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Consumers Are Wary of How Companies Use Their Data: What Retailers Need to Know
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Consumers Are Wary of How Companies Use Their Data: What Retailers Need to Know

Data misuse scandals have left customers questioning the trust they put in companies. Here’s what retailers need to know in the post-breach, trust-first climate.

Let’s face it: Trust in how companies use consumer data has reached a low point.

Today’s digital world revolves around companies collecting individuals’ data. In the early days of the internet, consumers willingly handed over their email addresses, birthdays, social media handles, and other details with the promise of receiving personalized offers and better experiences.

Fast forward to 2019, when data breaches at banks, social media firms, and other organizations are a regular news fixture. Data misuse scandals have left customers questioning the trust they put in companies.

At the same time, retailers rely on the ability to personalize digital and in-store visits based on data. As I visit retail HQs and attend industry conferences across the country, I often hear the question from retailers: How do consumers feel about all this, and what does it mean for our consumer experiences?

Consumers’ lack of trust doesn’t mean retailers can no longer take advantage of opted-in consumer data to personalize. Rather, it reiterates a need to increase transparency and build better consumer relationships.

New policies like GDPR and CCPA are forcing companies to turn data back over to the consumer, which is something they should have done all along. Here’s what retailers need to know in the post-breach, trust-first climate.

Retailers are in the midst of a personalization paradox

Consumers have become skeptical of the way companies use their data. According to new research:

  • 59% of customers believe their personal information is vulnerable to a security breach.
  • 54% don’t believe companies have their best interests in mind.

Here’s where the personalization paradox comes into play. While 59% of customers believe they’re vulnerable to a breach, 84% say being treated like a person, not a number, is very important to winning their business. That 84% want to be personalized to, which seems like a mixed message.

Leading retail brands lead with personalization

Adding to the complexity, a look at today’s retail landscape shows that many best-in-class retail brands are highly focused on personalization. For example, Stitch Fix’s entire business model centers on personalized and curated clothing boxes. Sephora offers personalized in-store services and offers to loyalty program members. Specialty retailer Stonewall Kitchen offers unique product recommendations based on shoppers’ browsing behaviors and past purchases. Guided by Salesforce Einstein, 78% of shoppers who are served a Stonewall recommendation add that item to their online cart, and 41% ultimately purchase the item.

So what makes Stonewall’s personalization strategy work in today’s skeptical environment? Retailers should adopt one core value to address customer worries and conflicted feelings: transparency.

The bottom line: focus on transparency and trust

A full 92% of customers are more likely to trust businesses with their data when they’re given control over what’s collected about them. Visibility and control are each key. Customers want transparency into their privacy options and the agency to make their own decisions.

If they follow this guidance, retailers can expect consumers to thank them in the following ways:

  • 95% of customers are more likely to be loyal to a company they trust.
  • 92% are more likely to purchase additional products and services from trusted businesses.
  • 93% of customers are more likely to recommend a company they trust. Given the prevalence of social media, online reviews, and influencers in retail, a single post — whether positive or negative — can have a big impact.

Consumers are done willingly handing over their data. Who can blame them? Retailers need to earn trust — and be worthy of it — if they want to take advantage of opportunities for data-driven personalization and make use of all the data scientists they’re planning to hire in the next few years.

Retailers who make their privacy policies clear and give consumers options will win in the age of the personalization paradox. High-performing retailers will continue to focus on data, but they’ll do so with full opt-in permissions and consumer trust.

 

As content strategy director at Salesforce, Heike researches and writes about trends in sales, customer experience, and digital transformation. For two years, she hosted and produced Salesforce's award-winning podcast about digital marketing: the Marketing Cloudcast. Before joining Salesforce, she edited bestselling nonfiction books and managed social strategy and content for B2C brands. Heike's work has been featured in USA Today, Forbes, Wall Street Journal, Business Insider, and more.

More by Heike

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