Most large retailers now possess an immense amount of data regarding their customers, certainly all they need to create personalized offers and other marketing messages. And several research studies have shown that most consumers want to receive communications from companies that are personalized and contextually relevant.
But there is also a very thin line between personalized marketing communications that are highly effective, and those that consumers find intrusive. For example, when CEB recently asked a panel of nearly 400 consumers how “online ads that use details about what I have done” make them feel, almost three quarters (73%) of the responses were negative, and almost half (49%) used synonyms for “creepy.”
So retailers are facing what could be called a personalization-privacy conundrum. They want to use personalized communications to improve the customer experience, but they must avoid crossing that nearly invisible line that separates effective personalization from what is perceived to be an invasion of privacy.
A recent report by Capgemini Consulting examines the personalization-privacy conundrum and seeks to identify how retailers can strike the right balance between personalization and privacy. Privacy Please: Why Retailers Need to Rethink Personalization is based on an analysis of more than 220,000 social media conversations relating to 65 for the largest global retailers. The objective of this analysis was to assess customer sentiment on the themes of personalization and privacy for retailers.
Capgemini’s research found that 80% of all consumer sentiment on personalization is positive, but that 93% of all consumer sentiment is negative when it comes to retailers’ privacy initiatives. More specifically, Capgemini found that only 14% of the retailers analyzed enjoyed positive consumer sentiment on both personalization and privacy. Nearly 29% of the retailers scored badly on both personalization and privacy, and 57% of the retailers enjoyed positive sentiment on personalization, but received bad grades on privacy.
Capgemini’s analysis found no significant customer sentiment differences between online and traditional retailers, or between large retailers and smaller companies.
The report argues that the retailers who are successfully addressing the personalization-privacy conundrum excel in three areas:
- The use personalization initiatives that offer tangible value, while giving customers control over their data.
- The treat technology as a means to drive customer satisfaction, rather than just as an enabler.
- The have solid data management practices in place, and they proactively communicate those practices to their customers.
The Capgemini report provides several important insights regarding how retailers can address the inevitable tension that exists between personalization and privacy. If you’re a retail marketer, reading this report would be well worth your time.