Wait a minute- how did you know that? Striking the balance between personalisation and privacy.

We’ve all experienced it. That creepy feeling that someone, somewhere is listening. Just yesterday you chatted to a friend about your upcoming vacation. Since then, you’ve received a salvo of emails, SMS links, and Facebook ads from beachwear brands offering you special deals on their merchandise in your size!

The fact is, more and more companies are getting personal with consumer data. There are good reasons why. Hyper-personalization – turbo-powered by AI, real-time data, and behavioral indicators – gives brands incredible scope to learn who consumers are, what they need, and when they’re most likely to purchase it.

Brands are getting personal with data 

By mobilizing highly-personalized content, product recommendations, and service information at scale, hyper-personalization can build customer loyalty and boost revenues. The stats back this up – Boston Consulting Group says leaders in personalization grow revenue 10 percentage points faster each year than laggards and enjoy higher customer satisfaction scores. McKinsey research revealed that 72% of consumers expect personalized experiences.

But you have to admit, sometimes it feels icky, right?

Sure! From a business perspective, hyper-personalization comes with risks.

Despite consumers’ desire for more personalization, when personalization feels invasive or excessive, consumers react negatively. This is known as the “Personalization Paradox.” 

So, how do you strike the right balance between delighting your customers and spooking them?

Delight me … Don’t disturb me!

All brands must comply with privacy laws and regulations. But even when you legally use data, you must decide if doing so will benefit or alienate your customers. Third-party data can raise particular issues.

Third-party data is data an organization uses that it doesn’t own and didn’t collect. In other words, it’s data that the organization buys or retrieves from a data marketplace, government agency, or data services company. Third-party data can include demographic information and online behavior, which is extremely useful for personalization.

Consumers often unwittingly pass it on. It may not be collected in compliance with privacy laws and regulations or be up-to-date or accurate. Sending personalized ads to customers from a business they have never interacted with can seem intrusive.

This can impact the bottom line. Gartner research suggests poor data quality costs organizations $12.9 million in lost opportunities and bad decisions.

Zero-party data (ZPD), however, is a different prospect. It’s gained by offering individuals the opportunity to share data willingly in exchange for better experiences, personalized offers, and services.

What’s the big deal with ZPD?

Unlike other forms of data, ZPD is characterized by its accuracy and consensual nature, making it a valuable source of profound insight into customers. And as data privacy regulations like the General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA) and regulations in the APAC region tighten, businesses will rely on consented and accurate data sources like ZPD to reduce legal risks.

Many customers agree that, beyond collecting data, brands should be protecting data, too. (Source: The State of Customer Engagement Report / Photo: Dropbox link) 

Ensuring the reliability and quality of zero-party data can be complex and time-consuming. Brands must streamline data collection processes, maintain internal data “warehouses” that can adequately keep data clean and ensure all employees across the business use the same single source of truth. This is particularly pressing given the proliferation of AI models that rely on high-integrity data.

As a result, more businesses are looking to unify zero-party data through customer data platforms (CDPs), many of which integrate data privacy safeguards and empower brands with a unified view of all their customers across multiple data touchpoints.

And how exactly are retailers using CDP?

Pomelo Fashion, the leading omnichannel fashion brand in Southeast Asia, used the Twilio Segment CDP to power its personalization models with clean and reliable data. The team coupled Segment with Amazon Personalize, which enables developers to build real-time personalization into applications. As a result, Pomelo saw a 50% uplift in overall product engagement, a 16% increase in add-to-cart clicks, and a 15% increase in gross revenue.

Another retail multinational, Central Group, used Twilio Segment to help it unify its data across multiple touchpoints and provide centralized engagements for its stores and brands’ customers in-store and online. Central Group needed a CDP that would collect data from different sources, communicate data to its CRM tools, and transform it into actionable insights that depicted their customers’ buying journey. Since implementing Segment, The Central Group has seen a tenfold increase in revenue from campaigns that did not typically produce high revenue. 

Brilliant! Just what I need.

Quality data is the linchpin of successful personalization. Building good relationships with customers is about showing that you understand them and will add value to their lives. This means having the right data to deliver messages accurately.

Companies can use tools such as CDPs to turn zero-party data into actionable insights. This allows them to tailor marketing strategies and customer engagement activities that feel right for customers and improve customer acquisition and retention.

When consumers understand how their shared data enhances their interactions with a brand, it builds trust and engagement. So, when your customer receives that perfectly- timed product recommendation, they’re not spooked but delighted.

Learn more about how our technology is helping brands strike a balance between personalization and trust. Talk to our sales team.