent): use relatively little technology while shopping compared to their peers.
  2. Transitioning (40 percent): use technology to research products before buying in store.
  3. Tech-intrigued (29 percent): uses SoLoMo (social-local-mobile) for everything from browsing to buying.
  4. Trailblazers (12 percent): uses SoLoMo widely, including as an evaluation tool.

While the largest group is those shoppers that are in transition, IBM argues that trailblazers — generally higher income,  optimistic about the future and socially engaged across many networks — are the most significant. These shoppers are shaping the customer experience that other shoppers will expect in the future.

Wait. What?

IBM is a big company. So perhaps it is unfair to expect one department to know what another is saying. Still, it is interesting to note that less than a month after predicting brick-and-mortar will trump online within five years, the company now claims shoppers are slowly but surely moving online. (Should we toss a coin?)

But let's stick to the research. In 2013, IBM found that 84 percent of shoppers made their last purchase in a brick-and-mortar store. Now that figure is down to 72 percent.

IBM Retail Whatinformation consumers will share_showrooming.jpg

While anecdotal evidence has suggested this might be a result of  showrooming — browsing goods in a store and then buying online — the research shows that this is not the case.

In fact, the research found that only about 30 percent of all online purchases resulted from showrooming—  down from 50 percent last year — with 70 percent of purchases made by shoppers that were buying directly from the online store.

Looking for Meaning

Ronak Sutaria, principal researcher at Mindtree Research Labs expects privacy and the use of consumer information by retailers to be put under the microscope more and more as the Internet of Things (IoT) develops. But for the moment, privacy doesn't seem to be much of a concern.

The takeaway? Most of your customers seem more than willing to share their information in exchange for ease, convenience and, perhaps, a nice coffee cup. Just don't spill the data they give you.

Infographics from IBM.