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PHOTO: Deividas Toleikis

Privacy is a complicated beast. Ask any C-Suite executive that is trying to develop and implement General Data Protection Regulation (GDPR) strategies, particularly in light of the recent rulings against Google in France and Facebook in Germany. However, there is increasing evidence that while online shoppers and other users are concerned about protecting their online identities and data, a growing number are prepared to give up some of that privacy in exchange for a better digital customer experience (CX).

Customers Will Pay for Customer Experience

This is obviously of considerable concern to online businesses and a great deal of research has been done to find out what is going on. Because many of today’s shoppers are digital natives, they have high expectations for their digital experiences.

On the positive side, Eli Finkelshteyn, CEO of Constructor.io, said that according to the Customers 2020 report by Walker, 86 percent of buyers are willing to pay more for a better CX. On the negative side, 39 percent of respondents to the Riverbed Retail Digital Trends Survey decided to shop elsewhere after having a negative digital experience, and 38 percent shared that experience with their family and friends. “Retailers are starting to realize how important giving the customer a tailored, personalized experience is, and those who don’t will eventually lose even their most loyal customers,” Finkelshteyn said.

A few years ago, most retailers tried hard to build their technical edge in-house, with mixed results, he said. Now, retailers realize that much of the tech that will power the digital experiences of the future is too risky and difficult to build themselves, and many of the strongest competitors have taken a different approach. “They’ve realized that they can build a better digital experience by focusing on deeply understanding what the most promising technologies are, then bringing in software from best-of-breed partners that rapidly lets them test and integrate that technology and give their users a better experience faster than their competitors,” he said.

According to Accenture's 2018 Global Consumer Pulse Research, 61 percent of customers stopped doing business with at least one company last year because of poor CX. Today's customers are aware that there is a degree of privacy that they must give up in order to get the experience they want.

Related Article: Data Ingestion Best Practices

Personal Data for Better Customer Experience

However, in order to do this, online customers need to provide certain personal information to retailers. Paige Musto, VP of corporate marketing at UserTesting, argues that we have entered the "Age of the Experience" where consumers are more willing than ever to provide certain personal information in exchange for a better customer experience. The demand for more personalized experiences is being driven by the consumer who tends to find themselves frustrated when a brand fails to deliver relevant, tailored offers and content. There are also many ways now that companies can solicit demographic/preferential data on their customer without being intrusive, for example, a personality quiz or a quick poll.

“This customer data is easy to capture and can give the company insight into the fears, aspirations and goals of their buyers, which in turn can be used for hyper-personalization of ads, webpages, emails, [and] chatbots,” Musto said.

Building Customized Experiences

Given the availability of technologies that can capture and analyze massive amounts of data, there is considerable opportunity for companies to use data to improve CX, providing a new level of customization that meets customers' expectations. Customer experience can make or break brand loyalty, so creating an experience that caters to customers' specific needs can give companies a big leg up. Privacy is of course a concern to customers, but they are open to giving out sensitive personal data for better CX in certain situations.

Sitel recently conducted a survey and found that consumers (about 33 percent) are most willing to share their personal information with companies in the banking and financial services industry for a better customer experience, but less willing with travel (17.92 percent), hospitality (15.92 percent) or retail (15.33 percent) companies. “While there's a clear appetite for better customer experiences, and consumer expectations only continue to grow, it's now the job of the company to prove that customers' private information will be safe and secure in their databases,” Mike Small, CEO of Americas at Sitel Group, said.

Related Article: Facebook's Difficult Relationship With Data Privacy

Data Use Limitations

This does not mean that online companies can do what they want. There are clear limits in the minds of consumers. Other research, this time from Jebbit, has shown that consumers are fine with sharing their data in order to have a more personalized digital experience — provided they see value.

For the second quarter in a row, three companies (Google, Amazon and Visa) that collect some of the largest amounts of consumer data, are also among the top-ranked brands. This suggests that consumers aren’t opposed to companies collecting information on them, but that the data they provide must be immediately and safely used to provide better CX in order for consumers to trust brands.

Additionally, the research shows that the number 1 factor leading to distrust with consumer data is brands asking for too much of it. When asked what would lead a consumer to trust a brand more with their data, more than 66 percent indicated that only storing and activating data that the consumers themselves provided to facilitate more relevant purchases is what’s most important in building trust. “This idea of consumers controlling the data that brands collect and use for personalizing experiences is at the core of whether, and when, personalized experiences are necessary and provide value,” Jonathan Lacoste, president of Jebbit, said.

Some data points from Selligent's white paper on digital marketing in the age of the “entitled” customer are telling here. The research, which is based on responses from 7,000 consumers on their preferences and deal-breakers in online transactions showed that:

  • 40 percent of global respondents noted they are "more annoyed" by companies now compared to five years ago. If a brand’s request for data is deemed "too much," some consumers are willing to abandon the brand altogether, with nearly 30 percent of respondents agreeing.
  • 74 percent of respondents noted that they expect companies to "treat me as an individual, not as a member of some segment like millennial or suburban mothers." The figure was slightly higher (77 percent) when it came to US respondents.  
  • Only 20 percent of consumers are willing to provide data to brands upfront in order to improve their experience.
  •  75 percent of global respondents expressed concern over the threat of a data breach, and 88 percent report concern that their data will be shared across companies without their consent

If consumers feel that there is a real and fair value exchange at play, then they are more than willing to accept that brands have use of their data, said Fleur Horner, Associate Director of The Value Engineers, a brand and marketing research consultancy. We see time and time again that the brands people couldn’t live without are the ones described as "fitting in with their lifestyle." This driver of preference is often synonymous with convenience; something achieved nowadays with the use of data (location, preferences, search history etc.).

“My argument would be that real value is not something like pushing content to a social media feed related to recent conversations a consumer has had — that is covert usage of information and offers little value over and above the off-chance that the content is relevant,” she said.  Those types of events erode trust. For me, it is all down to context — the degree to which the value exchange delivers against a real consumer defined benefit and finally the degree to which that exchange is explicit.