Customers expect personalization in every single interaction with a brand. At the same time, they don't trust companies to keep their personal information safe and handle it responsibly. Companies everywhere face this dilemma, as a new study shows.
Cloud communications platform Twilio's third annual The State of Personalization Report shows that 62% of consumers expect personalization – otherwise they would break their loyalty to brands. Conversely, 49% say they will buy from a brand again if it offers a personal shopping experience. And only 40% believe that companies use their data responsibly and keep it safe.
The report shows that a lack of trust is increasingly affecting consumers' purchasing decisions: for 60%, trustworthiness and transparency are the most important characteristics of a brand. In 2021, it was still 55%.
Personalization vs. Privacy – a paradoxical relationship
Providing personalized experiences requires personally identifiable data but changing consumer attitudes to online data disclosure presents companies with a paradox.
First-hand data is ideal for data protection, i.e., data is collected directly from the customer with their consent. According to the Twilio report, 63% of consumers say they're okay with personalization as long as brands use their own data and not data purchased or rented from third parties.
Protecting privacy is a challenge for every generation – and an opportunity
Companies have long "borrowed" customer relationships from advertisers and social networks. These companies collect behavioral and demographic data and then resell it as targeted audiences. However, comprehensive data protection regulations – both at legal and corporate level – force them to stop buying their customer relationships from others but to own them.
This turning point isn’t insignificant. Half of the companies surveyed said recent changes in privacy regulations have made personalization more difficult. However, since Google, along with Firefox and Safari, will ban third-party cookies by the end of 2023, switching to first-party data is no longer optional. Many companies are already responding to these shifts in consumer preferences, policies and technologies.
Interestingly, according to the report, data privacy concerns are most prevalent in APAC: 60% of consumers in APAC say they’re bothered by a lack of data privacy, compared to rates nearly half that in other regions.
Data and technology barriers to personalization at scale
Technology remains a hurdle for many companies. Tech giants have a multitude of data scientists and enormous budgets to make large-scale personalization a reality. Average companies, on the other hand, are still struggling to fully embrace personalization initiatives, the study found.
After all, six out of ten respondents stated that they will invest more in personalization this year. The most common obstacles include lack of technology, unclear ROI, lack of accurate data and organizational hurdles. Companies are therefore investing more and more in better technology for managing customer data and can thus build deeper customer relationships.
By Daniela La Marca