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Data-driven marketing
and consumer
privacy concerns:
Finding the right
balance

Author: Mike Elgan

Data-driven marketing is the practice of delivering relevant content to your customers based on the information you've gathered about them. Before data and personalization, brands had to generate demand for their products or make assumptions about their audiences using generalized data. But thanks to the internet and mobile devices, it's possible to communicate with heightened awareness about your market. However, the connected world in which we live has also raised questions surrounding data privacy concerns.

Customer expectations nowadays require companies to take a more personalized approach to marketing to be successful. A data-driven approach enables you to collect data and use that data for a better customer experience throughout the entire customer life cycle. More importantly, it allows you to communicate the right message at the right time, based on where the customer is in that cycle, increasing engagement and conversion rates.

But the secret to meeting and exceeding customer expectations and making this personalization work is trust, which is earned through responsibly managing your customers' data. When it comes to data privacy concerns, you have to strike the right balance between data-driven marketing and your customers' privacy.

Data and marketing: Data privacy concerns

Though data-driven marketing offers clear benefits, many consumers are also concerned about the collection and use of their data.

To learn more about data privacy concerns, Verizon surveyed 6,000 consumers in 15 countries to better understand customer expectations and how consumers feel about sharing their data with brands. Less than half (48%) said they're comfortable sharing personal data with brands. One-quarter said they're not comfortable with the practice at all.

Some consumers feel they have no choice; 24% of those who expressed discomfort or ambivalence feel there's no good alternative to sharing data.

That perspective is important. But it's not the whole story.

Data-driven marketing: The privacy paradox

The privacy paradox is the inconsistency between consumers' concerns expressed (in, say, surveys or opinion polls) about personal privacy and their actual online behavior. People may say they oppose sharing data with brands but often willingly and knowingly share it for personal benefits. They say one thing but do another.

So, do consumers want to share their data in exchange for personalization benefits? It depends.

Most consumers prefer and expect data-driven marketing, but it depends on how you use their data for personalization. For example, a consumer may welcome a message that highlights a big sale at a nearby store. But if the message pops up as the consumer walks in front of the store (indicating that the company "knows where they are"), they may find this unsettling. In both cases, the key data is the consumer's location. What's different is how the company uses their location data.

Many consumers also object to receiving advertisements for products they recently browsed online. This is especially true if they actually purchased the product. (This advertising practice is called "retargeting," whether it happens before or after a purchase.) In fact, Google deemed this practice so objectionable that the company recently decided to stop doing it with its ad system.

Consumers' data privacy concerns aren't just about what your brand does with the data, but what criminals could do with it should a breach or hack occur. According to an RSA survey, 64% of US respondents would blame the companies, not the hackers, for any theft of their personal data. Make sure you have strong security and data protection, then communicate that to your customers.

Customer expectations about sharing data with brands have changed over the last 20 years. For example, according to the Verizon report, some technologies, including artificial intelligence and facial recognition, can collect a customer's personal data without any prompts from them. That means it's more important than ever to be transparent about the data you collect and how that data will be used.

How to find the right privacy and personalization balance

The sweet spot is to find the right balance between data-driven marketing and privacy. Customers usually appreciate personalization if you do it right. To help minimize consumers’ data privacy concerns, follow these best practices:

  • Foster a customer-centric culture.
  • Maximize the quality of data you collect and use.
  • Favor anonymized or aggregated data in cases where that kind of data is just as effective. Don't gather data you don't need.
  • Give consumers control over how their data is used.
  • Make sure personalization is used for high relevance.
  • Get help, if necessary, from compliance, public relations and legal advisers to craft the right balance between personalization and privacy.
  • Make sure your data-driven marketing policies and practices are consistent with your overall data privacy efforts.
  • Treat customer data with the highest priority for data security, using best practices and technology for right-sizing access and protection against data exfiltration.
  • Operate under the major privacy requirements, such as the European Union's General Data Protection Regulation (GDPR)—even if most of your consumers aren't in Europe. Embrace both the letter and the spirit of the law.
  • Be transparent, clear and concise. Don't communicate with a large amount of legal jargon and an exhaustive account of what happens with the data. Emphasize the benefits so consumers can make an informed choice.

By embracing these best practices and handling customer personalization with competence and sensitivity, you'll earn the trust that makes personalization a powerful element of great customer service.

Discover more ways to establish and maintain trust with your customers in A Matter of Trust.

The author of this content is a paid contributor for Verizon.