Consumers 'not feeling benefit' of sharing their data
Most American and Canadian consumers (74%) say they are not feeling the benefits of sharing their personal information with marketers, according to a survey by loyalty marketing group LoyaltyOne.
The online survey of 1,000 American and 1,000 Canadian consumers found that only 52% said they somewhat or strongly agreed with the statement that companies use their personal data "so they can better serve me". Breaking down these responses, only 9% said they strongly agreed that companies use their information to serve them better.
At the same time, 54% said that they expect improved customer service in exchange for their personal data, and 55% said that they expect access to exclusive events and offers.
The company suggests that marketers need to solve an important perception problem about the benefits that consumers can expect in exchange for sometimes highly-personal information.
Underscoring this perception problem, there were several key areas in which fewer than half of the consumers surveyed acknowledged receiving basic benefits in return for their information, including:
- Tailored offers based on what I buy (49%);
- Advance information on new products and services (41%);
- Communications based on my preferences (41%);
- Easier buying process (39%);
- Preferential treatment (36%);
- Product range improvements based on what they know I buy (36%).
Interestingly, product discounts - a benefit not necessarily associated with the development of a long-term relationship between customer and company - actually scored highest (71%) as the offer that consumers expect to receive in exchange for their information.
"The message isn't getting across to the consumer that the primary reason marketers use customer behaviour data is to enhance the individual customer experience and build a deeper relationship," explained LoyaltyOne's president, Bryan Pearson. Pearson directs six global enterprises at LoyaltyOne, including Canada's Air Miles Reward Programme, and is the author of the forthcoming book, 'The Loyalty Leap: Turning Customer Information into Customer Intimacy' (Penguin Group, May 2012).
The study also found that consumers' actions sometimes speak louder than their words. For example, when asked, "What, if anything, have you done in the past 12 months to protect your personal information?" some 41% said they had used cash instead of a credit card to protect their personal information. Respondents who said they had been notified that their personal information had been compromised were more likely to take such actions to protect themselves and, not surprisingly, those who said they had actually been negatively affected by a compromise of their personal information were even more likely to take action.
Perhaps more worryingly, nearly one in four consumers (23%) said they had previously decided not to make a purchase from a company out of concern about the potential use or misuse of their personal information.
Consequently, Pearson offers five best practices for using customer data more responsibly to help create real value:
- Be transparent Express in straightforward language what you are trying to do, what you're achieving, what's in it for the customer, what's not in it for the customer.
- Give consumers a choice In the loyalty programme arena, to run a value exchange-based relationship with the consumer you need to gain trust. The best way to gain trust and commitment is by giving customers the opportunity to choose whether they share information. Permission-based or not, responsible marketers can add value for the consumer if data is respected. Problems arise when marketers cross the "creepy" barriers into the ultra-personal areas such as health, finance and sex, and marketing to children.
- Safeguard consumer data The best precaution is to keep only the data necessary to serve the customer and take proper steps to protect it. Use data only as directed and always, repeat always, destroy data with care.
- Monitor frequency of usage Don't wear out the consumer's trust. Make sure communications aren't too frequent and are relevant to the customer's needs.
- Mutuality of value Create real value for the customer: a fair exchange of value. It's not about the product exchange, cash, points or coupons. It's about something bigger: personal relevance.
Further details of the survey have been published in a report entitled 'Challenges that Data-Use Marketers Face in a Privacy-Worried World', which has been made available free of charge from LoyaltyOne's web site - click here (free registration required).