Cool or creepy? How to Use Customer Data Respectfully

There's a great local Caribbean takeaway place at the end of my street, and the owner knows me by name. And the fact that I enjoy a curry goat meal every single Friday. Apart from the fact that he has never run out of my favorite meal on a Friday (at least, not yet), I also get a courtesy dumpling thrown in every once in a while as a pleasant surprise. I certainly don’t see myself switching Caribbean takeaways anytime soon, thanks to the great food and the personalized, first-name-based service.

For brick-and-mortar businesses like food service, this example of personalization and customer service is a non-negotiable business advantage. And eCommerce brands are now waking up and noticing the consumer appetite for a personalized shopping experience. However, satisfying this hunger isn’t as easy as serving up “Hello, <insert first name>” marketing emails. 

In 2021, there are several factors to consider when it comes to effective eCommerce personalization that gives your business a competitive advantage. In this article, we’ll highlight what these issues are, and how you can successfully navigate them in 2021.

Are customers happy to give up their personal data?

Photo by Nguyen Dang Hoang Nhu on Unsplash

Thanks to the pandemic, more consumers are making online purchases from ecommerce merchants across country borders. This is putting more pressure on merchants to find a balance between creating personalized experiences for customers while staying compliant with data protection regulations. 

At the core of this balancing act lies customer data. On one hand, personally identifiable data (e.g full name, address, etc) holds tremendous value for businesses in understanding the unmet needs of customers. This data can help organizations not only create new products and services but also target customers better with more personalized messages leading to more sales.

On the other hand, organizations have a responsibility to handle customer data responsibly, and customers are increasingly aware of this. This awareness keeps consumers cautious about how their data is shared, and who it is shared with.

A recent study by the Internet Society showed that 69% of U.S consumers expressed some concern over the handling of their data by organizations.

Compared to back in 1990 when 0.01% of U.S consumers expressed the same concern by opting out of the Lotus Marketplace database, this is a significant change in consumer attitudes. 

With our increasingly hyperconnected, information-driven society, this change isn’t surprising. Consumers are actively demanding transparency over how businesses use their data, a contrast to the past when consumers had no clue about even how much of their data was being collected by organizations. 

To stoke the flames even more, heavily publicized data mishaps such as the Cambridge Analytica scandal have affected not just the consumers directly affected by the data breaches, but also on the general public awareness. McKinsey’s recent survey of 1,000 North American consumers found a high level of awareness of data breaches among respondents who were not directly affected by the breaches. This is particularly poignant for organizations handling consumer data, as it shows that consumers are paying attention to the way data-related concerns are responded to by these organizations. 

So, how are governments responding to these consumer demands? Data protection laws are being increasingly adopted in regions across the globe. So far, over 100 countries have one form of data protection law or the other in place. Within the U.S, the California Consumer Privacy Act of 2018 (CCPA) requires that organizations seek consent from their customers before collecting and using their data - just like GDPR in Europe. 

What’s the right way to collect eCommerce personalization data?

Photo by Anete Lusina from Pexels

The dilemma that ecommerce merchants now face is that while there is an increased demand for data protection rights similar to GDPR, 71% of consumers aren’t very keen on receiving a generic, non-personalized shopping experience. This means that maintaining top-notch data privacy isn’t an issue - until it’s time to meet the consumer expectations for personalization and tailored content. 

The ability to offer personalization is a key competitive tool that retailers can use to boost customer trust and also promote brand loyalty for future transactions. This is especially true for ecommerce merchants who have committed significant time and finances towards building internal ecommerce personalization data systems.

Pre-GDPR, retailers could collect Personally Identifiable Information (PII) to provide their customers with personalized services. These days, any information that enables retailers to directly identify customers could land them in hot water - the sort that turned into a class-action lawsuit for Harriet Carter Gifts. The accusation? Using technology that captured personally identifiable keystrokes and IP addresses. 

So how can modern-day retailers strike a balance? What is the best way to capture customer data in a way that allows for personalized preferences to be delivered in keeping with new privacy laws? 

Zero party data (or data that has been intentionally offered to the retailers by consumers) seems to be the magic bullet. Zero party data is the sweet spot of consumer data collection, as the act of voluntarily offering data paves the way for richer data collection and customers who are more likely to engage. 

But does zero party data collection work in practice?

Research suggests that it does, as research showed that for the sake of a personalized experience, 83% of consumers were willing to share their data. But with a simple caveat: that businesses are transparent about how they intend to use the collected data. 

Using consumer data responsibly - what do customers find creepy?

It’s one thing to collect data responsibly. Once this data is captured, it’s another thing to maximize its potential by using it in a way that consumers find cool. 

Brand relationships with consumers follow the same pattern as normal human relationships. They are built on trust, which could be broken whenever one party goes outside the relationship for information.

In their survey of customers who reported a ‘creepy’ brand experience, Accenture found that customers felt this way when brands used information not intentionally offered by the customer. 

Activities that showed ‘creepy’ use of information by brand, according to the survey include: 

• Receiving a text or mobile notification from a brand while walking by a physical store (41% of respondents)
• Being targeted with ads on social sites for items browsed on the brand’s website. 

On a positive note, an overwhelming majority of consumers (73%) did not express dissatisfaction with invasive or overwhelmingly personalized business communication. For these customers, the best engagement tactics used by brands include:

• Apology emails following poor customer experiences
• Apology messages on the brand website

What’s the cool way to use ecommerce personalization data?

The key to using consumer data in a way that connects, and doesn’t turn off is paying attention to what customers want and using the information they offer voluntarily to meet their needs. According to Accenture’s survey, consumers prefer brand-designed experiences that allow autonomy over their shopping experience. 

This means that consumers prefer shopping experiences that help them tailor their journeys, rather than experiences that attempt to predict what they might want. Don’t give off the vibe of the creepy salesperson spying on them as they shop—engage with your customers organically.

One practical example of this is in using quizzes to allow customers to drive their experience - just like the bra brand, Shop Cuup does. 

Accenture in their study recommends that brands create living profiles based on data, which consumers can then use to drive their experience.

Living profiles are customer profiles that capture the essence or detailed nuances that explain why customers make the choices that they make. or example, the choice of satin or silk over cotton in the clothing industry—you could use this information to recommend certain products to your customers you know they will more likely purchase. 74% of consumers expressed an interest in this approach, provided that they could take control over the use of these living profiles to curate the offers and experiences that they receive. 

Photo by Mikhail Nilov from Pexels

While conscientious data collection is essential for positive brand personalization experiences, they are only part of the solution. Businesses that seek to gain a competitive advantage through the proper use of data need to be innovative about using data, design and technology. With customers in the driver’s seat, businesses can create an effective and scalable ecommerce personalization strategy that sells.