Starting January next year, the California Consumer Protection Act will bring sweeping customer data regulation to companies operating in California. It will be the first major piece of legislation to tackle the use of private customer data in the country, and — at a time when privacy concerns are rising among consumers, reporters, and regulators — it’s a warning sign for more reforms to come.
It has never been more necessary for companies to establish best-practices for customer data use, and prove its value to consumers through enhanced customer experiences.
According to eMarketer, the demand for personalized content is at an all-time high, while 71% of consumers are frustrated that their shopping experiences are too impersonal. However, when asked about data collection for targeted ads, only 25% of internet users think it is ethical to tailor news feeds, or make purchase recommendations, based on browsing history.
While customers seek personalized shopping experiences, they remain insecure about sharing personal information. So what can marketers do to demonstrate the value of data-based marketing, and keep personalization human-centered?
Use Data to Recognize the Individual
Earlier this month, the hashtag #InstagramAds went viral as social media users discovered a buried page within the Instagram app listing user interests and information for marketing purposes. Naturally, the online reaction was to pose a challenge. “Laugh at how wildly off-base your results are” read the instructions of the game posted on Twitter, “then share the most ridiculous results.”
Thankfully, technology is quickly allowing brands to be more strategic about how they gain insights from customers and their information. One such method is predictive personalization, an approach that does not simplify consumers into types, but rather, analyzes customer behavior in real-time to determine their needs.
This approach is based on predictive machine-learning user experiences spearheaded by Spotify, Netflix, Pandora, and Amazon. Spotify’s UI experience is a great example, as it is geared towards presenting and recommending music and ads to customers based on their listening habits and moods, not just their demographics. The algorithm goes even further, challenging user assumptions by exposing them to new genres and songs, creating an intriguing user experience that encourages exploration.
Using technology to catch sight of individual customers, and move beyond stereotypes and demographics, will show the value big-data has for improving the relationships between companies and their audiences.
Elevate Customer Experiences
Marketers should prepare for a future where data gathering informs everything from product design to advertising — initiating a paradigm shift from the era of mass production to that of mass personalization. With this change comes the responsibility of making sure that personalized marketing remains focused on elevating the customer experience.
This year Gatorade launched Gx, a “customizable hydration system” that allows customers to design their sports-drink experience, from plastic bottle design to formula ingredients. “Technology is allowing us to democratize sports-fuel personalization,” Gatorade’s design lead Xavi Cortadellas told the Wall Street Journal. Sweat patch sensors once used to monitor the hydration needs of select athletes will be rolled out to the public later this year, while an accompanying app will help users analyze results and order Gatorade formula to suit their needs.
As bespoke product experiences take over the online beauty and health supplement industries, it’s clear that this use of data is not just about selling a product — but about improving the customer’s purchase options and access to information.
Despite this impressive use of data and technology, Deloitte consumer research shows that companies are doing a poor job of communicating their data collection intentions and “reassuring customers that they take consumer data privacy seriously.”
Especially when it comes to collecting sensitive data points, being transparent about the storage, handling, and sharing of information is key to earning consumer trust.
FitBit is a good example of a company that, due to the nature of its fitness tracking products, stores highly personal information such as the location, sleep cycles, and health metrics of its customers. Nonetheless the company quells concerns of misuse by being completely open about which data points they collect, how they share them, and how the collection of adult data differs from the collection of kids’ data.
Maintaining a focus on health benefits at the individual level, FitBit demonstrates the positive insights that data can deliver to each customer. In the future, the company looks to leverage the trust it has earned to expand its services to preventative healthcare and remote medical assistance.
Ensuring that customer data collection practices are developed hand-in-hand with consumers, according to their needs, and with their experiences in mind, will go a long way towards addressing public distrust in data gathering and personalization. In a culture where Millennial and Gen Z audiences are rapidly losing trust in brands, it is time for marketers to work with their audiences to deliver personalized products and services that they both need and want.