Concerns about personalization have surfaced before, somewhat comically with stories of internet users being “chased around the internet” by particular products, but for many people recent news stories have bought into stark focus the amounts of personal data being collected. And brands that are misusing this data have been feeling the backlash.
Introduction of the GDPR (General Data Protection Regulation) directive from the EU has set new standards for how companies collect and use personal data. Now companies no longer get to choose whether or not to be a trusted guardian, they are legally obliged to do so, and transparency is a must.
So, the issue for brands is now to focus on getting the value exchange right. Delivering hyper-personalized experiences without being too intrusive is indeed a challenging balance to strike. When is personal too personal? Research from eCommerce personalization firm Rich Relevance showed that 69 percent of customers find it “creepy” when companies understand their shopping habits so well that companies can use artificial intelligence to look at their personal data and choose or order products on their behalf. Brand and consumer relationships are no different to any other relationships—trust sits at the heart.
Brands need to step back and consider the value proposition on offer for customers. Customer data can drive real value back to the business if it is given a purpose. Brands that get this right do so almost invisibly, so closely aligned is their purpose to what customers want.
Some brands are using data effectively to curate relevant products and services. For example, Netflix: 80 percent content watched on Netflix is recommended by an algorithm but for consumers this is part of the joy of Netflix. Viewers are happy to receive tailored services and provide data, because they derive pleasure as a result. The value exchange is simple and transparent.
Other brands are using data to predict customer problems that can then be solved proactively providing a more seamless experience. Some motor manufacturers are using customer data to predict breakdowns and review warranties. Surely a beneficial exchange.
Whether your brand is “cool” in its use of data, or “creepy” will become the overarching marker of success, and companies that do it right can profit hugely in monetary terms, and also brand appreciation and recommendation. Amazon, for instance, is reported to have added up to 35 percent to its bottom line for its non-invasive “Your Recommendations” channels. Getting the balance right is the challenge.