Collecting customer data to personalize interactions and improve products and services is essential in today’s digital world. But equally important is conforming to rules and consumer preferences around data privacy.Â
Not only is there a growing body of legislation, including GDPR and e-Privacy laws, but businesses who violate users’ trust can face major setbacks, from multi-million-dollar fines to irreparable damage to a brand. Just consider Meta, who had to pay a $650MOpens a new window settlement last year for invasive privacy practices, and now faces long-lasting scrutiny.Â
To succeed, companies must find a middle ground where they can balance data-driven personalization with privacy and protection. Much of this revolves around building trust and a reciprocal relationship with customers, so they will be comfortable sharing information with a brand they value and trust.Â
It is up to marketers and businesses to not only ensure data is collected responsibly and secured safely but also to guarantee that customers receive enhanced experiences in return for their data being collected.
See More: How Zero-Party Data Can Take Your Customer Experience to The Next LevelOpens a new window
Third-party Data Tracking Is Being Overhauled From the Ground Up
Third-party cookies have often been used to track users across multiple websites for advertising invisibly. But in 2022, new rules and regulations are cracking down to fix privacy issues.
Google has taken a hard stance and plans to phase out third-party cookies by 2023. Likewise, Apple’s App Tracking Transparency (ATT) framework is making Apple devices ask for permission before monitoring activity across apps and websites. Another recent example of limiting third-party tracking is Mozilla’s Enhanced Tracking Protection (ETP) 2.0, which redirects tracking in Firefox by clearing site and cookie data set by known trackers every 24 hours.
Changes by Google and others to limit third-party tracking are forcing businesses to implement new plans to understand and engage with customers. These include a renewed focus on gathering first-party data and building more direct data relationships with customers via intelligently designed products, loyalty programs and risk reduction.Â
It Is More Than Just Navigating Cookie Restrictions — Understanding Customer Comfort Levels Is Essential
Customers today expect and often welcome highly personalized web experiences. They generally want businesses they trust to understand the context of their interests in a service or product so that organizations can adapt to their needs and preferences.
However, customers are increasingly cautious about handing over their private information. This is especially true if a customer does not have a strong existing relationship with a business or if they are unclear about what their data will be used for. Put simply, customers appreciate the benefits of personalization, like improved services but don’t want to be followed across the web or subjected to invasive surveillance just for an advertising profile.Â
While privacy is becoming more important, many vendors have fallen into the habit of simply “tracking everything†as soon as possible in case excess data will be useful later. This can lead to disaster, especially since there is a growing resentment toward middlemen and third parties that track users across websites.
One of the key reasons for the public outcry against Meta was that the company used a level of data capture in its products that were much higher than needed to provide great service. The implications of this mistake signal a broad, overall shift in customer data use and collection practices.
Achieving the Balance Between Personalization and Privacy
We will see a change in focus from understanding customers better to understanding them “well enough†at an appropriate level. This will enable businesses to provide necessary services without violating customer privacy expectations.Â
Companies still using third-party web analytics solutions will face long-term challenges in their digital marketing, personalization and marketing attribution. Recognizing this, many progressive companies are already implementing plans to build their own first-party data pipelines.Â
The first step for many is to take end-to-end control of their data and data processing infrastructure. This may require defining what data a business wants to capture about users and also taking responsibility to ensure data is only used in ways that are clearly understood by customers and the business alike. Additionally, if third parties are involved, all should clearly understand who data is being shared with and why.
Organizations may also need to control where and how data is stored, including who can access it and what it might be accessed for. For instance, a customer support team may need to access a specific customer’s info to help them at a given time. But instead of seeing individual user data, product teams may only need access to data grouped as cohorts to understand new features or improve solutions.
Improving Quality With AI-ready Data
Businesses may not only need to limit the information they collect but also ensure that the data they gather is meaningful enough to power AI-driven predictions and advanced analytics. Doing this may require removing data preparation bottlenecks and fixing an overreliance on third-party tools.Â
For instance, if a business adopts an end-to-end platform on its own cloud, it may be able to unify its data better and customize how it is categorized and defined, even if data is collected from various sources such as the web, servers, webhooks, IoT, and more. Businesses can also prep their own data warehouse, lake or event stream to optimize its form and context for AI and business intelligence. This can help provide less biased data that looks at broader behavioral context for better predictions.Â
Providing Transparency Is Increasingly Vital
There will never be exactly defined proper boundaries between privacy and personalization because comfort levels will always vary between individuals. But if customer experiences are improving, customers tend to trust brands and are not bothered much when data is collected, even if a lot of data is gathered in some cases.
To build trust, businesses must be open with customers about how data is being used and avoid approaches that can be seen as intrusive. To achieve this transparency, many companies can benefit from reassessing their data collection and reporting. Specifically, organizations can determine if they need to track certain personally identifiable information and, if so, how much data is really needed for valuable insights.Â
Most issues with data collection revolve around how personal data is collected and used. If customers find out a business has been collecting their personal info and have no idea how that info is being used and by who, it raises red flags and sometimes outrage. Businesses must reverse this trend, which means marketers and others must be honest and transparent about what data they collect and how it is collected and used.Â
When possible, businesses should actively engage customers in continual conversation to build mutual understanding and trust. Organizations can benefit from this conversation by emphasizing that they are not relying on dishonest data collection or sneaky third parties. Additionally, businesses should educate users and customers on their options and customize data collection to match individual preferences.Â
See More:How To Help Consumers Understand Your Approach to PrivacyOpens a new window
Don’t Delay Improving Your Data Practices
Future-facing businesses are already overhauling their data capabilities to meet new rules and customer expectations. This will allow them to harness tools like AI-ready behavioral data to deliver relevant, personalized services without sacrificing privacy or brand integrity. Those who wait to improve may struggle to manage data and alienate customers altogether.
What data practices are you following to balance privacy with personalization? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .