Editorial
The Gist
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Trust matters most. Customer trust is the foundation of successful personalization. Without it, even the best CX strategies fall flat.
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Transparency builds loyalty. Clear communication about data usage helps customers feel secure and more willing to share personal information.
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Less is more. Collect only essential data, prioritize zero-party data, and let customers control what they share.
Customer trust is your most important competitive advantage. However, with the rise of data concerns and the demand for personalization in marketing, businesses are now struggling to maintain customer trust while enhancing their brand experience.
Eighty-one percent of customers prefer companies that offer personalized experiences, and 63% of consumers are annoyed with generic ads. Businesses that offer personalized experiences see a 10-15% increase in revenue compared to brands that don't.
The problem, however, is that personalization cannot happen without data. A Pew Research survey revealed that 81% of the public believes that the risks associated with modern-day data collection outweigh the benefits. Customers want personalized experiences, and brands want to deliver it. But, customers are not comfortable with brands using their personal data.
How can you meet expectations by delivering personalized customer experiences without compromising the trust people have in your brand? The answer lies in privacy-first personalization.
Table of Contents
- Why Customer Trust is Critical for Brand Success
- Privacy-First Personalization for Stronger Customer Trust
- Transparency and Control in Privacy-First Personalization
- Core Questions Around Privacy-First Personalization in Marketing
Why Customer Trust is Critical for Brand Success
Brands have come to realize that customer trust is not just nice-to-have. It’s become the cornerstone for a brand's success and survival. The way a company deals with customer data is one of the biggest determining factors of trust. Eighty-three percent of consumers refuse to do business with brands they don't trust.
Customers prefer personalization in marketing, but they lose their trust in brands that adopt sneaky strategies for data collection. According to a recent survey, 78% of consumers have avoided a particular website and 67% have decided against making an online purchase because of privacy concerns.
Personalization is great. It can help improve your bottom line and build customer loyalty. However, your personalization strategy can quickly backfire if the customers feel queasy with how you use their data. That’s why it is important to strike a balance between privacy and personalization to make sure you can walk the tightrope of customer trust without risking a destructive fall.
Related Article: Why Most Brands Fail at Customer Loyalty (And How to Succeed)
Privacy-First Personalization for Stronger Customer Trust
Personalizing customer experience while respecting privacy is possible. A privacy-first personalization strategy can help you prioritize your customers’ privacy, address their data-related concerns and still deliver a personalized experience that helps them stay satisfied with every interaction they have with your business. Here are a few ways you can adopt privacy-first personalization in marketing and CX campaigns.
Be Transparent
Nothing builds trust more than transparency. If you can be transparent with how you use your customers' data, you may find them willing to continue sharing what they already share or even give you more. That's the power of genuine customer trust. However, you need to build transparency beyond jargon-heavy privacy policies and shrouded disclaimers of data usage for this to happen.
As a first step, consider simplifying your privacy and data usage policies so they are accessible to the general public. Remove the jargon and tell your customers how you collect their data, how you use it and why you need it.
Inform customers of any updates or changes to your data collection methods or privacy policies. Be clear if you are sharing their data with your partners. Don't forget to inform users of their rights when it comes to data. Tell them they can access, change and erase their data whenever they want to.
Getting granular with the details is critical. Be explicit about the kind of information you are collecting. Is it personal information like name, zip code or date of birth? Are you also collecting demographic information?
In a famous example of the problematic ways companies have used customer data, Target was found mining their customers' data to figure out when a customer was pregnant, even before she had shared the news with anyone else. Imagine yourself as the customer and the damage something like this would do to the trust you have in the brand.
You don't want to end up in a similar position. Be straightforward about the how, why and what of your customer data collection and usage. This will not only help you avoid losing customer trust but will actually reinforce and enhance the trust your customers already have in you.
Give Control Back to the Customer
It took a lot of public backlash for companies like Facebook to realize the importance of letting customers have a say in how their personal information is used. And by the time Facebook realized the importance of user trust, the general public had already lost the faith they had in one of the leading social platforms.
This is why forward-thinking companies now understand the importance of letting customers control data collection. This can be done by using consent management platforms (CMPs). CMPs are software programs that can help you collect and manage customer consent as they visit your website. Having one of these installed can help make consent collection and management a breeze. Not only that, but these CMPs also store proof of consent in case you find yourself in a regulatory audit.
