However, an increased adoption of digital technology has resulted in much more data being readily available – and consumers are calling for enhanced transparency and stewardship of that data. With a growing awareness around data privacy rights, consumers have become more intentional about what type of data they share, and with whom. In fact, over six-in-ten (64 percent) consumers say they are likely to engage with brands that make it very easy for them to control how their data is used, while 62 percent say they will continue to use companies who explain what they do with their data.
The Covid-19 pandemic has accelerated years of change in just eight months, particularly in the way companies across the globe conduct business. Specifically, it has driven an unprecedented number of people online, to shop and perform numerous transactions which they can no longer do in person – and companies and industries, including retail, have responded in turn.
There is no doubt retail has been one of the sectors most disrupted by the pandemic. As the virus spread, so did the move to online shopping, with sales increasing by more than 100 percent during April, May and June. With the consumer going online, retailers have had to pivot to a digital-led model, leveraging the data from increased online shopping to drive personalized experiences and relevant marketing offers.
Is your data worth the discount?
As retailers head into the biggest shopping event of the year, the desire to win the upcoming festive season is higher than ever before. In a bid to lift the gloom of a Covid-stricken 2020, consumers started their Christmas shopping earlier than usual, and many shoppers are planning to spend more on festive gifts this year, despite the pandemic, than they did in 2019.
With UK retailers set to offer greater discounts as they prepare for an uptick in festive holiday spending, promotions and bigger deals could entice shoppers to share their data. With the majority of shoppers (86.8 percent) opting to purchase gifts during holiday sales to take advantage of deals, the impact of Covid-19 looks set to exacerbate this as consumers prioritize a customized online experience in favor of their personal details.
In today’s increasingly digital world, consumers have come to expect tailored, personalized relationships with brands and customized experiences (which are driven primarily by their own data), but also fear their data being mishandled or misappropriated. A study by Smart Insights highlights this, with 72 percent of consumers stating they only engage with personalized marketing messages, despite 86 percent being concerned about data privacy.
As a result, companies are grappling with the balancing act between data privacy, data monetization and consumer trust. Because the stakes are so high—and awareness of these issues is growing—the way companies handle consumer data and privacy can become a point of differentiation and even a source of competitive business advantage.
Long-term loyalty is king
During a time when uncertainty and confusion reign, brands have an opportunity to reinforce and rebuild trust with new and loyal customers alike. Companies must do more than simply write out their data policies in the fine print of the privacy notices that consumers so often click past – it’s about allowing consumers the opportunity to make proactive and informed choices about what happens to their data.
While companies need data to understand more about their consumers, ensuring privacy and transparency are key considerations when building consumer loyalty. With this in mind, companies must educate and speak confidently about their brand’s adherence to data protection laws and commitment to best practice in data privacy. Research shows consumers are still wary about sharing their data, with 59 percent of consumers waiting at least a month before sharing any personal data with brands, and 65 percent stating they would stop using a brand that was dishonest about how it was using their data. With this in mind, businesses need customers to feel comfortable with the way their data is being collected, without the worry that others have access to it, or indeed that it could be exploited and sold for commercial gain without consumers agreeing to it.
The right data approach?
Without the knowledge of where their data is being used, it’s easy for people to disconnect themselves from brands and, subsequently, stop spending, even when faced with enticing festive deals. Instead, businesses need to ensure peace of mind for consumers by building up ‘digital trust’ which, in turn, will build brand loyalty. In fact, our own Global Consumer State of Mind report found 66 percent of consumers are more likely to be loyal to a brand if they trust them to use their personal data appropriately.
When it comes to creating this trust, it’s all about ensuring a company has the right approach to both data collection and data use. The Information Commissioner’s Office (ICO), has warned businesses that customers don’t trust them with personal data and brands need to adopt a customer-first approach and understand their responsibility for ensuring data privacy, to prove such fears groundless.
Today’s consumers expect their data to remain private and those who don’t believe their data privacy is being taken seriously, won’t be afraid to go to a competitor–a high price to pay for most brands, especially given how tough 2020 has been from a financial standpoint for retailers.
By truly respecting privacy, while ensuring they can use the data collected on consumer preferences to both drive business decisions and create tailored experiences, brands can build digital trust while making the most of data as a valuable business asset.
In a world where brands increasingly rely on data to innovate and grow, consumer trust and data privacy are too important to ignore when brand reputation can so easily be damaged beyond repair. Thus, investing in data privacy can be a commercial advantage this Christmas, with transparency winning hearts and minds, rather than a New Year’s resolution that sees your brand put on the naughty list.
Shallu Behar-Sheehan, CMO, Truata