How to Balance Personalization With Data Privacy

April 09, 2019

Contributor: Susan Moore

Risk-averse privacy ideas often prevent organizations from creating great customer experiences.

If you were asked to hand over your email address in return for a free pizza or a discount on your daily coffee, would you do it? How often do you tick "Agree" without reading an app's privacy policy?

Despite having less trust in brands to use their data ethically, millennials are more willing to provide companies with information in exchange for convenience and personalized experiences, according to a recent Gartner survey. This is the privacy paradox — the apparent inconsistency between customer concerns about privacy and actual online behavior.

“ Customers expect to be recognized and want their experiences personalized”

Companies often operate under the misconception that personalization and privacy are conflicting efforts, not symbiotic opportunities. The privacy paradox sets up potential conflict between data and analytics leaders, customer experience (CX) leaders, marketing leaders, security and risk leaders, and other business and IT stakeholders. It undermines CX initiatives, frustrates customers and limits new business value.

“Organizations are losing their best chances to create great customer experiences due to needlessly risk-averse privacy ideas that limit the use of personal data,” says Penny Gillespie, VP Analyst, Gartner. “The key is to bring value to customers and keep data use in context.”


Customization is the key

The objective of personalization is to enrich the experience of the individual, but few brands deliver. Only 12% of consumers say they get customized assistance from brands, according to Gartner research.

With the diminishing value of the traditional “four Ps” of marketing (product, price, promotion and placement) due to internet-enabled price visibility and product availability, customer experience has become the primary differentiator among organizations.

“ Organizations that combine identity data with behavioral data will outpace those that don’t”

Data privacy concerns often lead enterprises to use only non-personal data, such as anonymized information or aggregate behavior data, which may be helpful but is not always compelling to customers.

“Customers expect to be recognized and want their experiences personalized. If they don’t get it, they may go elsewhere,” Gillespie says. “Organizations that combine identity data with behavioral data will outpace those that don’t.”

Address the privacy paradox

Gillespie suggests eight steps you can take to mitigate risk while driving revenue:

  1. Understand privacy principles and requirements such as the EU’s General Data Protection Regulation (GDPR), as well as personalization based on personal data from legal counsel, business advisory or other education avenues. Reframe the discussion and actions to focus on using personalization and data privacy to enable, not annoy, your customers.
  2. Recast the relationship between personalization and privacy as symbiotic by defining the requirements for accessing and using individual-level data. This creates a more refined, trusted and contextualized optimal CX.
  3. Focus on the customers. Use their data to enhance their experience with your brand and make them more efficient, but stay in context.
  4. Enlist the help of legal counsel as well as compliance and public relations advisors to incorporate the balancing role of privacy with business process and innovation into their analysis of marketing, CX, new data product development, security protocols and risk assessment.
  5. Educate stakeholders across the organization on how privacy often supports creating an optimal CX. Use case studies to illustrate the role of privacy and personalization in creating trust and generating business value.
  6. Become a thought leader by augmenting generic personalization tactics with personal data. Create new data products and drive new revenue sources by delivering compelling experiences to your customers.
  7. Collaborate with CX and commerce leaders to expand personal data collection, use and sharing. Build customer trust by establishing best practices for transparency, incorporating privacy and employee training on ethical data use.
  8. Reduce stakeholder friction by ensuring that critical customer analytics initiatives include only the specific individual-level data needed to align the CX, customer preferences, requirements and interests.

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