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What is the personalization and privacy paradox and how can brands navigate it?

Bloomreach

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December 5, 2022 | 5 min read

With today’s customers, brands face high expectations

Shoppers want frictionless experiences built just for them, meaning they expect brands to anticipate their needs and know their preferences. Yet at the same time, data privacy concerns continue to grow, presenting a challenge for retailers – how to balance personalization and privacy. I

n the most recent CommX survey, 66% of the surveyed population agreed they were more likely to buy online from stores that knew their preference. At the same time, 87% asserted they were ‘very concerned’ about how retailers use their personal information and data. So how do brands reconcile these seemingly contradictory sentiments?

Here, Bloomreach provides a few different ways retailers can navigate personalization in an age of heightened data privacy concerns.

Building confidence is key

Retailers looking to make the most of personalization efforts first need to establish trust with consumers, allowing them to feel confident that any data shared will be used to provide real value. Making it clear how the data you have received is being put to use and how it will benefit the entire customer journey, even beyond an initial purchase, will be a major key in building that confidence.

One way to do this is to ask customers for data where they can easily see the results. For example, if you ask customers to input their birthday when they sign up, provide them with a special birthday promotion or gift on that day. Or if a customer has input their address, make sure to recommend clothing items that correspond with the climate at that time of year.

Confidence develops over time—it’s impossible to build trust over just a few interactions. Think about the Starbucks app for example. On their birthdays, without fail, customers are given a free drink of their choice. Additionally, with the customer’s permission, location capabilities allow you to apply certain promotions and discounts based on the Starbucks closest to you. Providing this information allows for an enjoyable experience and creates more trust in the Starbucks brand. Pivoting to a consistently transparent way of communicating about data will give consumers repeated assurance that their information is in good hands. Importantly, it will remind them that data collection is a two way street — any time you collect information from them, it’s to provide a better experience in return.

Knowing your audience

It’s no surprise that different generations of shoppers think differently about data privacy. Bearing these nuances in mind can help retailers adjust personalization strategies to the preferences of different demographics. For example, the CommX personalization study found that older and higher income consumers are most concerned with how retailers use their data.

This could mean that luxury brands and retailers focusing on an older audience need to be more communicative when it comes to their data collection practices, and more transparent about how they personalize their customers’ experiences with that data (for example, explaining “we’re recommending this item because you’ve browsed similar styles”). They may also choose to incorporate less personalization in marketing efforts such as targeted ads, which privacy-minded consumers may find invasive. In contrast, the younger generation surveyed (18-29 year olds) asserted that they didn’t mind sharing their data if they know it’s being stored securely. This offers retailers more flexibility in creating more personalization at different points in the shopping journey, so long as they make it clear that they have strong data privacy safeguards in place and that customers can change privacy settings at any time.

Collecting what you need, not what you want

Collecting the data you need instead of the data you want is another way to instill consumer confidence and while remaining on top of personalization efforts. For example, you may not need to know a consumer’s birthday, considered sensitive information, to personalize their shopping journey. Instead it may actually be more useful and beneficial to know their purchase history or their products viewed to prompt appropriately recommended items, which is less personal data overall. Focusing on data that is less sensitive yet provides more context and information into who a customer is, establishes more trust between you and the consumer and creates an equally personalized experience.

Thinking differently to drive value

The consumer and regulatory push for better privacy standards has ultimately catalyzed companies to think differently about data collection. It’s provided an important opportunity for them to focus on consumer trust above all else, and really consider how they’re using data to provide a better experience. Personalization and privacy can certainly co-exist, and as retailers lean into transparency and become more intentional about driving value with the data customers provide, consumers will slowly begin to trust in retailers’ ability to offer both.

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