Customers want privacy and personalization, but can brands balance both?
Article by Charlie Offer, EY Oceania Cybersecurity Leader and Dong-Hyun Lee, EY Asia-Pacific Customer & Growth Leader.
High-profile data breaches over the last few months have changed the way we think about our data. Consumers now understand their personal information has value — and they expect a fair value exchange.
Is an hour of free parking or Wi-Fi a fair exchange for my contacts or purchasing history? Is a US$20 voucher, a product recommendation, a special deal, or a discount worth the privacy risk? Customers are asking themselves: “Am I being well rewarded for my data? Is this information worth more to the company than it is to me?”
Data protection regulation is tightening around the Asia-Pacific region, following the lead of the world’s toughest laws, the EU’s General Data Protection Regulation (GDPR). But this is much more than a regulatory issue for brands to relegate to their legal departments.
The EY Future Consumer Index — which tracked the habits of 18,000 consumers, 6,500-plus in Asia-Pacific — finds economic uncertainty is forcing many consumers to tighten their belts. In fact, 68% of consumers say they are now more cautious about their spending. Brands must respond with a more precise understanding of their customers.
But this comes at a time when customer concern about persistent and pervasive tracking online is growing. The EY Future Consumer Index found nearly three-quarters (72%) are worried about sharing personal information on websites and apps, 80% are concerned about apps tracking their movements, and 86% are anxious about identity theft, for instance.
By the end of 2023, most major browser services will have phased out third-party cookies, the key enabler of fine-grained digital advertising. Genuine, informed, and unforced consent — the central tenet of the GDPR — is fast emerging as the necessary basis for compliant tracking of consumers’ behavior. Customers who enter an online channel will be required to self-identify. This will support real-time personalization and customized content, but it will also mean many brands must rethink marketing strategies and elevate their investment in data security.
Meanwhile, price visibility and product availability have eroded the value of the traditional “four Ps” of marketing in favor of customer experience. Whether they are shopping for shoes or surfing a streaming service, people expect that experience to be personal to them. Nearly two-thirds (61%) of consumers are now willing to exchange their personal data for customized online experiences.
This expectation is filtered through to shopping malls and physical stores. The latest trend, the hyper-physical store, transforms a transaction into a sensorial experience with the help of technology and data. With their eye-catching and tactile interiors, hyper-physical stores are the perfect place to snap selfies for social media. They also offer interactive experiences, like augmented reality and virtual try-ons, and they are equipped with sensing devices that analyze customer movements in real time and respond with tailored, sensory experiences. This may be the careful curation of simulated products or adjustments to the indoor environment to meet a shopper’s personal preferences. By eliciting emotion and helping customers to make memories, brands build loyalty and satisfaction.
The technologies that support the hyper-physical store can improve layouts and shopper journeys and enhance customer stickiness and conversion rates. This technology is embedded with data privacy protection, with cameras and sensors positioned to collect anonymous data, rather than identify an individual. But using these services without a customer’s consent can be problematic. Ultimately, consumers must have a choice.
Drawing a clear boundary between personalization and privacy is challenging for brands because every consumer has their own preferences and wants to make their own choices. But personalization and privacy rest on one clear pivot point: trust. Without trust, consumers will lean toward privacy. So how do brands build that trust? We think there are three clear steps:
Assess your data
Do you have full visibility of your data? Do you know what data you are collecting and storing, understand why it is collected and stored, and on what legal grounds? Some of the recent breaches were made worse because companies did not understand the full extent of their data collection — which included passports, driver’s licenses and more — until it was too late. When EY teams map clients’ data, we routinely uncover channels to market, customer touch points and data repositories that the organization had no idea existed. Add third-party data to the mix, and it is easy to see how brands lose track and end up with toxic data.
Ask the tough questions
Do you have consent to hold this data? Do you need it? How will you manage and minimize the risk of the data you do hold? And do you offer your customers a fair value exchange for their data? What inducements and incentives will you offer to expand your customers’ self-identification and information sharing? Creating a fair value exchange starts with humans, rather than data, at the center.
Align with “trust by design”
If trust is the pivot point for privacy and personalization, then brands must embed trust in products and services from the outset. The EY organization calls this “trust by design”. How will you address any inequity in the value exchange with your customers? How will you prioritize transparency and choice? How will you proactively address privacy risks to create new value for both your company and your customers?
EY Future Consumer Index comes with a crystal-clear warning for brands that are slow to tackle the personalization and privacy conundrum. Consumers are willing to give up some personal information, and even some elements of their privacy, for a cause that benefits society. But they have a sharper appreciation of the value of their data, and they are not always willing to exchange it simply to help a company sell more products.
The views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organization, its member firms as well as the views of Tech Wire Asia.
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