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Overcoming Consumer Concerns on the Road to Personalization

At the moment, several companies and their marketing partners are working furiously to integrate all of the available information about their current and potential consumers, such as past purchases, browsing habits, and third-party information, into a seamless representation of preferences, habits, and patterns.  The goal is to understand the consumer better, allowing companies to personalize each interaction between the company and the consumer. A personalized approach should result in the right offer or recommendation at the right time, leading to improved company performance and customer experiences.

From a consumer’s perspective, this approach has its advantages. Who enjoys repeatedly seeing advertisements for companies or products in which you have no interest? Or receiving recommendations for products that you would never consider purchasing? Given that advertising is an integral part of any brand today and is here to stay, we as consumers want the ads we see to be relevant. However, in order to reach that goal, companies have to sift through mounds of data to determine what nuggets are important. That requires companies to collect, access, and analyze lots of data about consumers. 

That last piece makes many people squeamish. Almost daily, there are news articles about hacking and privacy breaches causing the exposure millions of people’s private information. And some consumers simply do not want companies to know what they bought, when, from whom, or what they searched for. Consequently, the thought of sharing information that could later be exposed by hackers has made consumers reluctant to join this movement. In general, consumers have little visibility into how their data is being stored, used or protected. Instead of thinking about “big data” consumers often associate this process with “Big Brother.”

For now, the challenges that companies face are mostly technical. How do you match anonymous browsing history to in-store purchases? Or, how do you know it is the same consumer using a mobile phone and a desktop? In the next few years, these technical challenges will be overcome and the real battle — how to overcome the reservations of consumers — will begin. As I alluded to above, consumers do want a personalized experience, but they are reluctant to participate in any way that enables this. How do companies change this dynamic so that both they and consumers benefit?

Looking at how the Transportation Safety Administration interacts with fliers may be helpful. The TSA experiences a much more serious, but still similar, dilemma at airports. The agency is tasked with protecting fliers from a variety of threats, even though doing so can add significant time to the traveling process. Commuters want to be safe, but they would prefer to skip all of the hassles created by the security process. How the agency faces this challenge offers insight into how companies can encourage consumers to participate in sharing their information for the betterment of both parties. A few key principles can be used as guideposts:

1. Clearly explain the process

Even though some travelers still think it is acceptable to pack a two-liter bottle of Pepsi, cooking knives, and jumbo-sized lighter in their carry-on luggage, there are prominent signs stating otherwise. The TSA explains the security screening process clearly, detailing what items a traveler can and cannot take and the reasoning for these limitations. Similarly, advertisers should state in simple terms what information is being collected, why, and how it will be used. If the reasoning for collecting consumers’ data is sound, consumers will understand and be more willing to volunteer their information. On the other hand, if it is difficult to explain why or how information will be used, then perhaps that company should reconsider whether the information should be collected at all.

2. Allow people to opt-out 

The standard security process requires a traveler to pass through a metal detector, but he or she can opt out of that method if he desires. Doing so will result in a pat down by a TSA employee, but at least travelers have this option. The marketing equivalent is allowing someone to prevent themselves from receiving ads from a particular brand or product category. From the brand’s perspective, it is best to not spend money to reach a consumer that has little to no interest in your products. Bombarding an uninterested consumer can result in creating a brand detractor, which is not ideal.

3. Allow people to help out

The TSA offers frequent travelers the option to help out in the security process by volunteering additional information prior to traveling in exchange for a speedier security screening at the airport. There are a variety of traveling programs, such as PreCheck, GlobalEntry, and Clear, that pre-screen fliers, allowing them to proceed through a reduced screening process when flying. Likewise, companies should offer consumers the opportunity to volunteer additional information in exchange for better service. Hotel loyalty programs are a good example of how these programs can be executed. A person can specify preferences like pillow firmness, room location, and floor. In this case, a guest volunteers additional information, some of which may not pertain directly to his/her room, in exchange for a frictionless check-in. The traveler receives a better experience and the hotel learns how to interact with the traveler more effectively. Most importantly, allowing consumers to “help out” can help correct or properly emphasize data that would otherwise go unnoticed. For example, giving a consumer the chance to specify that purchased products were Christmas gifts for others rather than herself can help refocus a company on presenting products that are actually relevant to the consumer.

These three steps can help alleviate consumer data sharing concerns. But the responsibility for bridging the gap does not lie solely with the company. Consumers need to honestly evaluate the benefits of participating. Companies will continue searching for ways to engage customers more effectively. Refusing to share any information with companies will not stop that process. As a consumer, I would prefer to receive advertisements that are at least relevant to my future purchases.

Along the same lines, as consumers, we need to consider the costs of opting out of the process. How would the world be if consumers and companies had an adversarial relationship? Conversely, how would the world be if consumers and companies had a harmonious relationship? With the rise of companies that pay consumers directly for their product preferences, there is a real opportunity to develop a mutually beneficial relationship. With that opportunity in mind, it is worth considering how much it would cost for you to opt-in fully. Regardless of where on the spectrum you fall, it is important to realize that if we all opt-out, we will all have worse experiences as a result. Ultimately, everyone may not feel comfortable sharing information with companies, but the more people that do so, the better all of our experiences will be.

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