Companies have always collected data about their customers. For example, even before computers existed, Starbucks would take note of customer orders and add them to a filing system, so when they came back later, baristas knew what they would likely order again. Simple data collection in this way was typically well-received as it was helpful to customers. However, with the growth of big data, consumers are growing increasingly concerned about the personal data companies collect and online privacy.
Consumer and Business Concerns Align
Today, data privacy is near the top of consumers’ and businesses’ agendas. Consumers naturally worry about how companies are using their personal information. Furthermore, marketers are taking extra care when navigating consumer data privacy changes. A survey by KPMG found that 86 per cent of respondents said they were concerned about data privacy. Businesses are stuck in a continual balancing act: they want to access relevant consumer data to provide them with more relevant products and services, but they do not want to invade their privacy. In this environment, businesses need to invest in privacy to prepare themselves for the future adequately.
Ad Relevance vs Data Privacy
Consumers have high expectations when it comes to digital advertising. For example, a study by BCG and Google found that 65 per cent of consumers have negative online experiences because the ads they see are not relevant. However, 74 per cent of customers only want to see ads that are relevant to them—this requires access to their data. Despite this, consumers have concerns about how their data is used. They want to know specifics: what information is collected? How is it collected? How will the data be used?
But, vitally, consumers are not protective of all of their personal data. They do not mind divulging information that they view as invasive or allows them to be identified, including their gender, age, interests and past purchases. Over 30 per cent of consumers are willing to share their email addresses with companies for no incentive. However, with incentives such as discounts, this figure increases to approximately 90 per cent. In addition, the study found that consumers are least comfortable with their conversations being recorded.
Prioritising Trust and Transparency
While consumers want relevant online experiences, they care far more about brand trust. When consumers truly trust a brand, Google found that they are almost twice as likely to share their personal information willingly. The same applies in the opposite direction—a brand that is perceived as bad with personal data makes a customer twice less likely to share their email address with the company. Brands must show their customers that they are using their data properly to improve customer experiences, as not all customers will assume that companies will handle their data properly. For example, BCG and Google found that 29 per cent of consumers mistrust companies in any industry.
To build trust, marketers must make it obvious how they are using customer data. The best way to do this is to deliver the benefits of personal data usage to consumers, for example, by showing them relevant ads. Companies must also make it crystal clear that consumers’ data is in safe hands. By communicating to consumers how their data is being used, companies can reassure consumers that their personal data is being used to improve personal online experiences.
Consumers and Businesses Want The Same Thing
In summary, consumers and businesses want the same thing regarding online privacy. Consumers are comfortable divulging personal data that is not invasive if it improves their online experience. Likewise, businesses want to obtain first-party data to improve experiences for consumers and boost revenue in the process.