Privacy

Personalization vs. Privacy: Where’s the Fine Line

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We often think personalized customer experiences and data privacy are mutually exclusive yet critical. Can we leave one out and focus solely on the other? Not really.

That’s precisely why startup founders and thinkers need to find that balance. Consumers, too, have no preference. They need the best-personalized experience and require you to be careful with their data.

While personalized experiences require data collection and analytics, data privacy requires restricting these same practices.

Let’s make a case for both extremes and then see how we can balance them against each other to offer personalization and privacy.

The Case for Privacy

In several locations worldwide, data privacy concerns are on the rise. According to a Statista report around current attitudes toward personal data use in the U.S., 2021, a majority of respondents were at least a little concerned about their data being collected online. Only 17% agreed they weren’t worried at all.

According to another survey from Feb 2021, over half of U.S. respondents said they were more concerned about data privacy than a year ago. Only nine percent said they were less concerned.

COVID-19 escalated cyberthreats to another level, with people working remotely and carrying out all critical activities online. That didn’t add to trust-building for sure.

Previously, security concerns gave rise to laws like the General Data Protection Regulation restricting data collection and processing of private data captured from consumers.

In general, consumers are more concerned than ever about how their data is stored, processed and used, meaning data privacy is the need of the hour. Any misuse of private data can lead to outrage and abandonment of the parties involved by the public.

The Case for Personalization

And then there’s personalization. Any informational material that talks of marketing, sales or customer experience will touch upon personalization as a way to distinguish yourself from others in the competition.

Consumers now expect personalized experiences on the daily. They like it when you capture relevant information to learn about them and tailor their experiences to save them time or mental bandwidth.

In a survey of 800 marketers to capture how customer engagement improved after personalization, over 50% reported increased brand engagement, 48% reported an increase in conversations, 47% saw an improved response to discounts and 41% noticed higher email open rates.

Across the marketing board, personalization has become the norm, with giants such as Amazon and Netflix leading the game, raising bars for the rest of us.

Related Reading: GDPR: Adopting More Stringent Privacy in the US

Tips on Sketching the Fine Line

We know for sure that both businesses and customers need both data privacy and personalization. So let’s look at a few ways to strike a balance between the two.

Follow Regulations

No matter how much customers themselves love personalized experiences, their love doesn’t precede the law. Startups need to comply with legal requirements before marketing or advertising to their customers.

In a way, complying with the legal requirements translates into customer-centricity since it’s a way people know that a company isn’t taking their data privacy lightly. So following data regulations can be a way to speak to what your customers need.

Align Personalization with Privacy

There are ways you can capture customer data with transparency and keep it secure. Only collect the information you need and that you can justify having collected.

Tread lightly around collecting sensitive information such as a person’s physical whereabouts, phone number and medical or financial information. And with the information in your hands, hand over the control of customization back to your customers.

Let your buyers decide the level and nature of personalization they want from you. Start a dialog and obtain your customers’ POVs to have privacy and personalization go hand-in-hand.

Get Transparent

Get upfront about the information you’re collecting from your customers. Use short and clear questions to have customers answer them with a yes or a no to tailor their personalized experience themselves.

Another step in becoming transparent can be to highlight important aspects of data privacy in your data policy notice. Make important communication about how you handle customer data to get extra credit points in transparency.

Show Concern for Customer Privacy

A 2019 Gartner survey discovered that nearly 40% of users would stop doing business with a company if they thought the personalization was ‘creepy’. Another report found that 74% of consumers thought push notifications were invasive.

Since your audience’s preferences and perceptions may differ, it’s an excellent idea to extensively survey your target audience to learn about the forms of marketing and advertising that may be acceptable and not ‘creepy’ to them.

Leverage Anonymized Data Better

More companies have opportunities to leverage aggregate data than they realize. For instance, Amazon personalizes the ‘Frequently bought together’ section of its shopping experience based on anonymous data from many customers.

Such practices offer some level of personalization without being too heavy on data privacy concerns. Other companies such as Facebook are now adopting differential privacy to collect and share aggregate data around user behavior while maintaining the privacy of individual users.

Think about how you can leverage anonymized information better to reduce the need for extensive data privacy or hyper-personalization.

Table the Issue

If earning customer trust is crucial for you, balancing personalization against privacy will be an ongoing challenge. Please make sure everyone in your company knows their responsibilities around data privacy and protection, especially the marketing and advertising departments.

Hold regular conversations and discussions around privacy to ensure that your company and brand are forever moving toward better practices and solutions.

It’s only a matter of time that privacy concerns compel businesses to step back from the stance of capturing all the data they can and leveraging it freely. While the movement has begun, there’s still a long way to go.

There’s also an incentive for startups that build keeping data privacy at the core right from the start.

If you’re unsure how data privacy might look for your growing startup, speak to one of our experts today.

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