Industry News
Striking a balance between data privacy & digital personalization
Brandon Leong
March 25, 2020

Retail marketing teams must feel like they’re wobbling on a tightrope these days. They face an ongoing struggle to balance the competing interests of respecting consumers’ privacy by protecting shopper data while simultaneously using that data for marketing personalization. Personalized marketing includes targeted campaigns and ads, which can help retail companies earn engagement, sales and loyalty.

As a result, retailers and consumer packaged goods suppliers must now rethink how their marketing processes can deliver meaningful communications and services without compromising the safety of consumer data.

On one hand, consumers now expect personalization. Shoppers want retailers and brands to accurately anticipate their needs based on data insights related to their buying habits and preferences. For instance, studies show:

Meanwhile, consumer mistrust continues to grow, especially after recent high-profile data leaks. As a result:

To help CPG suppliers strike this delicate balance, we’ll look at trends and best practices related to data privacy and data personalization.

Data-driven technology shapes consumer behavior

Smartphones are changing consumer buying habits while delivering rich data on individual shoppers’ activities and preferences.

Today’s consumers are increasingly mobile-centric, as they use their smartphones to browse, research and buy products. For instance:

Also, despite the alluring convenience and efficiency of shopping with voice commerce technology like Amazon’s Alexa, 33% of consumers say the lack of security features will stop them from making more purchases using voice-enabled devices. Instead, consumers prefer to shop online using their smartphones, particularly millennials.

Why data is an emerging business issue

Beyond the marketing and IT functions, CPG C-suite leaders and business owners are now taking data management seriously.

That’s because data can directly impact a retail company’s reputation and brand trust. Accenture found 41% of consumers felt it was creepy to receive a text from a retail company while walking past a physical store, and 35% felt the same way about seeing social media ads for products they've recently browsed online.

Also, 27% of marketers feel data is the main obstacle hampering effective personalization due to ineffective approaches to data collection, integration and protection, suggesting internal processes need to reflect best practices to understand consumers better.

In addition, retail marketers must know how to comply with the General Data Protection Regulation and the California Consumer Privacy Act to respect the new digital rules of consumer engagement and avoid legal issues.

Strategic implications of retail data

Retail companies of all sizes are trying to untangle the complex issues surrounding consumer data, and how they can affect their marketing strategy and future campaigns. That’s because the effective use of consumer data can enhance the consumer experience, sales and loyalty.

One survey found a quarter of respondents returned to a retail website to make a purchase after being retargeted with personalized digital ads specifically because the ads reminded them of a product they wanted to buy. In addition, personalized content and product recommendations, triggered messages and product searches are proven to dramatically increase retail key performance indicators – but data consent is key.

Data consent is key

However, consumer mistrust of corporate use of data has made retail marketing more complex.

A Gartner study found that, among consumers who received marketing content that was personalized but irrelevant, 48% said they will unsubscribe from future communications with the brand. In addition, 14% said they would stop doing business with the brand altogether.

For these reasons, Gartner predicts 80% of marketers will drop their personalization efforts by 2025 due to poor return on investment and challenges with managing customer data.

Best practices for retail data

Retailers and CPG suppliers can improve their ability to comply with regulations, put consumers at ease and still deliver excellent marketing by applying these best practices for digital personalization and data privacy:

  • Empowerment: Give consumers control over how and where their data is used. Let them decide what kinds of messages they want to receive (like shipping notifications and promotions) and how they want to receive them (like text/SMS or email).
  • Familiarity: Include some personally identifiable information to show you know your customers, including their purchase or browsing history and personal preferences.
  • Ease: Make it easy for consumers to complete a task or complete a purchase.
  • Relevance: Consumers are busy, so only send them communications that align with their shopping history and patterns.
  • Transparency: Clearly state what data your company collects, where it came from and how you will use it. Share your privacy policies and practices, and assure consumers that their first-party data will never be shared without their consent.

 

Brandon Leong is vice president of marketing & growth for RangeMe, the industry standard online sourcing platform that streamlines new product discovery between suppliers and retailers. Some 70% of the top 100 retailers in the US, as well as thousands of independent retailers, use RangeMe as an efficient way to discover innovative new products and manage the inbound product submission process. Visit RangeMe for more on marketing personalization, voice commerce and millennial wants.

 

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