Trust and the Privacy-for-Personalization Exchange
When it comes to brands cultivating personalized experiences, customized products and individualized recommendations, consumers are prepared to trade off a valuable asset—their personal information. In particular, Millennials are significantly more likely than prior generations to provide brands with their personal data in exchange for convenient, customized, and timely treatment.
That’s according to a recent survey we fielded at Gongos, which found that more than half of Millennials are willing to have their facial details and fingerprints on file with retailers if it means: a more convenient experience (55 percent), customized products and services (55 percent), or real-time promotions (52 percent).
The openness to sharing such sensitive information speaks volumes about the desirability of personalization, but it is not to be taken for granted. Brands must prioritize gaining and maintaining consumer trust for this comfort level to continue, as further demonstrated below.
Rooted in an era of hyper-personalization
One-to-one marketing has, well, consumed corporations for some time now, and consumers—particularly Millennials and Gen Z—have grown up in a world of “hyper-personalization.”
Since 2000, Netflix has offered personalized show and movie recommendations to subscribers, and today the brand boasts more than 158 million paid memberships in over 190 countries. In 2012, the New York Times reported on Target’s ability to determine the likelihood of a woman being pregnant, and subsequently sending promotions corresponding to different stages of her pregnancy. As for Amazon, a 2017 report from SmarterHQ found 44 percent of customers buy from product recommendations.
The dichotomy of trust
Given the Target and Home Depot data breaches, in 2013 and 2014 respectively, in which nearly 100 million credit and debit cards were compromised, the willingness of Millennials to share personal data with retailers today is somewhat surprising, considering the relationship between their willingness and wariness in doing so.
|Willing: Of those polled (Millennials, Gen X, and Boomers), 57 percent attested to trusting retailers over banks to protect their personal information. And 37 percent trust retailers more than any other institution listed in the survey (including government, the healthcare system, social media friends) to protect their personal information.||Wary: Our survey also indicates that Millennials are 1.5 times more likely than Boomers and 1.2 times more likely than Gen X to delete all of their online retail accounts in order to have a fresh start and be more selective with companies in which they share information.|
While U.S. retailers are doing comparably better at earning the trust of consumers with personal data than other American institutions, these themes reveal an important caveat to consumers’ willingness to relinquish privacy: caution.
So yes, consumers have a strong appetite for customization. More than half of Millennial respondents to our survey (56 percent) said they would toss their current, non-customizable brand aside for a brand that makes it possible to customize products or services.
And yes, the ability of brands to feed that appetite depends on the inflow of personal information. However, consumers’ openness to relinquishing personal data is conditional.
What does this mean for brands moving forward?
There are two paths toward building consumer trust and tailored experiences, both vital and grounded in consumer empathy.
- Assess what “trust” means to your customers. How do your customers define trust? How strong is that trust? How can you strengthen it?
Our survey found 44 percent of Millennials are willing to buy a product form a company if they are aware of its business practices—even if they do not agree with those practices. This speaks to the importance of brand transparency in building consumer trust. That said, trust means different things for different brands, depending on factors like industry and deliverables. So, consumers could just as easily base their trust on whether a product was ethically made, if the brand promise is being kept, or the authenticity of marketing influencers, for example.
The 2019 Edelman Trust Barometer Special Report on brand trust is a great place to start. From there, you can pinpoint the areas of trust your brand should focus on and then delve into the “why” through primary research.
- Find authentic ways to personalize. What does personalization look like from the perspective of your customers? Is it about products, promotions, services, experiences, or something else?
Three out of four Millennial and Gen X Gongos survey respondents anticipate all digital marketing (e.g. sponsored ads and emails) will be tailored to their preferences at all times within the next three to five years. This finding highlights the importance of timeliness in an era of hyper-personalization. For example, pushing smartwatch ads to a customer who spends a lot of time comparing smartwatch features and pricing online might be the right approach. But, continuing to push the ads their way after they’ve purchased a smartwatch is often a turn off. At this point, if they decided to go with your brand, it might be worth sharing content that covers product use and maintenance.
Personalization is not always linear, and understanding which forms provide the most value to your consumers requires truly mapping your customer’s journey.
What will the impact be on the importance of consumer research for brands?
As advocates of the customers’ voice, researchers have a responsibility to walk the talk. We must hold ourselves to the same standards we hold client brands to when it comes to hyper-personalization and trust. We must go to market with compelling experiences, tailored to the people we are seeking to understand.
The trend toward personalization is here to stay for the foreseeable future; it is well beyond a fad. And given that only 27 percent of our survey respondents purchased a customized product within the last year, there is a gap or, as we like to say, an opportunity, for brands to get this right.
As consumer expectations regarding more convenient, customized and timely treatment continue to escalate, the value of personal data will grow. Keeping that information flowing in will require brands to respond—not only through the creation of tailored deliverables—but also as to how they choose to earn and cultivate consumer trust.