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Finding the Balance: Data Privacy and Customer Insights

This article was published on July 27, 2021

2018 was a turning point for consumer attitudes towards data privacy.

High profile data breaches and news coverage of data-related scandals made the general population aware that their personal data had become a commodity for sale. And when companies weren’t actively selling personal data, some organizations were so incompetent as to leave the doors wide open for hackers to take what they pleased.

For example, 78% of US consumers surveyed were aware of the Cambridge Analytica scandal. Over half of those people said that one story had made them more concerned about their data privacy. Only a third said they were happy for websites to serve personalized advertising, with the caveat that they wanted to know the website owner would handle their data responsibly.

In the European Union, the GDPR came into force, handing power to the individual and making privacy the default for EU residents. That same survey of American consumers saw 68% of respondents express a desire to see similar protections in the US.

When it comes to customer communication, though, the story is somewhat different. In the survey quoted above, most consumers were unhappy for websites to use data in order to deliver targeted advertising. In that scenario, the benefit lies with the website owner and the advertiser. What if sharing their data benefits the consumer?

Research conducted by the UK’s Direct Marketing Association (DMA) suggests that, over the period 2012 to 2018, consumers increasingly understand that “the exchange of personal information is essential for the smooth running of society”. Similarly, 46% of those surveyed said they believe they receive improved service in return for sharing their data.

Based on their research, the DMA identifies three types of consumer:

  • pragmatists (50% of respondents): they’re willing to share data depending on what they get in return
  • fundamentalists (25%): they won’t share their data willingly, no matter what the benefit
  • unconcerned (25%): they don’t care if organizations collect and use their personal data.

The trend over the five years of the research shows that more people are becoming either unconcerned or pragmatic about how companies use their data. However, it might be that the full impact of the 2018 scandals and breaches is yet to be seen.

Perhaps more importantly, people care differently depending on the context within which their data is used. An opinion piece by Retail Systems Research hints at why, and it comes back to there needing to be a tangible benefit to the consumer themselves.

Work Out Where You Are

So, how can you create a 360 degree view of your customers, build an omnichannel conversation with them, and individualize the customer experience while respecting their privacy?

The key is to be conscious of how your business makes use of personal data and what the trade-offs and benefits are for customers.

If your business is covered by the GDPR, you might have recently conducted a data audit. A data audit is an honest, exhaustive review of all the points at which you collect and process personal data, along with the legal justifications (or lawful bases, in GDPR terminology) used and permissions gathered. For example, your audit might included something like this:

You can then grade each of these according to whether you’re doing the right thing legally and also where the balance lies between the benefit to your organization and the customer.

From there, you have an informed starting point to ensure that the data you collect and use can be justified in serving the customer.

Be Transparent

Once you have a clear picture of your organization’s data use, be upfront with your customers. Tell them how you use their data and, most importantly, explain why.

Let’s say you’re a retailer who tracks each customer’s journey through your website. Make it clear to customers how that enables you to offer them a better service and personalised offers. The DMA survey showed that 32% of respondents were happy to trade their data in exchange for discounts, regardless of whether they already trusted the organization.

Of course, telling your customers how you use their data is, in itself, a balance between boring them and informing them. The UK’s Information Commissioner’s Office has practical advice on how to meet the GDPR requirements, if they apply to you.

Finding the Balance

Although consumers are more aware than ever that companies use their personal data, that’s not to say that we’re likely to go back to a time of true anonymity.

On the company’s side, the costs of acquiring customers are often too high to justify a world in which every transaction is a one-off, every interaction is anonymous, and every experience one-size-fits-all.

For individuals, the benefits of curated experiences, targeted offers, virtual assistants, and all the other ways in which data can deliver them more, are too valuable to turn down.

The key is to find the balance between using a customer’s data to better serve them and, frankly, being creepy. When something is as easy to collect as data, it’s tempting to forget that there are limits to good taste. New laws and a growing awareness of data privacy is starting to enforce those limits. To serve your customers well, tell them how you use their data and why, then demonstrate its value by using that data well.

Vonage staff

Vonage staff

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