Data Privacy Versus Personalization: How Do Consumers Really Feel?
Sep 21 2021
The COVID-19 pandemic propelled ecommerce to unprecedented heights: a whopping $861 billion was spent online by U.S. consumers in 2020. According to a recent forecast from eMarketer, that figure will grow to $933 billion by the end of 2021. With the continuation of upward trends, the ecommerce boom is much more than a passing trend.
Customers Expect Personalized Experiences
This explosion of online shopping shifted customer behavior and heightened what they expect from brands. Today’s customers want to feel like they are being listened to and their needs are being addressed. 88% of consumers view a brand’s products as having higher quality if they feel like the brand is listening to their needs. Similarly, 91% are likely to make a repeat purchase if they feel heard.
Due in part to these demands, ecommerce brands have been forced to adjust their marketing strategies to meet and exceed these magnified expectations. The result is an emphasis on more fulfilling customer experiences through targeted personalization, which is built on the collection and analysis of customer data.
Consumers Concerns About Sharing Personal Data Online
Ecommerce brands collect customers’ personal data through website interactions, email, online shopping profiles, paid media, past purchases, social media, and other data collection points. But consumers are paying closer attention as to how brands handle, utilize, and secure this data security. Today, 69% of consumers are concerned about how their personal data is handled by the brands they interact with online.
The most typical data security and privacy threats affecting ecommerce sites and customers include phishing and social engineering, personal password or credit card data theft, malware, and hacking. The unauthorized access to or reuse of their personal data and the illegal sale of private information to other parties are also major concerns for consumers.
Customers Want The Best of Both Worlds
Despite the constant threats to online privacy and security, recent studies reveal that when it comes to data privacy versus personalization, today’s consumers want it both ways.
On the one hand, 79% of consumers are very concerned about their data privacy, and 64% said their awareness about data privacy has increased over the past 12 months. According to the Internet Society and Consumers International, 69% of consumers are concerned about how their personal data is handled by the brands they interact with. 45% of Americans feel the data collected about them can be potentially harmful.
At the same time, 83% of U.S. eCommerce consumers are comfortable giving out their behavioral data for a more enhanced customer experience and 76% of people said they would take a brief survey on an initial visit to a website if it leads to better personalization from that brand. Additionally, 61% of consumers indicated that they’re willing to share personal information with an app or website in exchange for more transparency and control over their data.
Personalization Is A Win-Win For Brands and Customers
While consumers may strike a middle ground between privacy and personalization, the business value of personalization for both ecommerce brands and their customers is undeniable. When done right, personalization is a win-win.
For brands, personalization yields a number of benefits that span the entire customer life cycle, including drawing new visitors to their website, converting visitors into buyers, increasing sales, improving customer retention, and strengthening brand loyalty.
For customers, the value exchange (what they get in return for sharing their personal data) is just as enticing: targeted recommendations, access to exclusive deals and offers, loyalty benefits, and more. Most importantly, customers have an overall better experience with brands that cater to their interests.
How Brands Can Convey A Value Exchange To Earn Customer Trust
As consumers become increasingly aware of how brands are handling their personal data, they are demanding the highest level of data privacy and security. In turn, brands must make sure their customers understand why data is needed and the value they get in return. If consumers don’t see benefits to sharing data with a brand or think it poses a risk, then brands need to rethink what they’re collecting and using data for and ensure they’re being transparent and truthful with customers. This is the best way to ease customer anxieties and earn their trust.
For starters, brands need to convey to customers that their data is being treated with the utmost care and respect. It’s important for brands to be transparent and proactively educate their customers about how they plan to use their data.
To this end, brands must utilize a customer-first philosophy to stay compliant with data policies and to build and maintain consumer trust. This includes dedicating the appropriate resources to ensure data is collected in a secure manner and that plans are in place in case a data breach does occur.
Striking A Balance
Aside from data collection transparency, brands must offer meaningful and consistent products, content, and messaging to keep customers engaged. While the tug of war between privacy and personalization will likely be an ongoing issue, brands can strike a balance in ensuring compliance while creating relevant messaging all along the buyer’s journey and across all channels.