Neil Davey | Fri, 24 Jul 2015 14:00:00 +0000 | http://www.smartinsights.com/customer-relationship-management/customer-privacy/data-customer-relationship/

Data-driven marketing: How to tackle the tricky topic of trust

TrustThanks to a convergence of tools and technologies, marketers today have unprecedented access to consumer data. This has opened up a world of new opportunities for marketers, who are now better able to identify the consumers who are interested in their products and also establish what their preferences are in terms of how they are engaged.

Marketers have never been more capable of delivering the right message at the right time. However, while basic data such as the browsing history and past purchases are easy to obtain, rich data such as a person’s interests cannot be collected without cooperation from the consumer. And while customers were historically fairly liberal about the sharing of their personal data, there has been a noticeable changing of attitudes in recent years. This affects the data-customer-relationship.

‘The important thing to remember here is that the customer is a lot more savvy these days and understands that there is a value exchange,’ notes Barry Smith, of Ikano Inight. ‘They know that by giving you a little of their data there is an expectation in return, and as marketers we must get this right, engaging with the customer on their terms and through their channels of choice.’

The problem is that a key component of this value exchange is trust – trust that the company will keep the data secure and trust that marketers will use the data appropriately. And levels of trust are in decline.

The annual Edelman Trust Barometer, for instance, suggests that customer trust in companies of all types has fallen significantly over the past few years to the point where only 44% of customers now trust businesses.

‘All the evidence suggests that there is a lack of trust and a lot of frustration,’ says George Kidd, Chief Commissioner of the DMC. ‘We could get to the point where consumers’ willingness to give up data, or leave the box unticked, will depend on how businesses go about their relationship. If businesses abuse my trust, then they will act.’

In particular, there are three areas that businesses need to tread carefully to ensure they do not lose customer trust – security and privacy.

Security

Symantec’s State of Privacy research recently found that 59% of UK consumers are worried their data is not safe and this lack of confidence in brands to protect information is causing Brits to self-censor the data they give out. 53% of UK consumers avoid posting personal data online in order to protect their privacy and one in three people give fake personal data so that their real information remains private.

Sian John, Chief Security Strategist for EMEA, at Symantec, warns: ‘This is a worrying trend for marketers and advertisers whose business models are increasingly built around customer data. Inaccurate information could lead to the organisation putting faith in user data at the expense of the truth, and subsequently deliver an advertising or marketing campaign with little relevance.’

John suggests that we are at a tipping point, where customers will start to migrate to those companies that they consider to be the safest. This means there is a need for businesses to turn data security to their advantage by ensuring policies and procedures are robust and that security is communicated to customers as a reason to engage with them.

John continues: ‘It’s best to start by analysing your own data, and ensure that you know what you have and what needs to be protected. Protection must focus on the information that you have – not the device or data centre. Understanding where your sensitive data resides and where it is flowing will help identify the best policies and procedures to protect it.’

Data Protection measures

John summarises the protection measures that must take place:

  • Ensure technical measures are in place to protect your customer data. This includes network security and database encryption.
  • Strengthen your security infrastructure with data loss prevention, network security, endpoint security, encryption, strong authentication and defensive measures, including reputation-based technologies.
  • Store data on secure servers that are only accessed by authorised users. Ensure that the database is password-protected to a robust level.
  • As well as restricting access to sensitive personal data about your individual customers, the data should also be encrypted. Any data that is shared with marketing service providers should also be encrypted.
  • Educate employees, and provide guidance on information protection, including company policies and procedures for protecting sensitive data on personal and corporate devices.

John adds: ‘Our research found that 59% of UK consumers would like to better protect their personal details, but they’re not sure how to go about this. Accordingly, there is a fantastic opportunity for employers to educate their staff around data protection.

‘Put simply, customer data privacy education and awareness should be built into the whole organisation at grass roots level, from customer services to marketing and sales to HR. Frontline customer services should be able to answer questions on data security and privacy, and privacy policies and service terms and conditions should also be easily accessible and conveyed in clear language.’

