Personalization vs privacy – finding the balance with your customers’ data

With businesses placing more and more emphasis on customer-centric policies, personalizing the customers’ shopping experience is very much a must these days. This not only keeps the customer happy; it also pretty much ensures the customer will bring repeat business, and hopefully also generate positive word-of-mouth referrals.

However – you can’t personalize the customer experience without access to private data, and customers want their data kept secure. Can you do both?

What does privacy and personalization mean?

One of the prime goals of online marketing is to ensure that customers have an enjoyable experience. In order to personalise the experience and to make customers feel special and individual, personal information from the customer is utilised.

And that’s where things get tricky! Where does the line lie between the ethical use of personal data and the invasion of privacy, and how are companies supposed to tread that fine line successfully?

The protection of people’s data privacy is a big issue nowadays. People are deeply concerned about the safety and security of their online data. If it comes to light that a company is guilty of poor privacy practices, it can be hugely detrimental to that business.

One need only think of Mattel’s disastrous ‘Hello Barbie’ campaign and the Facebook and Cambridge Analytica data breach debacle, to realise the damage this can do to a business.

Businesses somehow need to keep customers happy by personalizing their user experience by utilising sufficient personal data, whilst still observing ethical data privacy policies. Not an easy task, as it means dealing with the so-called privacy paradox.

The great privacy paradox

The privacy paradox lies in the conundrum around the fact that:

(a) Companies want and need personal data from their customers in order to personalize their experience. This not only makes the customer’s experience more memorable, but helps boost the business’s conversion rate.

(b) Customers say they don’t like businesses getting their data.

(c) But customers seem perfectly willing to give businesses their personal data quite freely.

It is also a fact that the line between ‘private’ and ‘public’ has become much more indistinct over recent years. Every single day, multitudes of people make huge amounts of private information (pictures, videos and highly personal data) freely available in the public domain. So actual online behaviour seems to fly in the face of concerns expressed about the importance of online data privacy. Therein lies the privacy paradox!

Online privacy-related studies suggest that online users vary significantly in their perceptions and attitudes regarding online privacy, and the degree of importance they attach to it. Most people seem to regard financial, medical and information about their families as pretty much sacrosanct, and are less concerned about their media usage and shopping behaviour and preferences being known.

How should businesses reap the benefits of personalization without running the risk of breaching valid privacy principles?

Stick to the letter and the spirit of privacy principles and laws

Personalization should never come at the cost of legal compliance. Businesses must understand and comply with legal and ethical requirements as laid down in the GDPR guidelines. Your customers must be confident that the information they give you is safe and secure, and that you will deal with it ethically and responsibly.

Be transparent, and don’t overwhelm your customers

Tell your customers how your data is collected and get them to give their consent as stipulated in the GDPR principles. Your communication about data protection must be clear, easily understandable, and concise. Don’t expect your customers to wade through interminably long privacy notices!

Personalization and data privacy policies must be in sync

Collect all your data in a transparent manner, collect only data that you absolutely need, and keep it absolutely safe.

Avoid ‘inappropriate tactics’ like the plague!

Don’t use ‘push’ notifications and customers’ locations to personalize recommendations. These tactics make customers uncomfortable as they regard them as invasive. Rather just listen closely to your customers and take their feedback on board diligently.

Make use of anonymised and aggregate data

This ‘safer’ type of anonymized data is more acceptable to customers, and it evokes a lot less suspicion than more hyper-personalized services do.

Your whole brand and business must address the personalization and data protection issues

If you’re going to earn customer trust, you need to make sure everyone in your business is on board regarding data protection and privacy. Everyone involved must also be trained in the ethical use of data. This will earn your customers’ trust and make them more willing to sharing their data with you.

As mentioned in a noteworthy SAS study, businesses that treat their customers’ data with diligent care will be rewarded, whereas those that don’t run the risk of losing their customers as a result of the loss of their reputation.

A quick checklist for balancing privacy and personalization

We suggest you measure your data collection strategies against this straightforward checklist to ensure that you adhere to legal and ethical principles.

• Transparency, transparency and then transparency yet again, because we live in online goldfish bowls! The more open and transparent you are, the better you will be able to balance customers’ privacy with ethical data collection and effective personalization.
• Ensure your data collection is purely focused on the customer’s needs and with the aim to improve their interaction with you.
• Always respect the customer’s decision. If they wish to move on, facilitate access to their data to make the transition problem-free.
• Build an ethical, principled and well-trained marketing team whose second name is compliance with GDPR legal and ethical principles.
• Focus on building customer relationships based on trust and confidence.