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Data As Currency: Personalization With Permission Increases Share Of Wallet

  • Written by  Brian Cleary, RedPoint Global

0aaaBrian Cleary RedPointGlobalThe scales of power are tipped in favor of the consumer. With a single click or tap of a button, consumers can order anything they want and have it delivered in mere minutes to their doorstep. But it’s no longer enough for brands and retailers to have a one-way conversation with customers. The majority of individuals demand a two-way dialogue. That means companies must not only streamline the checkout process, they also have to provide consumers with a personalized experience along the way.

The shift from transactional to meaningful customer relationships requires data from the consumer to personalize the process. But just as consumers are in control of their path to purchase, they are also in charge of their personally identifiable information (PII). They can enable push notifications or text messages to alert them about the next best offer, and they can certainly choose which data they want to allow brands and retailers to have access to. They expect that brands will request permission to use their data — and if/when they hand over their information, they want it to be used to enhance their experience. These new levers of consumer power are driving changes in marketing behavior.

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Brands that value the consumer’s choice and preferences, and prioritize privacy, will increase their share of that consumer’s wallet over their competition. Those that do not face serious consequences — as evidenced by the backlash surrounding Facebook’s privacy mishaps — and risk losing consumers’ trust and business.

The Data-Value Exchange

Customers, especially Gen Y and Z, are willing to supply brands with their personal data on the condition that they have transparency and control over their own information. Consumers understand that personal data drives personalization in a modern, omnichannel world. In exchange for their data, they not only expect value, they also demand transparency and control over their information.

Research from the Harris Poll study commissioned by RedPoint Global revealed that 54% of consumers are willing to share personal data in exchange for a better customer experience. A survey from Accenture echoed similar sentiments. About two-thirds of consumers said that they are willing to share PII in exchange for a perceived value, and one-fourth said they are willing to share PII for better service or the ability to choose which data is shared with third parties.

A Matter Of Trust

While most consumers understand that personal data drives personalization, providing a brand with PII does not give marketers carte blanche to use customers’ information however they see fit. According to the same Harris Poll survey, more than half of consumers say it is very frustrating when a brand sends their personal information to other companies, and they will be less likely to shop with them or use their services in the future. When a customer interacts with brands and retailers, they expect their information to be safely guarded.

Research shows that a majority of consumers will hesitate to transact with companies that fail to protect their personal information, regardless of whether that action is unintentional (hacking) or intentional (selling data). Anything less than complete transparency and control over their own PII could result in a consumer switching brands or a complete loss of business. Once a brand or retailer loses a consumer’s trust, recovery is often dependent on two factors — quickly repairing the trust and providing value that consumers will say is worth the risk of exposed personal information.

In the Accenture survey cited above, four of 10 consumers said that their trust in a brand or company goes up when a breach is handled swiftly and correctly. And eight in 10 said that trust is a key driver of brand loyalty. This tells us that consumers will give the brands they like the benefit of the doubt when it comes to protecting PII if it’s used to enhance the customer experience.

Fragmentation, Friction, And Frustration

What consumers ultimately mean when they talk about better customer experience is a desire to be recognized across an omnichannel journey. Case in point, the Harris Poll survey found that 63% of consumers expect personalization to be part of the standard service they receive. Asked to define personalization, consumers rated “knowing I’m the same customer across all touch points” as second only to “sending special offers available only to me” as the most effective ways a brand can personalize the experience. A customer who makes an in-store visit may expect a retailer to know about online research they did on that retailer’s web site that preceded the visit. Or if a customer places a phone order for a provisioned smartphone, there is often an expectation to pick up the phone at the carrier’s retail store the next day.

Customers understand that enabling this seamless experience across all touch points requires the sharing of personal data, and they are willing to make this exchange because doing so reduces friction and improves the personalization of the customer experience. However, retailers that don’t get personalization right put their own businesses at risk; in fact, personalization failures cost U.S. firms $756 billion and a total of $2.5 trillion globally.

A Personalization And Privacy Balancing Act

Fragmented systems and siloed customer data impede the ability to provide the frictionless, personalized customer experience that consumers expect. Consumers faced with friction are less likely to entrust a brand or retailer with PII. Conversely, companies that eliminate fragmentation will be better positioned to deliver the value that their customers expect, and in return will have a greater chance of being entrusted with PII. When a company is transparent about how a customer’s data is being collected, stored and used, the customer is more apt to share the personal data that is necessary to personalize the experience.

With GDPR and other data regulations taking hold, concerns around privacy and compliance will continue to be top of mind for consumers and businesses. Consumers understand that they wield power over their data just as they understand that their information is the currency in the personalization economy. Brands that embrace the empowered consumer and balance their privacy concerns with their personalization needs will ultimately emerge victorious.


 

As RedPoint Global VP of Solutions Marketing, Brian Cleary is responsible for ensuring that the voice of the customer and RedPoint’s key markets are reflected in our technology roadmap, as well as RedPoint's go-to-market approach. Cleary brings more than 20 years of success in directing product management, marketing, and sales strategies for emerging software companies and top-tier enterprise software vendors.

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