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The irony of data privacy and personalization

Consumers want both data privacy and personalization. Though these themes sound in direct conflict, brands have to find a way to walk the tight rope of meeting both sides of customers' expectations. Here's how.

The majority of consumers continue to express concerns about data collection. And those very same consumers expect companies to deliver more personalized experiences.

Yet brands can’t deliver personalized experiences without collecting personal data.

And that's the paradox of our time (as marketers)—the great irony of personalization. We want the ends, but we aren’t sure if it justifies the means. 

It’s something every company is grappling with. Customers crave personalized experiences but are wary about sharing their data. Brands want deep relationships with their audience but are wary about violating customers’ trust. 

It’s a razor-thin line to walk. One with‌ no compromise—we either have personalization (and with it, data collection), or… we don’t.

There's one shade of gray, however. As third-party cookies go away, consumers can get personalization without risking sharing their private information with unknown third parties. For consumers, it means choosing to provide zero- and first-party data to brands that they want to know more about them.

We get it—you don’t want to share your data

You likely don’t want to share your data because, historically, web activity has been tracked, analyzed, and sold by shadowy brokers for nefarious purposes. Not to mention the data breaches

It’s easy to fear surveillance when you don’t know where your data might end up. However, a default assumption that data collection—as a whole—is harmful is a misguided belief. 

In the ongoing battle of privacy vs. personalization, many thought leaders recommend a “right down the middle” balance between the two. And although there are ways to collect only necessary data or only tailor select customer interactions, the balancing act can lead to the undermining of utility on both sides. Privacy won’t be private enough, and personalization won’t be personal enough.

Personalization isn't only great for business—it’s great for user experience, too

Personalization drives business performance through improved customer experience (CX). Faster-growing organizations see 40% more of their revenue driven by personalization than their slower-growing competitors. When personalization efforts are decreased—because data collection efforts are decreased—it does a disservice to both customers and companies.

In the vast digital landscape, among oceans of information, consumers seek out opportunities for individuality—curated content, spot-on recommendations, and meaningful interactions. We live in an era in which personalization isn’t just a luxury—it’s insisted upon. In fact, 71% of consumers expect brands to provide personalized interactions, and 76% become frustrated when it doesn’t happen.

In almost all cases, data collection shouldn’t be prevented. Instead, it should be discussed transparently and safeguarded by ‌collectors. And you should be able to choose what you’re willing to share, but you should also understand that it may come at the expense of less-than-personalized experiences.

And you’re already sharing data whether you realize it or not

When you’re online, you’re typically operating under the illusion of anonymity. People tend to believe that they’re untraceable if they’re behind a screen or layers of encryption or firewalls. This is why people with online handles like “user54687720” are usually the ones who say the worst things in the comments—they feel untouchable.

Little do some of these people realize, every click, every like, every share leaves behind a digital footprint that can be traced back to them. All of users’ online activities are tracked and analyzed by the very platforms within which they’re trying to remain anonymous. It’s these platforms’ sole intention to mine user data and make money off it through advertising. Even if you’re in incognito mode, you’re still visible to third parties, and you’re still being tracked. So, you may as well log in and tell these companies exactly how you want to be treated with regard to your data.

If brands don’t know who you are, you can’t expect personalization

This is the “irony” part of the whole thing: The very data that enables brands to personalize user experiences is the same data that threatens their privacy. Or so they often believe. 

Today’s customers have become accustomed to the personalized experiences brands offer. From custom-made recommendations on retail sites to curated playlists on streaming services, consumers want to feel like their individual tastes and preferences are being considered. Humans crave feeling special and understood, and they want to stand out in the sea of faceless accounts online.

Consumers want to be treated as individuals, yet fear being stripped of their identities in the process. They want brands to know them, but they also want brands to respect their boundaries. Customers want personalization but often don’t want to share the data that fuels this bespoke treatment. So they find themselves at a crossroads, torn between a desire for tailored experiences and the need to protect their personal information at all costs. This delicate dance is inherently contradictory in nature.

So, how are companies supposed to meet these high expectations if users aren’t willing to provide the information needed to do so? 

Consumers have to be willing to trade fragments of their privacy for the convenience of a customized online experience. Full customer privacy can’t exist at the same time as tailored customer treatment. It’s just not possible.

How brands can build trust

You’ve heard of cookies. Some use their powers for good to deliver better user experience (UX), like session cookies and persistent cookies that “remember” users’ online activities and preferences. And others are admittedly creepy. These are third-party “tracking” cookies that collect bits of user data to be shared with, or sold to, a variety of companies (usually advertisers) by the website doing the collecting.

