How to Balance Ecommerce Personalization vs. Privacy: What You Should Know Now for 2023

To say the tension between personalized experiences and privacy is looming is an understatement.

Customers expect their data to remain secure but want personalized and contextualized experiences. A data-driven approach to designing personalized experiences benefits the customer and the company but risks violating customers’ trust when done wrong. To be successful and trustworthy, proper consent and data management are necessary.

The Salesforce 8^th Edition State of Marketing Report, drawing from 6,000 marketers across 35 countries and analyzing trillions of outbound marketing messages sent using the Salesforce platform, explores how to capitalize on customers’ evolving digital-first expectations. Marketers are transitioning to zero-and first-party data despite deadlines to phase out third-party cookies. Still, 75% of marketers say they rely on third-party data. While not all third-party data is cookie-related, organizations must reconcile this strategy with imminent privacy regulations worldwide.

Simplify the Quantity of Data to Get it Right

Gartner says by 2025, 75% of the world’s population will have its personal information covered by current privacy regulations. This figure reiterates the need for brands to leverage customer data with a proper understanding of customer preferences, terms of service, and relevant regulations.

As organizations anticipate an increase in the number of data sources used each year, most project they will use an average of 18 data sources for 2023.

Gartner recently published a survey reporting just 14% of organizations achieve a 360-degree of their customer. Among those who have achieved it, 44% say their 360-degree view is in a Customer Data Platform.

Tread the Personalization vs. Privacy Tightrope Carefully

A consumer’s trust in how a retailer or brand leverages private data will play a more important role in their view towards personalization. During the past few years, changes in data privacy policies and regulations have had a significant effect on digital analytics.

Looking towards 2023, organizations should be mindful of the effective dates of several new state privacy laws in the United States. Companies should review the new laws to evaluate their applicability and identify potential enhancements to compliance programs. Upcoming effective dates include:

The General Data Protection Regulation (GDPR) is a constantly updated and optimized collection of data security laws created for protecting European Union residents from unauthorized data tracking and disclosure to third parties. No matter the region, all organizations collecting and acting on data collected from the public must review and bolster their data governance and security approaches to be compliant.

Although 75% of marketers still invest in third-party data, 68% say they have fully defined their strategy to shift away from these sources. Providing information-sharing incentives for customers can help bridge the gap by enriching customer data profiles. While marketers understand that proper privacy and security measures are essential to building and maintaining customer trust, a tipping point regarding how far marketers are willing to go is likely. Only 51% of marketers say they go beyond regulations and industry standards to protect customer privacy, down from 61% last year.

Use AI to Bridge Online and Offline Experiences

Marketers are embracing AI to improve customer experiences and operate their organizations more efficiently. Three of the top four AI use cases are related to automation, signifying the importance of scaling up speed and effectiveness with existing resources. Sixty-eight percent of marketers say they have a fully-defined AI strategy, up from 60% in 2021. Consider these new findings:

4 Ways to Manage Customer Data

1. Be explicit with consent management and preference settings to give customers better control over how their data is used. Delineate these settings by functional area (e.g., marketing, sales, customer service) and use cases to avoid conflating data applications.
2. Prioritize transparency in privacy settings, so customers know how and why you intend to use and manage their personal information. Communicate proactively about preference and consent.
3. Make ethics a core component of your data management strategy by creating data use cases based on how these use cases bring value and benefit to the customer, not just the company.
4. Limit data collection to what’s needed by defining each data use case to collect the minimum data required through the least invasive methods.

Personal data and technology can deliver granular private information to brands in new ways, but a consumer’s trust in how a retailer or brand leverages private data will play a more important role in their tolerance of personalization vs. privacy.

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