Data privacy – the dos and don’ts of collecting customer data
For brands, data is everything. Those key insights into core consumers – how & when they shop, their key interests, and what makes them tick – are crucial in order to create powerful and tailored marketing strategies. Sej Patel explores.
However, consumers are starting to become wary about the amount of personal information they’re giving away. They are increasingly distrustful of companies who don’t store their data correctly. In fact, according to a recent research on data privacy, the majority of Australians said they had concerns about companies collecting their personal data. Over half of the respondents say they felt companies are asking for too much personal info.
When it comes to collecting customer information, it’s a fine line between. There’s getting data to help improve business performance but also making the customer feel uncomfortable. As customer awareness of data collection improves, brands need to find a happy medium between the two.
Not all data is equal
Eight-five percent of Australians have concerns about giving companies their personal information. The biggest concern they had was the possibility of the organisations being hacked and their personal information stolen. They were also worried about brands sharing or on-selling their private information to other companies.
Customers are happy sharing some of their information with brands. Almost half are happy to share their entertainment choices, such as films watched or games played. Forty-seven percent are also willing to share lifestyle information such as hobbies and interests.
Over a third (40 percent) were happy to share their demographic information with brands. This includes age, gender and income. But only around a third said they’d be willing to share purchase history or online browsing behaviour. Even less (18 percent) are willing to share real-time location information on GPS data or browser IP.
Amongst Australian consumers, the feelings are split when it comes to targeted advertising. Almost half (40 percent) say they don’t wish to receive targeted ads based on their browsing history. Conversely, 37 percent are okay with it.
But for those who don’t want to be found, they’re going out of their way to make sure their online activity stays hidden. Thirty-five percent disable location-based services on their devices and disable cookies in their browser. Australians are also using ad blockers, VPNS or browser add-ons to protect their privacy online. One in six set up and use dummy emails for promotions, deals, loyalty programmes and social media.
When done well, customer loyalty programmes can be a data-filled gold mine for marketers. They can provide rich metadata which can be used to improve overall brand performance. They also provide the ability to drill down and create tailored campaigns for individuals. One well-known example is UK grocery chain Tesco’s. After launching its loyalty programme in 1995, it able to increase sales by 50 percent in just five years. This is a true testament to the power of collecting transactional data and using those insights to adjust the business’ focus.
In Australia, loyalty programmes are very popular amongst consumers. Our own research showed that 81 percent of Australians were already members of at least one loyalty programme. Those who participate in loyalty programmes are fully aware that their personal information and shopping data is being used. However, because they’re being rewarded they report being okay with it. Seventy-seven percent of Australians who are a member of loyalty programmes said they receive benefits from being a part of them.
Trust, transparency, and rewards
Savvy consumers know that their data is worth something – and while they’re happy to hand it over given the right circumstances, they want to feel like they’re being adequately rewarded for doing so. When asked, the majority of Australians say they’re cautious about companies asking for too much data, and yet, the majority are also perfectly happy to participate in loyalty programmes because they see it as quid pro quo.
For marketers, customer insights are crucial when it comes to developing data-driven business strategies. But it’s evident that as consumers become more savvy about data collection and more concerned about their privacy, that brands must adjust the way they approach data collection. There’s a delicate balance between getting enough information and asking too much; and brands must clearly communicate the reasons why data is being collected, and provide adequate incentives for doing so, in order to continue to build customer trust, and ultimately, improve customer loyalty.
Sej Patel is the country director at Toluna, ANZ.