Retail marketing teams must feel like they’re wobbling on a tightrope these days. They face an ongoing struggle to balance the competing interests of respecting consumers’ privacy by protecting shopper data while simultaneously using that data for marketing personalization. Personalized marketing includes targeted campaigns and ads, which can help retail companies earn engagement, sales, and loyalty.
As a result, retailers and consumer packaged goods (CPG) suppliers must now rethink how their marketing processes can deliver meaningful communications and services without compromising the safety of consumer data.
On one hand, consumers now expect personalization. Shoppers want retailers and brands to accurately anticipate their needs based on data insights related to their buying habits and preferences. For instance, studies show:
- 81% of consumers want brands to get to know them better.1Personalized Marketing is More Than Just a Name. Salesforce. January 3, 2018.
- 61% of consumers want companies to prioritize personalization.2Study: Online Shoppers Desire Personalization, But Demand Privacy. MarTech Series. Feb 25, 2020.
- 91% of consumers are more likely to shop with brands that send them relevant offers and recommendations.
Meanwhile, consumer mistrust continues to grow, especially after recent high-profile data leaks.3 Walk-Morris, Tatiana. Beyond the data breach: How retail is addressing cybersecurity. Retail Dive. June 6, 2019. As a result:
- 73% of consumers say their concerns over data privacy are growing.4Williams, Robert. IAB seeks balance between consumer privacy, ad personalization with industry-wide collaboration. Marketing Dive.Feb. 11, 2020.
- 53% of consumers think brands and retailers should prioritize consumers’ online anonymity more.5 Walk-Morris, Tatiana. Companies face a ‘paradox’ between digital personalization and data privacy. Retail Dive. Feb. 25, 2020.
To help CPG suppliers strike this delicate balance, we’ll look at trends and best practices related to data privacy and data personalization.
Data-driven technology shapes consumer behavior
Smartphones are changing consumer buying habits while delivering rich data on individual shoppers’ activities and preferences.
Today’s consumers are increasingly mobile-centric, as they use their smartphones to browse, research and buy products. For instance:
- 69% of in-store shoppers prefer to read product reviews on their phones instead of asking a store associate, and 53% of shoppers want to find deals via their phone instead of talking with a store associate.6Ibid.
- 25% of consumers use their smartphones to research products multiple times each week and 18% use their smartphones to complete a transaction multiple times per week7Ibid.
- 48% of consumers who shop online daily say their reliance on their smartphones for shopping has increased over the past year.8Ibid.
Also, despite the alluring convenience and efficiency of shopping with voice commerce technology like Amazon’s Alexa, 33% of consumers say the lack of security features will stop them from making more purchases using voice-enabled devices. Instead, consumers prefer to shop online using their smartphones, particularly Millennials. 9Study: Online Shoppers Desire Personalization, But Demand Privacy. MarTech Series. Feb 25, 2020.
Why data is an emerging business issue
Beyond the marketing and IT functions, CPG C-suites and business owners are now taking data management seriously.
That’s because data can directly impact a retail company’s reputation and brand trust. Accenture found 41% of consumers felt it was creepy to receive a text from a retail company while walking past a physical store, and 35% felt the same way about seeing social media ads for products they’ve recently browsed online. 10Sweeney, Erica. State of marketing personalization is getting worse, Accenture finds. Marketing Dive. May 4, 2018.
Also, 27% of marketers feel data is the main obstacle hampering effective personalization due to ineffective approaches to data collection, integration and protection, suggesting internal processes need to reflect best practices to understand consumers better.11Levine, Barry. Will personalization’s role in marketing shrink as challenges grow? Marketing Dive.Dec. 6, 2019.
In addition, retail marketers must know how to comply with the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act to respect the new digital rules of consumer engagement and avoid legal issues.12Farivar, Cyrus and David Ingram. California is bringing law and order to big data. It could change the internet in the U.S. May 13, 2019.
Strategic implications of retail data
Retail companies of all sizes are trying to entangle the complex issues surrounding consumer data, and how they can affect their marketing strategy and future campaigns. That’s because the effective use of consumer data can enhance the consumer experience, sales and loyalty.
One survey found a quarter of respondents returned to a retail website to make a purchase after being retargeted with personalized digital ads specifically because the ads reminded them of a product they wanted to buy. In addition, personalized content and product recommendations, triggered messages and product searches are proven to dramatically increase retail key performance indicators – but data consent is key. 13Study: Online Shoppers Desire Personalization, But Demand Privacy. MarTech Series. Feb 25, 2020.
Data consent is key
However, consumer mistrust of corporate use of data has made retail marketing more complex.
A Gartner study found that, among consumers who received marketing that was personalized but irrelevant, 48% said they will unsubscribe from future communications with the brand. In addition, 14% said they would stop doing business with the brand altogether.14 Brands should avoid death by a thousand data points. Mike Herrick. Marketing Dive. Oct. 31, 2019.
For these reasons, Gartner predicts 80% of marketers will drop their personalization efforts by 2025 due to poor return on investment and challenges with managing customer data.15 Levine, Barry. Will personalization’s role in marketing shrink as challenges grow? Marketing Dive.Dec. 6, 2019.
Best practices for retail data
Retailers and CPG suppliers can improve their ability to comply with regulations, put consumers at ease and still deliver excellent marketing by applying these best practices for digital personalization and data privacy:
- Empowerment: Give consumers control over how and where their data is used. Let them decide what kinds of messages they want to receive (like shipping notifications and promotions) and how they want to receive them (like text/SMS or email).16Brands should avoid death by a thousand data points. Mike Herrick. Marketing Dive. Oct. 31, 2019. 17 Walk-Morris, Tatiana. Companies face a ‘paradox’ between digital personalization and data privacy. Retail Dive. Feb. 25, 2020.
- Familiarity: Include some personally identifiable information to show you know your customers, including their purchase or browsing history and personal preferences.
- Ease: Make it easy for consumers to complete a task or complete a purchase.18 Brands should avoid death by a thousand data points. Mike Herrick. Marketing Dive. Oct. 31, 2019.
- Relevance: Consumers are busy, so only send them communications that align with their shopping history and patterns.
- Transparency: Clearly state what data your company collects, where it came from and how you will use it. Share your privacy policies and practices, and assure consumers that their first-party data will never be shared without their consent.19Ibid.
To help retailers and CPG suppliers balance data privacy and personalized marketing, RangeMe delivers real-time data on industry trends based on consumer demand through our partnership with Nielsen. As data drives retail success, applying best practices can help companies remain confident in their data compliance and competitive with their marketing