More often than not, when users want to protect their privacy, they want to protect it from these third-party cookies. Third-party cookies have historically been used by marketers to track consumer behavior and serve up targeted ads to users. But increasing regulation—like Firefox and Safari doing away with third-party cookies and Google’s plan to phase them out of Chrome this year—and user backlash have made these creepy cookies passé. 

Laws like the General Data Protection Regulation (GDPR) regulate how brands can use customers’ personal information, so companies need to be mindful and cautious of this, too. Further, 70% of global internet users actively take steps to protect their personal data online, so honoring this overwhelming desire for privacy is in a brand’s best interest. Data breaches and privacy violations not only hurt customers, but they can also damage a brand’s reputation long-term.

The upside: Nearly 70% of customers say they’re okay with personalization if brands use first-party data to do it. So, instead of purchasing customer information from a middle-person, brands should aim to collect consumer data like first-party and zero-party data directly from their users. Brands also need to consider if the value of providing users with a personalized experience outweighs the value of asking for private information. 

Bottom line: When brands are transparent with how they intend to use customer data and explain the value customers will receive in return, they’re more likely to build trust with these users. And this trust leads to more data-sharing in this circle of [personalization] life.

You have to choose what’s most important to you

So, what’s the solution to this privacy vs. personalization problem?

Pick a side. Or at least lean toward one over the other. 

Consumers should most certainly demand transparency from the brands with which they interact. They should 100% hold brands accountable for how they handle sensitive information. Users should educate themselves on the risks vs. rewards of sharing personal data and treat their information as assets that deserve to be protected.  

However, consumers also need to be mindful that personalization always comes at a “price,” even if it’s small. Consumers are smarter than ever, so they’re not completely oblivious to this paradox. Their push for privacy is a reaction to the feeling of being surveilled and having their online behavior monetized. Yet, the allure of personalization is often irresistible, so this draws them back into the fold of a digital landscape that relies on the exchange of information. 

The happiest medium that exists is a nuanced approach to data personalization. Along with transparency, robust security measures and ethical data usage can help brands make consumers feel safer when divulging personal information. 

Brands need to give users the power to opt in or opt out of personalized experiences. This can be accomplished with clear communication about data-handling practices. Shady data collection methods will only hurt both sides. Because although 58% of customers understand that sharing their data is necessary to receive a personalized UX, 87% believe it’s necessary for brands to ask for permission before collecting this personal data. Brands being straightforward about their intentions with user data can help bridge the gap between privacy concerns and personalized engagement.

Privacy by design also needs to be at the forefront of organizational leaders’ minds. This means that privacy is integrated into system designs, products, and services by default. Protecting user data should be held as a guiding force in UX and should be treated with the same care and respect as website functionality. 

The best of both worlds?

Next time you go to mindlessly click that “I agree” button on a privacy policy, you may want to pause for a second and read what you’re actually agreeing to.

You should decide if what you’re giving up—your data—is worth it for what you’ll get in return—personalization—based on your relationship with a particular brand. Because your choices matter. It’s only by acknowledging the complexities of the privacy vs. personalization paradox that consumers will be able to decide what’s best for them.

Personalization makes it easier for brands to offer things you actually want. It also leads to consumers’ increased loyalty, repeat purchases, and customer referrals. When companies gather data to understand their customers’ preferences and needs, they can also enhance their products and services for future buyers. In fact, 62% of organizational leaders say increased customer retention is a benefit of their personalization tactics.

So listen, Hannah Montana, there could be a solution that offers the best of both worlds: telling brands exactly what you want them to know through zero- and first-party data. This can be accomplished via the use of secure forms and surveys (you can get started for free with Typeform). With forms and surveys, brands can ask for specific information based on their products and services, and you can tell them as little or as much information as you feel comfortable providing. 

Another consideration is treating personalization more like customization. Personalization typically happens behind the scenes and is driven by the brand, whereas customization happens up front and is controlled by the user. Depending on a brand’s industry and offerings, it may make sense to allow users to decide the level of personalization they prefer. This way, they can shape their own experience and customer journey. 

Just keep in mind, however, that the depth of the data you (the consumer) offer up will directly correlate to the depth of personalization you’ll be able to experience.

Striking a “balance” between privacy and personalization is a good idea in theory, but one is always going to win out over the other. Instead, decide what is right for you. And, if you choose personalization, take control of the information you share with brands directly. Because contrary to popular belief, privacy and personalization shouldn’t be considered opposing forces. Instead, they should be leveraged together to build consumer trust and provide exceptional experiences. 

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