Empower your customers by giving them granular control that goes beyond simply letting them choose whether they want to share their data or not. Let the customers decide if they want to share their data, what type of data they’ll share and how much of it they want to share. Allow easy access to preference centers so they can opt out of data sharing or change their preferences whenever they want.
Allowing the customer to have a say in how you use their data can have a huge impact on brand loyalty and perception. It can help you acquire critical personalization data while building trust with the customers.
Make sure you demonstrate your commitment to customer autonomy when it comes to data sharing, across all touchpoints if possible. This will help inform customers that you are committed to respecting their privacy, and it may help you get more people in the sales funnel.
Rethink How You Collect Data
Seventy-three percent of the data collected is never used. That’s because many companies collect every possible data point, but they can only use a small percentage of it. This leaves them with massive volumes of data siloed in their systems, which increases data collection and cleaning costs. Collecting unnecessary data also poses an increased risk of damage in case of a data breach.
Collect only the data you truly need. If you are selling plastic spray bottles, you don't really want to know whether the target audience enjoys reading books or watching movies. Adopt a minimalist approach here, and collect data that is in line with your product or service and can actually offer value. Besides that, see if you can use aggregated data instead of granular individual-level information. Go for aggregated data wherever possible.
Consider Using Zero-party Data
The availability of zero-party data can make all the difference in your efforts to deliver privacy-first personalization. Zero-party data refers to the information that customers willingly share with the brand while knowing the brand may use this information for personalization, marketing and other purposes. Surveys, quizzes and polls are all ways you can collect zero-party data.
A grocery store trying to personalize the ads experience on their website can offer a quick this-or-that quiz to see what their customers like having for breakfast, for example. They can then use this information to run targeted ads when people are shopping for breakfast essentials. If customers willingly share this information, they won’t feel uneasy at an ad that seems to know exactly what they like for breakfast.
Customers expect some form of value in exchange for information. For example, many skincare brands use “Find what works best for your skin type” quizzes to collect customer preference information. Other brands offer discounts in exchange for someone’s email address. In the first case, the value is issue resolution; customers get personalized recommendations for skincare products that would work for them. In the second case, the value is obvious; customers want discounts.
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Meanwhile, Ikea adopts zero-party data collection with the Ikea Family Program. Customers can log in with their information like name, email address, date of birth and where they live. In return, Ikea gives them incentives like discounts.
Zero-party data collection can help you build customer trust and loyalty. The incentive you offer also plays a role here; the value you offer must be worth the information you are asking from your customers. Besides that, this data also allows for more accurate personalization in marketing. It comes directly from the customer, so there is no guessing and connecting-the-dots involved.
Explore Data Collaboration
Seventy-one percent of marketers claim to be using data collaboration platforms. Data collaboration involves collecting and sharing data from various sources. Private partnerships between companies help them share customer data in a closed-loop system.
Many companies like Facebook and Amazon have built walled gardens with sizable volumes of data. Businesses that use these platforms get a chance to tap into this pool of customer data to personalize their experiences without risking compromising their own customer trust.
Data collaboration can help you get a better understanding of your target audience and knit the pieces of your customer persona together. It is also more cost-effective, especially for SMBs who don’t have the resources to deploy independent systems for data collection and analytics.
Before you move forward with data collaboration, make sure to partner with companies that have the same ethical data collection and usage best practices as yours. Remember, customer trust is at the heart of all your efforts.
Related Article: Building a Customer Data Strategy: Key Trends
Transparency and Control in Privacy-First Personalization
In an era of deceptive marketing approaches, shrouded data collection and damaging breaches, customer trust hangs by a thin thread. No business can survive without a customer base that trusts them. This, however, does not minimize the importance of or need for personalization in marketing. Therefore, businesses now face a critical challenge; they have to strike a balance between privacy and personalization to successfully maintain customer trust and loyalty.
A privacy-first personalization strategy can help them do that. By being transparent, allowing customer control and using zero-party data, you can continue to impress your customers with personalized experiences without overstepping boundaries and making them uncomfortable by breaching their privacy.
Core Questions Around Privacy-First Personalization in Marketing
Editor's note: Here are two important questions to ask about personalized experiences in marketing:
How can brands balance personalization in marketing with customer privacy?
Brands can adopt privacy-first personalization strategies. This involves being transparent about data collection, giving customers control over what information they share and prioritizing zero-party data collected directly from customers.
What is privacy-first personalization?
Privacy-first personalization is a customer experience strategy that delivers tailored content and offers while respecting customer privacy. It relies on transparent data practices, customer consent and limited data collection to build trust without compromising personalization.
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