Balancing Personalization & Data Privacy: Achieving Optimal Customer Experience

From a consumer standpoint, which holds greater significance to you: tailored experiences or safeguarding personal data?

While personalized experiences and data privacy may not appear contradictory initially, this query presents a dilemma. Personalization necessitates the gathering and examining of data, while data privacy often involves imposing restrictions on these very practices.

This topic is intriguing because individuals have not definitively chosen a preference between the two approaches.

People prefer personalized customer experiences

Personalized customer experience refers to how each business offers each consumer a unique, customized experience through communication, recommendations, and different methods. This has gotten increasingly challenging in an age when clients can buy your products and services from practically anywhere in the world. According to McKinsey & Company's study, customers today regard personalization as the default level of engagement.

But all of this comes at a cost. And that price is information.

Advanced forms, such as hyper-personalization, involve the revelation of personal data, such as demographics, preferences, browsing history, purchasing patterns, and more, to be analyzed and exploited by the company using technology (e.g., machine learning). This is a breach of privacy because people's data is stored and managed outside of their control.

Growing privacy concerns amongst customers

There has always been a subset of people who have expressed worries about data privacy.

According to the Internet Society and Customers International, 69% of customers are concerned about how personal data is acquired via mobile apps. Consumers becoming more aware of how corporations use their data is a significant factor in the increase in privacy concerns. Previously, consumers were unaware of how much firms collected their personal information.?

However, the public is becoming increasingly aware of how their data is shared online and how it might be misused, and specific examples have sparked outrage and hatred against the companies involved.

But that is not all. Not only are consumers concerned about their data collecting, governments are beginning to intervene and limit data collection.

The General Data Protection Regulation (GDPR) is considered one of the most essential standards governing data collection (according to their website, it is the tightest privacy and security law in the world).?

To begin, consumers must consent to the collection of their data. Companies must not bury their collecting attempts deep inside their terms and conditions; all consumers must plainly understand them. GDPR also requires businesses to give their users the right to view their data, the ability to take that data and use it elsewhere, and the right for consumers to request that you remove all of their data from your records.

All of these changes will necessitate greater transparency with your customers.

Understanding the Privacy Paradox in Customer Experience

The Privacy Paradox refers to the difference between consumer attitudes and behaviors, as well as between the customer's and company's perspectives and actions. It's a constant conflict between a company's need for exceptional customer experiences, with personalized adverts garnering greater attention and remaining longer in the memory, and a customer's desire for privacy. Consumers, on the other hand, desire personalized experiences and will leave those that do not provide them yet refuse to share their personal information. Consumers, on the other hand, seldom take any precautions to secure their data. People frequently surf websites and sign up for items without even reading the privacy policies before inputting all of their personal information.

We must consider this as brands that genuinely care about how customers experience. What can we do to address this disparity?

Five approaches to gaining consumer trust and enabling personalization

1. Coordination of personalization and data privacy efforts??

Regardless of their flaws, the two notions should not be mutually exclusive. You can transparently gather data and keep it secure. One step is to ensure that you only collect what is necessary.?

Do you, for example, need to know a person's location to personalize their experiences fully? The data consumers are least okay with is personal information like their names, telephone number, and living address. Perhaps you only need purchase history and product views, which are less sensitive than medical or financial data.

Also, personalization could learn from customization in this area: personalization is intended to happen behind the scenes, whereas the user drives customization. Depending on your industry and business, there may be ways to allow users to pick how much personalization they want (and thus how much data they want to contribute) and design their customer journey and experiences.?

An organic grocery store, for example, uses voice and AR (augmented reality) to enable individual shoppers to personalize their experience as they shop. Begin a two-way dialogue and allow customers to tell you what they want.

Of course, ensuring that the technology you use respects privacy is vital - a single data breach might cause your clients to lose trust in your business. Pay attention to security standards, use SSO logins if possible, display security badges on your website, etc.

2. Be transparent?

The presence of privacy policies and the opportunity for consumers to provide consent (as required by the GDPR) is critical. Telling people how and why you acquire data should be the standard.?

However, there is evidence that people's concerns grew when they began receiving a "sudden flood of privacy notices" and communications due to GDPR, and they don't feel good about mindlessly clicking consent pop-ups. One probable explanation is that some businesses attempted to misuse or avoid the rule or did not know how to deal with it correctly.

Transparency about how and why you manage data is expected to benefit your customers rather than cause further doubts or concerns. The lesson may be that, in addition to whatever legal compliance policies you must make available (e.g., on your website), you must also make your data protection communications clear, concise, and to the point - rather than supplying clients with long-winded privacy notifications that nobody will ever read.

3. Embrace the spirit of the laws

Whatever we think about customization, the fact remains that the law comes first. Before implementing any marketing strategy, businesses must understand and comply with all legal requirements.?

Laws give individuals confidence that their identity is safe with you and that they will receive actual value in exchange for providing you with their data. This should be your goal and can only benefit client satisfaction in the long run.

As a result, make sure that any acts you conduct help your customers in every way.

4. Avoid using unsuitable tactics

While most customers prefer personalized experiences, there are some practices that they need help to accept. According to a study, 74% of customers believe push notifications are intrusive.

Of course, your audience's perspectives may change; for example, millennials are typically more accepting of diverse uses of technology than GenXrs or Baby Boomers. As a result, it is critical to listen to your clients, solicit feedback, and meticulously measure the outcomes of various personalization projects.

5. Improve your utilization of aggregated and anonymized data

Personalization entails far more than simply analyzing anonymous data from all visitors or customers and creating subgroups. However, this data type is far easier for customers to swallow and may raise fewer concerns than a hyper-personalized service. It's a case of 'work with what you've got.

A cybersecurity paradigm allows digital businesses to acquire and share aggregate information about user activities while protecting individual users' privacy.

Create a Personalization Strategy for 2023 and beyond

An excellent digital marketing plan begins with a great team. Personalization is projected to remain a critical component of digital marketing in 2023 and beyond, so you'll need the necessary digital expertise to create and execute your marketing personalization strategy.

If you're looking to create a personalized customer experience but not conflict with data privacy, we can help you find excellent consulting services.?