Personalization vs Privacy Paradox – How To Balance Personalisation With Data Privacy?

Rapid digitization and monopoly of tech giants have brought us a new paradox; Personalisation vs Privacy Paradox. The competition for customers’ attention has driven focus to Customer Experience Management. The objective of personalization is to enrich the consumer experience, with a bespoke and personalized service. Customer expectations are at an all-time high. Today’s customers expect personalization from brands that they support. They expect tailored content, and customized recommendations, according to their personal taste. However, this level of personalization comes at the cost of data privacy. 

The personalization vs privacy paradox is a challenge for marketers and a concern for consumers. The continuous media coverage of some high-profile exposures, such as the Cambridge Analytics scandal, has consumers on edge. Governments are working towards setting up legislation for increased privacy, tighter data control, and the right to erase information with a click of a button. Tougher data governance through government interference has forced big corporations to retrospect how they handle the data of millions of consumers. 

Tech and data giants have come under criticism for their disdainful handling of personal data. The decade-long indifference for data privacy at Facebook led to events that culminated in one of the biggest and most consequential data leaks in recent history, the Cambridge Analytica scandal. General Data Protection Regulation (GDPR), the data protection forum of the EU, slapped Google with a $57 million fine after the Information Commissioner’s Office found that the company used customers’ personal data without consent for its targeted online advertising. Google claimed innocence and maintained that it followed all of the GDPR regulations. These incidents have shed light on the cavalier attitudes of data companies regarding privacy and call upon the need to step up strict regulations and greater transparency in data management.

Today’s customers have come to the conclusion that, no matter what, data collection is inevitable. Most individuals sign consent forms and tick boxes without ever reading the content of the agreement. The responsibility of data privacy also lies with the consumer. Customers are partly accountable for data breaches, in the context that they agree to terms and conditions without ever truly understanding what the relationship entails. This later gets exploited by big corporations. When it comes to public awareness, many recognize that their digital footprint is relevant information for companies, to constitute personalized services. However, a growing number of consumers are concerned about their privacy, and who has access to it. There is increasing consumer anxiety due to a lack of control on the extent of data being extracted across the digital ecosystem. Various studies show that there is consumer willingness to voluntarily share personal data, but it varies from industry to industry. For example, there is a greater willingness to share information with banks, phone services, and retail sectors rather than entertainment providers. 

For marketers, the privacy paradox is a great dilemma. Especially for marketers that rely on third-party data, cookies, and past browsing histories to enhance customer experience. Tracking a customer’s digital footprint allows companies to understand the customer on a granular level, and cater them with relevant, personalized content. But this can also be risky, as it may be perceived by customers as an invasion of privacy, and a breach of trust. It may end up driving customers away. A survey by Gartner found that nearly 40% of customers would stop doing business with a company if they found their personalization too “creepy”. 

It is possible for marketers to collect customer data without eroding customer trust. The reliance on third-party data must be replaced with zero-party data. Zero-party data is the information that customers are willing to share with the company they are doing business with. Zero-party data eliminates the risky elements of third-party data while upholding customer trust and privacy. 

Striking the balance between personalisation and privacy

The risk of data privacy averts a lot of companies to use unreliable non-personal data. But, it is possible for companies to base business models as such that are able to gather personal data and deliver exceptional customer experience, without the breach of privacy.

• The first step is to strictly adhere to local and international guidelines of data privacy, such as GDPR. Companies need to rework their internal guidelines to ensure that there is no immoral and unethical use of customers’ personal data.
• There must be a re-energised focus to create a symbiotic relationship between privacy and personalisation. There must be clear specifications regarding accessibility and utilisation of customers’ personal data.
• Businesses must focus on building trust and transparency with their customers. Customers have a right to know how their personal information could and would be used to enhance their brand experience.
• Companies must enlist experts and advisors to counsel all stakeholders on the importance of privacy to elevate customer experience, as well as lead innovation in the fields of CEM, digital marketing, sales, product development, security protocols, and risk management.
• Businesses must consolidate generic personalisation techniques with customers personal data to maximise conversions and ROI on their marketing campaigns.
• Companies must collaborate with CX and business leaders to expand the scope of ethical data collection, use and exchange. Employees must be trained on the ethical use of personal data and data transparency.

Final Thoughts

Data breaches have been a cumulative fault of greedy corporations, weak regulations, and indifferent consumers. Consumers and companies need to take responsibility for their actions. Consumers must raise their awareness while companies must be transparent about their inner workings. The personalization vs privacy paradox will exist as long as their greed and impetuous attitude on both sides.