“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Rob Heiser, president and CEO at Segmint.
When it comes to the ways that brands leverage consumer data for marketing and communications purposes, a relative absence of regulation should by no means indicate an absence of risk.
While consumer brands face less regulation than financial institutions, public backlash around recent high-profile data breaches and awkwardly targeted ad campaigns show that there is still a great deal of risk in using customer data. For brands, personalization should be tempered with a few precautions, rather than pursued at all costs.
The financial and payments industry has long understood this. Consumer brands should adopt those industries’ same principals of caution and transparency when it comes to the use of customer data, in order to boost trust and effectiveness, while minimizing risk.
Is Personalization Needed?
Brands need to think about the need for personalization. It’s frequently written about in a way that suggests that any and all personalization has inherent value – that increased personalization derived from consumer data will always increase engagement and results. This, however, ignores what makes personalization effective to begin with.
Personalization doesn’t exist in a vacuum. It works in the context of a pre-existing relationship of trust. For example, when the manager of my favorite restaurant asks how my kids are doing, it’s a welcome add-on to our already trusting relationship, which is based on years of interaction. The fact that he remembers a personal detail reminds me of why I love the restaurant in the first place: It feels like home.
But what if the same scenario took place in a restaurant I’d only visited once in the past year? The same inquiry about my kids might seem creepy or, at worst, an invasion of privacy and sense of security. My first question: “How does he know about my family?” I’d imagine that many others would feel the same.
Yet, when we take the same situation online, common rules about the boundaries of personalization seem to disappear. Many digital marketers seem to have forgotten that personalization does not work without a foundation of trust. Context is critical here.
Banks long ago mastered the art of building relationships through physical branches, vast repositories of personal information that could be applied at just the right moment. The key to their success has been to first establish trust and security with consumers, and increase personalization and familiarity second. Brands from any industry should learn from this by placing trust ahead of personalization.
Why Is The Data Used?
How data is used isn’t the only issue here, though. Brands also need to think about why it’s being used.
Of course, any data that’s used for marketing or communications purposes must be anonymized for security’s sake, but brands should also think about context.
Will the consumer wonder how I know this detail about him or her? Is the value of this personalization immediately apparent? What triggers can be applied to create that personalized tipping point?
These kinds of questions are especially important in the financial industry, where any use of consumer data must be weighed against the risk of it being compromised. However, other brands are no longer immune from these same risks and therefore must consider the same questions when deciding how to leverage personal data.
Who Can Access The Data?
Beyond understanding when personalization is appropriate, though, brands also should be conscious of all parties that have access to potentially sensitive data.
When working with a third-party vendor, it’s imperative to understand exactly who will have access. Many vendors say, “Give us the data,” but what does that really mean?
Before agreeing to a vendor’s data request, brands should understand who owns the data, who will have access to it, who owns its derivatives, where the data will be stored and whether or not that data will be sold or shared with third parties.
A good way to start is by identifying the specific ways that any personal data provided would be used. Brands should next ensure that their data will be stored independently rather than aggregated into a shared data lake.
Also, it’s imperative to make sure that the motive of having data aligns with the motive of the consumer, in terms of value. If the data isn’t being used to help the consumer make a more informed choice, then it’s not likely to be very helpful and could have potentially adverse effects. Again, this ties back to the same cost-benefit analysis that banks have long had to make, but that should serve as a rule of thumb for any brand interested in maintaining consumer trust and the effectiveness of personalization.
It seems obvious that trust should precede personalization, but the headlines too often prove this assumption wrong. Brands that seek the benefits of personalization must first take a step back and understand the goal of leveraging data, the value provided to the consumer and the steps taken to ensure security. Only then will personalization truly resonate with the consumer.