The power of responsible personalisation for brand loyalty

Diane Murray
17 April, 23

Personalisation is everything in today’s digital age, with most consumers expecting to be addressed individually throughout each interaction and experience. Retailers are turning to technologies such as artificial intelligence (AI) to analyse their customer data and better understand consumers’ habits, preferences and individual expectations.

Many customers are aware that their ecommerce experiences are based on data. According to Gartner, 71% of business-to-consumer (B2C) and 86% of business-to-business (B2B) customers worldwide already expect companies to be informed about their personal information during an interaction.

While getting close to customers enables more intelligent engagement, sharing their personal data has become a big issue. There’s a fine line between using data to enhance engagement and utilising it in such a way that infringes upon privacy. Despite expecting personalisation, a KPMG consumer survey has revealed that the majority (86%) of respondents said they feel a growing concern about data privacy, and 40% don’t trust companies to use their data ethically.

Appreciating the value and appropriate use of customer data is vital to avoid compromising customers’ wishes and jeopardising their reputation – bad news travels fast in the digital world.

Building brand trust

It’s important to look first at what privacy means in this age of personalisation and what builds brand trust. It’s probably fair to say that a lack of any real personalisation breeds friction for the customer and isn’t an intelligent approach for a modern business. Using technology to capture their data is the way forward. According to Adobe’s 2022 report, 68% of consumers’ trust in brands increases when brands use technology to personalise their experience.

This responsible personalisation is a power that can give retailers confidence in their relationship with their customers. Responsible use of data and privacy guidelines should be laid out clearly for consumers to understand and strictly adhered to once they tick the acceptance box. Any breach of this trust or security risk is a major threat to the relationship.

Consumers are willing to provide personal information as long as it’s used in a transparent way and in a manner that satisfies them, according to a Salesforce.com report. The benefits come in the form of convenience and improved experience.

Breaking consumer trust

Getting personalisation right is especially complex in a world where consumers can easily switch from one brand to another in a matter of clicks following a single unsatisfactory customer experience.

Retailers must realise that just because personalisation is possible, it’s not always appreciated and must be a choice and also be relevant. The Salesforce survey reveals that only 27% of consumers completely understand how companies are using their personal information.

Consumers are also concerned data may be compromised or sold on. The KPMG survey reveals that 47% of the respondents were concerned about the possibility of their data being hacked, while 51% were worried about it being sold.

What the regulations say

Compliance helps brands assure customers that their data is being used responsibly and can enhance their experience with the brand. But the regulatory landscape is diverse and navigating it can be tricky. While privacy advocates cite concerns on the amount of customer data being collected by organisations, most regulatory requirements allow such data to be used for insights, provided they remain within a certain geographical space, not used for other reasons, or sold to third-party organisations.

There are increasing laws to protect consumers and Gartner has predicted that by 2025, 75% of the world’s population will have their personal information covered by modern privacy regulations to prevent any breaches and increase consumer confidence.

The Data Protection Act 2018 is the UK’s implementation of the General Data Protection Regulation (GDPR). Everyone responsible for using personal data must follow ‘data protection principles’ that ensure information is used fairly, lawfully, and transparently.

The privacy-personalisation balancing act

There are three key considerations for organisations to capture and use data responsibly and in a way that will build positive customer experiences that elevate brand loyalty:

1.    Understand the level of concern

Consumers are willing to share some data, for example to improve their education or national security. But they are more reluctant to share personal data unless they know who has access to this data and how it will be used. This means that marketers and customer experience experts need to understand the different levels of concerns that different types of data bring.

2.    Listen to what consumers want in exchange for their data

Consumers have some clear expectations for trusted brands – trust, transparency, and a sense of control. They are looking for a sense of control over the data transaction – it matters whether information is offered willingly or not. Consent is a big part of building trust and transparency, and long-lasting loyalty. Once there’s trust, the benefits start to outweigh the associated ‘risk’ of convenience and improved experience.

3.    Create a fairer data transaction framework

Customers’ personal information is an investment, like their time or money, and it’s right for brands to find ways to pay them back. Some ways to start creating a fairer data transaction framework include clearly stating responsible use and privacy concerns and strictly adhering to these once terms are accepted.

While it’s vital that communications should be personalised, the level of familiarity in communication should match the level of affinity with the brand. Marketers must ensure every interaction is clear, tested and has potential to increase a customer’s level of digital maturity.

Giving consumers control can build loyalty

There has always been a tension between personalisation and privacy. While consumers understand and accept that brands want their personal data to improve their overall customer journey, there is still apprehension.

Given the growing amounts of data acquired by a brand through a customer’s lifecycle, businesses must develop policies and practices that address consumer concerns around how their data is being collected, used and protected. By becoming more transparent and giving consumers more control over how their data is used, brands can build trust and solidify access to this critical resource – it’s a win-win situation.

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