What the Privacy Paradox Means for Retail Today

Privacy is important. We lock our doors and our home screens, and chances are you probably close your blinds at night (predictive analytics at it's finest). But as big data becomes further enmeshed with the retail experience, today's consumers are faced with a choice: to keep things private, or personal.

In the wake of Target's notorious pregnancy snafu and countless articles and op-eds on "spooky marketing," data-driven retailers need to take care to avoid getting too personal with shoppers. What's not helping: customers' own assessments of data usage. When polled, many consumers express unclear or even downright conflicting sentiments on which data is okay to collect and how retailers should be using it.

So, what exactly do customers want when it comes to data and personalization? A few of our own (data-driven) observations:

1. Consumers do want personalization. A 2015 Accenture survey found that more than half of consumers are eager to receive real-time promotions and product suggestions, with 82 percent welcoming automatic discounts for loyalty programs. Likewise, roughly four in five adults say that companies should be able to gather their personal data in some form or another.

2. ...But it depends on the details. Consumers are picky about how their data is being used: only 1 in 4 consumers are okay with tailored search results, and even fewer (15%) also approve of their data being shared with third parties. Other data-collecting initiatives that got the boot from consumers: tracking location and browser history.

Generational trends can also skew consumer preferences in the trade-off between personalization and privacy. When presented with the scenario of a drug store alerting individuals of negative interactions with existing prescriptions, 70 percent of Millennials saw a helpful solution. The same proportion of Baby Boomers reported feeling uncomfortable with the idea.

3. ...And there's always a catch. Nearly 3 in 4 Millennials report understanding why disclosing personal information is necessary to receive targeted offers and shopping experiences. But with great data comes great responsibility — these shoppers will also expect a higher caliber shopping experience, eschewing retailers who send batch-and-blast emails or irrelevant promotions.

So what's a retailer to do?

The broadest trend we noticed across consumer preferences was a demand for more autonomy and transparency in data sharing. While 73 percent of consumers prefer to do business with companies who use their data to personalize the shopping experience, nearly 90 percent also believe they should have control over how that information is being used.

Involving consumers more directly in data sharing should be a priority for e-commerce and omnichannel retailers. Many of today's customers are eager to swap data for a tailored experience, as long as the sharing feels more like a informed decision than a sneaky marketing ploy (see: personalized shopping startups StitchFix and Fitbay, Netflix's self-reported movie ratings, and most recently, Maille's high-tech mustard spoon).

Now that consumers are aware of the power of their personal data, they'd be happy to share it with their favorite retailers, just as long as they start asking nicely first.

Tagged : privacy

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