Personal information is a valuable resource for companies, but brands must be transparent, says Darryl Adie.
Darryl Adie Managing director, Ampersand Commerce
Prying eyes, leaked customer information and spyware have always been a concern for online shoppers, but more so now as retailers are thrown into the spotlight following customer data leaks.
One of the most recent and hard-hitting cases affected US supermarket chain Target, which had a data breach that resulted in 70 million customers’ credit card details being stolen. In addition, the National Security Agency/Edward Snowden saga, and even services such as Facebook, have made consumers more aware of the extent to which data is being collected about them and just how valuable that data is.
Retailers therefore need to be responsible and transparent about the data being obtained from their customers to avoid consumer anger.
Currently, retail data collection is mostly one-sided, in that retailers choose how it is obtained (through membership cards, online accounts or previously purchased items), the kind of data collected and what it is used for. Consumers, however, are only given the choice to opt in or opt out through obscure check boxes online or on paper forms.
This needs to change. Consumers are more aware of the value and sensitivity of personal data and, as a result, governments will be keen to support their position in light of the post-Snowden paranoia around data privacy. This means there will be an increasing demand for control over anonymity and how customer data is handled. This will, in effect, mean retailers must be more stringent in keeping data safe and secure.
Once the correct measures are in place to secure data, retailers must then think about how it will be used. In particular, the appetite for delivering personalisation through a customer’s data needs to be balanced with the individual’s desire for the service.
Generally, people appreciate some personalisation and targeted marketing, but anecdotal evidence strongly suggests that too much personalisation - whether through excessive retargeting or in-store targeting using Bluetooth devices such as iBeacons) - can be seen as a turn-off or creepy.
iBeacons, in particular, are perceived by many consumers as a method for retailers to access their private location information via data gathered through apps. An example of this is US department store chain Nordstrom, which piloted indoor location tracking last year by tracking the locations of customers in store through their Wi-Fi-enabled smartphones. The scheme resulted in a high number of complaints.
The danger is that if retailers overuse the technology to push out vouchers and mobile advertisements, consumers will opt out or they will find the tracking sinister and complain. In some cases, consumers may be more reluctant to adopt new technologies because of poor past experiences.
Retailers must find a balance between how much personalisation they offer and how much privacy they give customers. Indeed, there needs to be a clear benefit for the consumer before any request for data. The dichotomy is that data enables some of the services that provide value for both retailers and consumers - from personalisation through to predictive delivery. Retailers need to educate their users about this trade-off, and then give customers a clear choice about where they want to sit on the privacy versus convenience scale.
In practical terms, there are some restrictions on how anonymous individuals can be in a digital age. While the purchase of digital goods could be made 100% anonymous with relative ease, physical distribution requires the consumer to surrender some degree of anonymity - it would be difficult to make delivery otherwise. Retailers need to think about how the different parts of the retail privacy jigsaw will fit together.
Ultimately, the first movers that develop the best method of balancing the need for data with the individual’s need for privacy will gain a competitive advantage. The stragglers, however, could be swamped by a tidal wave of privacy protest as they continue to obtain excessive amounts of information from their customers.
Top tips when gathering personal details
● Start a conversation first. Asking some questions will make it seem more natural for a retailer to use other data gathered from a customer to tailor their experience.
● Don’t get creepy. Consider opt-in approaches - the advantage of iBeacons is that it is completely opt-in, so using a similar service ensures the customer isn’t surprised by your targeting. The challenge is then to make sure you don’t overburden the customer with information.
● What’s your value proposition? Consumers will only give their data if there is perceived value to them. Make sure your value proposition is clear to customers.
● Don’t deny a failure. Make security and protecting customer data a top priority at your company.
● Stop the dark art of user experience. Consumers are more aware than ever about the tricks retailers employ to get an accidental opt-in. When a consumer spots that type of behaviour, trust is fractured.
● Encourage consumers to update their data. Prompt customers to keep their data up to date. It can be alarming for a consumer who walks into a multichannel retailer and decides to give their details at the till to hear a previous, potentially very old, address being confirmed by the salesperson.