- The tension between personalized experiences and privacy is increasing.
- A data-driven approach to designing personalized experiences benefits the customer and the company, but when done wrong, risks violating customers’ trust.
- To be successful and trustworthy, proper consent and data management are necessary.
Most customers want all of their interactions with a brand to be personalized. According to the 2022 Gartner Customer Service and Support Survey, 71% of B2C and 86% of B2B customers expect companies to be well informed about their personal information during an interaction. However, there’s an inherent tension between personalization and privacy. As data-driven interactions become necessary for providing an effective customer experience (CX), customers also become alarmed by how their data is used.
High-profile data breaches and data ethics scandals elevate privacy concerns and accelerate the desire to withhold personal information. Government regulations around the globe, such as Europe’s General Data Protection Regulation (GDPR), redefine the standards by which data is collected, stored and used.
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“By 2025, 75% of the world’s population will have its personal information covered by modern privacy regulations,” says Brad Fager, Gartner Senior Director Analyst. “This reiterates the need for brands to leverage customer data with a proper understanding of customer preferences, terms of service and relevant regulation.”
The implications of using data for personalization
Providing personalized CX requires companies to walk a fine line between using data to enhance the experience and being “creepy.” For example, service representatives should use judgment during live interactions to ensure customer information they leverage, such as prior contact history and product usage, doesn’t cross that line.
As marketing and service leaders, it’s imperative to be cautious about how you use and manage customer data so as not to lose trust. In 2020, eight out of 10 customers were unwilling to share personal information with companies they do not trust. Brands must ensure they use their customers’ personal data only for the original intent. For example, data collected for product improvement should not be used in marketing.
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Four ways to properly manage customer data
- Be explicit with consent management and preference settings to give customers better control over how their data is used. Delineate these settings by functional area (e.g. marketing, sales, customer service), and use cases to avoid conflating applications of data.
- Prioritize transparency in privacy settings so customers know how and why you intend to use and manage their personal information. Communicate proactively about preference and consent.
- Make ethics a core component of your data management strategy by creating data use cases based on how these use cases bring value and benefit to the customer, not just to the company.
- Limit data collection to what’s actually needed by defining each data use case so as to collect the minimum data required through the least invasive methods.