Data privacy and personalization: what do consumers really care about?

We might infer that data privacy is a one-way street with consumers increasingly apprehensive about data disclosure, and assertive about governing its use. But consumer research shows a rather more nuanced picture. The Data and Marketing Association (DMA) has conducted four waves of research over the past ten years, highlighting that the proportion of consumers with a high level of concern about data privacy has fallen from 84% in 2012 to 69% in 2022.

This, perhaps, shows that consumers feel current regulations offer them a good level of statutory protection.

From ‘fundamentalism’ to ‘pragmatism’ and ‘unconcern’

Of course, consumers’ views are not homogenous. From the survey responses, the DMA identifies three distinct attitudes. At one extreme are the ‘data fundamentalists’ who decline to share their data even with the promise of an enhanced service; at the other extreme are the ‘data unconcerned’ who don’t have privacy concerns and are happy to share. Between these two lies the largest group (46%): ‘data pragmatists’. These people are concerned about privacy but will make trade-offs based on the benefits they perceive they will get in return.

The biggest change in these groups over time is a steady drift away from the fundamentalists, toward the ‘unconcerned’ group which has almost doubled in size over the decade of research. Younger people and digital natives predominate in this group, but all age groups are represented.

This shift in attitudes presents an opportunity for organizations to gather and use first-party data – an invaluable resource for understanding customers better and achieving business objectives. When used intelligently, this data is like rocket fuel for generating value, from customer preferences and driving personalized experiences, to predictive models to drive communication and incentive strategies.

The selective consumer

Many customers are willing to share data, but a large proportion remains selective about who they share it with.

Trust in the brand is consistently their biggest consideration, but transparency about what the data will be used for (and perception of how value is exchanged) consistently rank highly. The latter is usually a perception that offers and experiences will be more personalized, or discounts and incentives will be made available. We’ve also found that when it comes to contact permissions, simply stating that the customer can cancel at any time yields a higher level of consent. This is somewhat counter-intuitive since GDPR requires that, so one might expect consumers to assume it.

Can we trust privacy surveys?

But privacy surveys don’t tell the full story. They tend to put consumers in a mindset about social media companies tracking them across the internet, mining their personal content for advertising hooks, being location-tracked by their phone, or their smart speaker monitoring their every word. People do have concerns over this type of data sharing because it can yield information that we never intended for any organization to have.

But, for most brands, the first-party data in question is much more modest and comprises the customer visiting their website, looking at different products or information, making a purchase, reading a blog, interacting with an email or seeing (or clicking) an advertisement. In this area, most consumers have a higher level of expectation that the brand will receive and use the information to give them a better experience.

This is reflected in McKinsey research which showed that over 70% of customers expect personalized communications and product offers, and they get frustrated when they don’t receive it. This is somewhat incongruous with privacy concerns, but there’s an argument that privacy surveys tend to sensitize the issues being investigated. Statista reports a 2021 survey suggesting that over 60% of people routinely accept all cookies without going into the settings and choosing which ones they are prepared to accept.

First-party data and marketing permissions are sufficiently precious to justify the effort of fine-tuning a data policy that inspires trust and offers customers a worthwhile exchange of value to secure them. With the right setup, more consumers can be convinced to give consent and share their data. But they will expect it to be used to personalize offers and make content relevant to their preferences and needs, so data collection must be backed up by the insight and analytics which enable a data-driven customer strategy.

There are a lot of challenges when choosing this route, but the rewards are great. That McKinsey research found that brands successfully personalizing offers achieved 40% better outcomes based on more repeat purchases, enhanced value per customer, and increased loyalty. Those benefits are too good to pass up.

To read more from The Drum’s latest Deep Dive, where we’ll be demystifying data & privacy for marketers in 2023, head over to our special hub.