Ask the Expert: Respecting Privacy in an Era of Hyper-Personalization

To seek personalization is to be human. We go to the barista who knows how we like our coffee, or to the hairdresser who understands the style we have in mind and the amount of small talk we crave. But in the online space, the inherent lack of humanity often makes experiences seem… lacking. 

So, how can brands be more like baristas and less like digital private investigators?

We asked our Lead Analyst, Lindsey Flanagan, PhD, to share ideas with us on the opportunities she sees for brands in digital today:

Q: Why are brands continuing to look for more ways to personalize their experiences?

A: Technology is evolving, giving us the ability to collect, store and use more data than ever before. And marketers have a big incentive to do so, with businesses estimating that personalization leads to a 54% increase in customer spending. 

Q: How should brands think about personalizing to “known” vs “unknown” users?

A: For logged-in users, be upfront – make sure to provide a consent or account setting screen. The additional customization assures customers that you care about their privacy, and also allows them to opt out of personalizations that don’t apply to them any more.

For unknown users, it also pays to be explicit as to what and why. That’s why Amazon will accompany product recommendations with text like, “Based on your cart, we think you’ll love these.” In addition, we’d also recommend allowing customers the choice to exclude products from their recommendations.

For purely content based experiences, or ones with technological limitations, a more subtle approach may be in order. In this case, we’d recommend a rigorous measurement approach and a pre-post analysis. We like to segment out returning users and make sure that we are seeing a lift in key metrics that merits the effort to keep running that personalization.

Q: Why should customers hand over their data? What’s a reasonable value exchange for brands to seek and offer?

A: With large data breaches being a regular occurrence, people are more aware than ever of how their data is being collected and used. Any experience, online or offline, should be planned with this in mind.

If you’ve established that collecting personal data is needed for optimizing your site experience, begin to think about how you will incentivise customers to share their information. Keep in mind, the ability to better personalize their experience will rarely be enough by itself. You’ll often have more success offering a discount, reward or value-add service.

Obviously, data collection of any sort should follow any local data governance laws and your privacy policy (which those handing over their data should also be able to find), so we recommend familiarizing yourself with any key requirements and regulations so you don’t violate them accidentally.

Q: How can brands ethically collect data in a post-cookie world?

A: A big focus of many privacy laws and regulations has been browser cookies. And so now, with cookies being regulated and deprecated, marketers have been looking for a replacement.

The problem is, there is still no good like-for-like replacement. Heavy reliance on cookies is one of the reasons that Google has held off on limiting them in Chrome browsers. That’s also why you see cookie banners popping up, asking for consent.

Other brands have been moving towards much more intensive data capture, using fingerprinting technologies, cross matching, and IP address collection to derive things about their customers that they’ve never known before. While this can lead to a strong enhancement in customer experience, these methods can often skirt around the privacy protections by following the letter rather than the intent of the law.

If you’re working with a customer data platform (CDP), we recommend implementing your data collection under the same consent standards as you would for cookies. The way that consent management platforms work is by preventing any scripts writing in a browser unless the consent of the website user has agreed to be tracked. This can help you make sure that any data collected about the activity of your customers is with their agreement.

Q: How does data collected by AI get stored and used? Are there specific privacy concerns there?

A: 91% of brands say they’re transparent with customers on how AI uses their data but only 48% of customers agree. Chances are that many of the brands within that 91% don’t fully understand how AI is using their customer data. As AI is used more and more to deliver personalized experiences, this lack of experience can lead to bias and unexpected outputs.

We recommend keeping documentation of any models that use customer data, in terms of what data goes into them, if there are any public databases that they are matched to, and how the output is being used. There are tools out there that can help you conduct those assessments, and some include the ability to raise flags and put measures in place to make sure you get back on the right data protection track.

Q: What’s the core takeaway about all this for brands?

A: Technology has given us more ability than ever to tailor the customer experience to their needs and desires, but with respect to data privacy, we can use it to either be a hero or a villain. Keep choice as a core element of your personalization and data collection, and above all, show respect to your customers. 

If you want to chat about how much personalization is right for your brand, we can provide you with a personalized touch, too. We like sharing what we’ve learned with others. We’re right here if you want to reach out.