Nov 25 2019
Data Analytics

How to Find the Balance Between Ad Personalization and Customer Privacy

Retailers can deliver a tailored experience without disturbing customers or losing their trust — but must also do it in a way that provides valuable data.

While personalized outreach to customers has become both more common and more successful, retailers are finding that they’re not learning as much as expected about who their customers are.

They’re working on ways to improve the experience so that customers don’t feel that they’re being tracked with ads so precise that they seem like an invasion of privacy.

“To achieve this level of engagement, marketers need the ability to predict — without coming across as intrusive — what their target audience will think, feel, say and do across a variety of scenarios,” Jeremy Hlavacek, head of revenue at IBM Watson Advertising, told eMarketer

“And with the incredible amount of data available now, personalization is more complex than ever,” he added.

MORE FROM BIZTECH: Artificial intelligence may help retailers learn more about consumers’ feelings.

Inaccurate Ad Personalization Turns Off Customers

According to a report by the firms Econsultancy and RedEye Optimisation, 71 percent of organizations undertake some form of personalization in their marketing activity — many using marketing automation software — and most see results. In fact, the report says 4 out of 5 companies report an “uplift” since implementing personalization, and nearly one-fifth of these saw this in excess of 20 percent.

Email is the most common personalization channel, with 77 percent of marketers personalizing their email marketing; about 52 percent personalize their websites. 

Even while marketers report that personalization works, a broad swath of consumers say that personalization efforts can end up annoying them. A report from SmarterHQ shows:

  • Nearly two-thirds (63 percent) of consumers have stopped buying from a brand that employed poor personalization
  • Sixty-six percent were annoyed when they were targeted too many times
  • Forty-four percent found it annoying when brands targeted them for too long a period of time 

A large number of shoppers also reported annoyance at being targeted for items they’d already bought (39 percent) or for items they were purchasing as gifts (37 percent), the report found.

The issue may not be the tidal wave of personalized messages, but rather the feeling among customers that brands are watching their behavior. Forty-one percent of consumers say that marketing crosses over into what SmarterHQ termed “creepy” territory when they’re not told how brands will use their data, and 40 percent say they are unnerved when they find out that their data is being tracked. 

The irony is that even as retailers are reaching out to large numbers of their customers with their tracking efforts, many retailers are finding it difficult to identify those customers. According to a 2019 report from OneMarket, only 27 percent of retailers say they can recognize more than half of their website visitors with their existing ID management solutions. 

Customer ID Management Provides Valuable Information to Retailers

To achieve the benefits of personalized marketing without turning off consumers, retailers must invest in solutions that will allow them to track and make use of customer data in ways that feel both unobtrusive and valuable to their customers

One example is customer ID management solutions, which can help companies better recognize repeat shoppers who come to them through online channels. When combined with customer relationship management solutions, customer ID management tools can drive gains in customer insights and predictive intelligence. 

“Customer ID management is a crucial activity for retailers in order to deliver personalized, relevant experiences to their customers and visitors,” says Dave Goulden, chief product officer at OneMarket.

Within physical stores, retailers can use tools such as sensors and smart screens to track customer interests. However, it’s critical that these efforts be both transparent and valuable, or else they can risk turning off customers.

Finally, customer service management software from providers such as ServiceNow or IBM can help retailers track and manage customer contacts more effectively. According to a 2019 study by Forrester, such tools can result in a three-year, $1.6 million benefit due to improvements in customer retention alone.

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