Some organizations do a great job with personalizing digital interactions, and others excel at delivering on privacy—yet few manage to do both well.
One of the epic struggles for all businesses is balancing personalization and privacy. As the digital age unfolds, organizations—and particularly retailers—are recognizing that consumers are increasingly turned off by carpet bombing methods that dump the same message, promotion or coupon into everyone's inbox or mailbox.
Yet they also don't want to have a business abuse their personal data.
New research from consulting firm Capgemini indicates that while some organizations do a great job of personalizing interactions, and others excel at delivering on privacy, few manage to tackle both tasks equally well. The report, "Privacy Please: Why Retailers Need to Rethink Personalization," examined social media sentiment for more than 220,000 conversations covering 65 large retailers. Remarkably, only 14 percent of retailers were viewed positively by consumers on both personalization and privacy initiatives.
Capgemini found that 93 percent of all consumer sentiment was negative about retailer privacy, with data security and intrusive behavior key drivers of negativity. The main factors contributing to bad sentiment were data security (76 percent) and intrusive behavior by the retailer (51 percent).
Meanwhile, the report found that 80 percent of all consumer sentiment on personalization was positive globally.
Not surprisingly, "favorite businesses" emphasized both of these areas. On the personalization side, firms focus on meaningful deals, customized products and responsive customer service. On the privacy front, they allow customers to control personal data and take steps to demonstrate how they achieve data security.
On the other hand, laggards are regularly criticized by customers for sending out irrelevant offers, spamming, perceived abuse of personal data and breaking customer trust on safety and security of sensitive data.
Capgemini also found that consumer privacy lapses can undo hard work on personalization. This should come as no shock to enterprise leaders. Studies and news stories show that consumers shop less and spend less at businesses that experience breaches.
The report concluded that four core factors contribute to problems: a lack of a single view of the customer; a climate of mistrust; customer pushback over the use of personal data; and a desire for consumers to control their data.
The solution? Businesses must focus on providing truly personalized offers, delivering highly personalized products and services, creating streamlined loyalty programs, and delivering truly personalize communication. At the same time, it's critical to avoid data breaches, avoid intrusive behavior, veer away from oversharing data with third parties and eschew tracking and monitoring tool such as face recognition and RFID tracking.
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