Balancing the Need for Data Privacy with the Desire for Personalized Experiences
It’s rare we go a week these days without reading a fresh headline regarding some large scale data breach. According to Statista, nearly 25 million data records were exposed by data breaches during 2022 and it does not seem that number is likely to fall during 2023.
This has created an environment where the majority of Americans are now experiencing feelings of concern, confusion, and a lack of control over their personal information. According to the Pew Research Centre, approximately 81% of Americans now say that the potential risks they face because of data collection by companies outweigh the benefits.
Trust is at an all-time low. 79% of Americans say they are not too or not at all confident that companies will admit mistakes and take responsibility if they misuse or compromise personal information, and 69% report having this same lack of confidence that firms will use their personal information in ways they will be comfortable with.
No discussion on this topic in 2023 can be complete without a mention of Google’s plans to withdraw support for third party cookies from its proprietary Chrome browser. Following hot on the heels of similar policies such as Apple’s decision to make data collection opt-in on iOS devices, Google is poised to pull the plug on third party cookies by the end of 2024.
This means that responsible companies which want to leverage data to provide personalized experiences need to produce both fresh solutions to alleviate the concerns of customers, and novel methods of collecting that data in an environment where the world’s most popular internet browser doesn’t support third party cookies.
#1 Quizzes
We are seeing an increasing number of big brands such as Ultra and Sephora using quizzes to gather first party data on new visitors to their ecommerce platforms. If a customer logs on for the first time, they are presented with a brief questionnaire which attempts to measure the kind of shopper they are and which products and services they are most likely to respond to. This data can then be turned into detailed buyer profiles which can be used to craft personalized experiences.
"Captivate the user, and understand their intent through consent-based reference data,” said Saritha Ivaturi, VP of Data and Platform Engineering of Guitar Center in an interview with Forbes. This way companies are only obtaining the information that consumers are willing to share, yet still getting valuable insights and customer data that they can use.”
#2 Artificial Intelligence
With platforms such as ChatGPT and its latest iteration GPT4 demonstrating just how far the technology has come over the last six months, AI has been hitting the headlines on the regular for a while now.
Ecommerce brands can leverage this technology to better understand human behavior and create hypothetical buyer profiles which can be used to personalize the shopping experience for real customers. This method is particularly elegant in that it actually just creates the illusion of personalization as it does not collect any data from real people, but can give the appearance that it has.
#3 Build Strategic Partnerships
No person is an island as they say, and strategic partnerships are going to be a key determinant of personalization success as we move into a more data private world. The sharing of consensual data between likeminded brands will provide a way for third-party information to continue to play a role in ecommerce personalization even after cookies have been consigned to history.
"This is about identifying where companies depend on third-party cookies, and finding robust ways to replace them,” says Accenture. "Collaborating with other organizations can help fill gaps in first-party data, expand your reach and increase customer acquisition.”
#4 Transparency
This is where your brand addresses the trust issues the modern customer has with how data is collected, stored, and used by organizations. Make sure you are completely open and honest with them regarding how you collect data, the security protocols in place to ensure it remains private, and the way it is used to directly benefit them during the shopping experience.
Do not hide your data policy behind complex jargon or hide it behind walls of obfuscation. Place it front and center and begin rebuilding the trust which has been eroded by years of irresponsible, opaque, and nebulous data use and communication.
#5 Know the Law
This is perhaps the most important thing you can do to balance privacy and personalization. Ensure your organization is up to speed on all the latest regulations – including those in other parts of the world such as the EU’s GDPR. This way, you will know exactly where the line is and how to achieve maximum personalization whilst remaining on the right side of it.
"Enlist the help of legal counsel as well as compliance and public relations advisors to incorporate the balancing role of privacy with business process and innovation into [your] analysis of marketing, CX, new data product development, security protocols and risk assessment,” says Gartner.
Final Thoughts
The world of ecommerce is changing and retailers need to evolve if they are to continue to provide customers with the kinds of experiences they expect. Years of irresponsible data management have created an environment where trust is at an all-time low, but with a little work and fresh thinking it can be rebuilt and personalized shopping can continue.
Balancing personalization and privacy is sure to be a hot topic at eTail Connect West 2023, being held in September, at the JW Marriott L.A. Live, Los Angeles, CA.
Download the agenda today for more information and insights.