Retail

Privacy And Personalization Clash For Retailers

email marketing on smartphone

Retailers are facing a personalization paradox. Recent studies are showing counter trends right now that are proving the adage that consumers want what they want — even if it’s a contradiction.

That paradox is evident between the appeal of personalization and a stepped-up need for privacy. It’s illustrated in a new report from Episerver, which shows that personalized messaging can be a deal creator or deal breaker for consumers. But it also shows that privacy is paramount. Fifty-three percent of consumers want retailers to respect their anonymity in 2020; at the same time 61 percent want more personalization in marketing, messaging and promotions.

“Companies are facing a digital experience paradox,” said Alex Atzberger, CEO of Episerver. “Digital is a necessity to compete, but it’s getting more difficult and expensive to compete on digital alone as the golden standard for digital experience isn’t right for every company and customer, and yet the requirements keep increasing. We’ve been sold on experience, but hindsight is 20/20. Understanding what customers want, giving them control over how and where their data is used, and leading them to the next best content and action is how retailers ultimately solve for these contradictions.”

The rub here is that personalization depends on consumers giving personal information. That transaction has spawned major regulations in the European Union (GDPR) and California (CCPA). Personalization and privacy can live together and with 64 percent of retailers using it and 79 percent of consumers demanding it, the practice needs to be secure for privacy and compelling for personalization. In fact the Episerver report draws the conclusion that the relationship between personalization and privacy can be positive even for practices like retargeting. Twenty-five percent of respondents said they returned to a website to make a purchase after being retargeted with ads because they were personalized.

“Content recommendations and product recommendations, triggered messages and product search are proven to dramatically increase retail key performance indicators, but data consent is key,” the report states.

However, there is one major vulnerability and that’s around voice commerce. Consumers are bailing on using voice-activated devices because they don’t trust personal data protection. In 2019 the Episerver report found that 17 percent of respondents shopped with voice-assisted devices compared to just 7 percent this year. Also: 22 percent of respondents used voice-assisted devices to research a product and that dropped to only 8 percent in 2020. Thirty-three percent of consumers report that lack of security features have stopped them from using voice commerce.

“What these customers want is omni-channel personalization — whether they interact via a website, an app, email, SMS, in-store and so on. They want to be treated uniquely,” says Rajesh Jain, founder and managing director of global marketing technology firm Netcore, in a Wharton School interview. “That’s where brands can use the entire data stream, those digital footprints that their customers are leaving. You can use machine learning and algorithms to predict what future action the customer is likely to take, what is the next best action the customer should be prodded towards. That’s the world of personalization that is coming up.”

Other surveys reinforce the need for personalization at retail. An Adlucent study published last week showed that 66 percent of consumers have opted in for email promotions. Sixty-seven percent have shared their social media information with a retailer.

The bottom line is that data security is on the radar for consumers. They are aware of what retailers will do with it on the positive side and they’re wary of the negative side. It’s up to retailers to make sure personalization and privacy can live in the same house.

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