As consumers are increasingly shopping beyond the boundaries of their home countries, retailers and brands are faced with not only meeting differentiated needs and personalized preferences specific to different markets, but also complying with a widening set of data protection requirements.
Data protection laws are expanding globally, according to Consumers International.org, which currently cites more than 100 countries around the world which now have data protection laws in place. Even in the U.S., the California Consumer Privacy Act of 2018 (CCPA), slated to go into effect on January 1st of 2020, mandates (similar to GDPR) that companies gather consent from their consumer base when it comes to collecting and using data.
Our own customers, both in the U.S. and those that serve consumers overseas, have expressed interest in ensuring that the data we gather are GDPR compliant (they are, and SOC-2 compliant, too). But they’ve also expressed concerns about whether this new “compliant” version of consumer data would continue to serve as a relevant guide for decisions on consumer product preferences, pricing and more.
Retail is walking a fine line as consumers want to have their cake and eat it, too. According to recent research, while most consumers in the United States would welcome personal data protection rights similar to GDPR, research from Segment found that on average, 71% of consumers express some level of frustration when their experience is impersonal. The same report found that 49% of consumers have purchased a product that they did not initially intend to buy after receiving a personalized product recommendation from a brand.
I came across a great piece in CMO.com which discusses the duality of data privacy and personalization: “The modern consumer demands increased privacy, tightened data controls, and the right to be forgotten. That's easily deliverable until you contrast those demands with their expectations for tailor-made content, bespoke product recommendations, and uber-personalization.”
Retailers and brands are understandably concerned about how to move forward, as many have spent years curating consumer data and building systems to offer personalized services. Before GDPR, most technology solutions enabled retailers to gather Personally Identifiable Information (PII) that would then allow these retailers to go back and provide personalized offers, products and recommendations. PII is a big NO nowadays, as it enables the retailer to identify individuals directly. Just last month, Harriet Carter Gifts was hit with a potential class-action lawsuit accusing them of using a technology that captures keystrokes and IP addresses that can be used to identify people. As regulations on data privacy tighten faster than retailers can adjust, it’s likely that we will continue to see these kinds of lawsuits.
Another rising privacy concern according to Sourcing Journal is how retailers are finding and using location data from customer’s phones. Retailers leverage these data to determine what consumers are shopping for, how to advertise and the market voids open to new opportunities. ‘They’re buying mobile-phone data that can track where and for how long people shop, eat, see movies – and where they go before and after. It allows them to determine personal details that paint a picture of who consumers are.’
So how does a retailer or brand capture data on a shopper that will enable them to offer personalized preferences in line with expectations while adhering to new privacy laws?
The answer lies in “Zero Party Data”, or data that are intentionally given to retailers by consumers. There have already been studies which discuss how retailers and brands are benefiting from this type of data, as consumers who volunteer their information are likely to give richer information and be more open to engaging.
This data set enables retailers and brands to build direct relationships with consumers, and, in turn, better personalize their marketing efforts, services, offers and product recommendations without the guesswork.
An example is one new study which found that marketers that were prepared to meet and exceed the GDPR standards, when introduced, saw a marked increase in consumer trust, loyalty and engagement levels. This is according to the results of a survey by the CMO Council in partnership with SAP Customer Experience.
Further, according to a recent report by the Interactive Advertising Bureau (IAB), two-thirds of European brands indicated that they actually increased their programmatic ad spending in the eight months after the GDPR came into force on May 25th, 2018. Three-quarters (76%) of UK brands reported some level of data quality improvement.
U.S. retailers are starting to catch on as well. Walmart, Kroger and Target are exploring how they might use the customer data they possess to build an advertising business, with the aim of both increasing basket value and using ads in the age of GDPR.
As retailers and brands continue to arm themselves for the coming onslaught of new regulations around data and consumer privacy globally with no end in sight, ensuring their technology partners bring a Zero Party Data approach is a good start, as is ensuring they are compliant with GDPR, which is increasingly becoming the standard for other countries as they develop their own laws.
I believe as we move further into the GDPR world, we will continue to see the benefits of data privacy controls, including happier, more engaged consumers who are willingly offering their data to inform retailers and brands, bringing better personalized marketing efforts, services, offers and product recommendations.
