Using Customer Data Transparently

Business Analysis
Using Customer Data Transparently

Jessica Scarane

Director of Business Strategy


"We’ve officially entered a period of heightened awareness of targeting practices and concern for data privacy. This isn’t necessarily bad news for marketers, though."

The era of collecting your web and app users’ customer data without their consent or knowledge and using it to personalize your marketing experience is long gone. Following repeated investigations into Facebook’s use of profile data, apps that share sensitive health data without customer knowledge, and marketing campaigns that know women are pregnant before their families do, the majority of internet users know marketers are tracking their behaviors online. We’ve officially entered a period of heightened awareness of targeting practices and concern for data privacy. This isn’t necessarily bad news for marketers, though.

The good news is customers find targeting helpful. To a point. In its 2018 Personalization Pulse Check, Accenture found nearly all consumers are more likely to shop with “brands who recognize, remember, and provide them with relevant offers and recommendations.” They also found the overwhelming majority of consumers are willing to share data to enable a personalized experience.

That trust, however, begins to falter if the brand goes outside the bounds of that relationship. Marketers begin to cross the line of acceptability when they introduce targeting based on information the consumer didn’t know they shared or data supplied by a third party. There is evidence that abusing that trust to sell products can lead to a backlash from consumers.

Marketers need to walk this fine line between delighting their customers with personalized features and turning them off by going too far. You can accomplish the balancing act if you:

  1. Know what’s acceptable to users
  2. Know what’s valuable to the business
  3. Communicate why you capture the data and give users control
  4. Carefully consider the methods used for data collection

Know what’s acceptable to users

The acceptability of data capture and use varies from product to product. While it makes complete sense for your cloud-based security system to know the location of your home, it can feel intrusive to share that same information with your favorite mobile game. The context of your product in the user’s life is what matters most for determining acceptability.

While recently researching testing tools, I encountered personalization that went far beyond acceptable. On my first visit to a site I’ve never searched or expressed interest in before, I was greeted with this:

It’s using my company’s name, though I’ve personally never given them that information. While it did catch my attention, it did not leave a positive impression. This is a perfect example of personalization that goes too far and creates confusion for the user. Rather than investigating their product, I’m spending time wondering how they know the name of my employer.

It’s better to build up to personalized experiences rather than deploying them as soon as a new customer lands on your homepage. That experience will make a person feel surveilled rather than catered to.

Additionally, it’s best to avoid personalizing or targeting on any data points that get too personal—health conditions, relationships, sexual orientation—no matter how deep the relationship with the consumer goes.

Know what’s valuable to the business

Once you determine the acceptable data to capture from your consumers, it’s important to assess which of those data points drive value for your business. One of the principal issues companies face when tracking user behavior and profile data is data integrity and storage. Many marketers end up with so much data from their customers they become hamstrung trying to manage it all and deploy it effectively. To avoid this glut, determine the data points that truly make a difference in converting your users and focus on them. Don’t force your users to share data if it isn’t adding value to your business or integral to the user experience.

Google Maps provides an instructive example. Even this app, which is obviously focused on navigating users from place to place and helping them discover what’s around them, provides access to the majority of its feature set without requiring users to share their location.

Communicate why you capture the data and give users control

One of the most straightforward ways to impact customer trust in your use of their data is simply communicating, honestly, what you intend to do with that data. A study conducted by Privitar concluded that consumers are more willing to share their data when businesses are transparent about how it will be used. Research by Harvard Business Review found the same. Its experiment centered on telling shoppers “that an advertisement was based on their activity on the site.” After this admission, click-through rates increased by 11 percent. The takeaway is clear: When companies are upfront about data collection and usage, customers respond by trusting the company and increasing conversion.

The same Privitar study also found that 81% of consumers say they would like more control over whether they share their personal data with a company. When the HBR study experimented with this concept, it found that the positive effect on conversion increases further when customers are given the ability to control their own data. The effect of giving user’s control over preferences was even large enough to cancel out negative effects of using third-party data the consumer did not directly share.

LinkedIn excels at both communicating data collection practices and providing customers control over them. In a user’s profile, the network itemizes individual data sharing preferences, explains how each data point is used, and allows the user to opt in or out.

Carefully consider the methods used for data collection

A perhaps obvious, but still useful, tool marketers can employ is old-fashioned data collection – simply asking consumers for their preferences and profile data. A marketer may find this is the least intrusive and most customer-friendly way of acquiring user data from less technologically-savvy target markets or from users of particularly sensitive products.

Investing app Robinhood executes this approach well by asking users to complete an investing profile after they’ve signed up. The app targets suggestions and content based on each user’s investment approach, but it asks for specific personal data like marital status, income, and investable assets. Rather than using third party data to assess a customer’s ability to invest, which could be seen as intrusive or underhanded, Robinhood simply asks the user to share the information directly.

The landscape surrounding online data capture, personalized features, and ad targeting will continue to change each year, particularly as the young digital natives become the majority of consumers. In the meantime, taking a customer-centric approach will ensure you are creating value for both your customers and your business.


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