Privacy risks

Increasingly sophisticated technology has enabled businesses to support the customer’s desire for more focused and tailored content and messaging in recent years. But there is also an inherent tension between personalisation and privacy.

‘On the one hand consumers are looking for more tailored and personalised offers, yet are concerned about loss of privacy. We like our brands to know who we are but feel uncomfortable when they know exactly where we are and what we are up to,’ warns Shaun Smith, founder of Smith+Co.

Indeed, the digital footprint that customers leave behind when using the internet, is a wholly reasonable and legitimate source of strategic marketing that leads to sales and business growth, but there is a privacy risk beyond damage such as unfair use of personal data or data breaches – something that Polotensky, Tene and Jerome refer to as the ‘ick factor’.

Notable examples of this include the canned status update about privacy that makes its way around Facebook on a relatively frequent basis, that notes ‘I don’t give Facebook the right to use my data…’

Another example comes from Janet Vertesi, PhD, Postdoctoral Fellow at Princeton University; who, in an effort to hide her pregnancy from marketers, (and thus avoid being bombarded with advertisements) engaged in a wide variety of inventive methods to leave no digital exhaust including a particularly interesting use of the Tor network.

Gordon Daniell of Kentico, explains: ‘While both of these situations are entertaining in their own way; they provide excellent examples of ‘the ick factor’ in practice. People are – though they leave a rooster tail of digital exhaust – not always comfortable with that information being used to sell them things. Companies who use it have been criticised for; well, being ‘icky’ in their use of data.’

Privacy practices

So how can brands counteract these customer concerns?

Kidd has called on marketers to ‘look beyond the law’ in their use of consumer data, and that complying with ‘consumer wishes’ was of equal and even greater importance, in maintain long-term trust.

‘The overwhelming majority of marketers understand the law and know what they can and can’t do when it comes to using people’s data,’ he says. ‘However, there are many who play fast and loose with the rules. Consumers don’t focus on whether or not marketers are or are not breaking a law or regulation. They are angry when they feel deceived or misled when their requests for privacy are ignored and when they think their personal information is being sold on.

‘Marketers therefore must look beyond complying with the law and standards of best practice to complying with their customers’ wishes. Doing so is essential for creating effective marketing, earning consumer trust and preventing complaints.’

Best practice includes being proactive in letting users know what you collect, when, how, and what you plan to use it for. Daniell notes: ‘If customers know that you’re collecting this data, why, and you can make them comfortable; there is a better chance they’ll stay loyal, and keep buying, rather than flee at the first highly targeted ad.’

This includes ensuring your Terms and Conditions are absolutely clear, so that customers know what they are agreeing to. ‘Terms and conditions for online services and products are in many cases hidden, long and difficult to understand or even misleading,’ says Professor Udo Helmbrecht, Executive Director of ENISA. ‘We recommend that companies and public sector bodies review their privacy policies and create simple more effective methods of communicating these to consumers. We believe that terms and conditions should be more concise, easy to understand and companies should help customers take control of their data.’

It would also be sensible to implement a Privacy Officer. Axel Schaefer, Senior Manager, Strategic Marketing EMEA at Adobe Systems, explains: ‘We recommend you assign a Privacy Officer for your DDM efforts that is aware and responsible of respecting legal requirements. Modern technology is able to measure close to every interaction with a brand, at least on a digital level – however, it always needs a human aspect to restrict oneself from misusing these possibilities. Very clear corporate data guidelines are essential to enforce the discipline on an operational level and with suppliers, too.’

Avoid the ‘ick factor’ to ensure data privacy and protection

Meanwhile, Forrester’s report ‘Digital creepiness: How not to spook your customers’ provides further tips on how to avoid falling foul of the ‘ick’ factor.

  • Comply with privacy laws. This may seem obvious, but protecting vast amounts of customer data can be a herculean task for many organisations. Failure to do so can create privacy infringements, and, in the digital space, it’s more important than ever that companies are aware of the data protection guidelines across different countries.
  • Develop granular preference controls. ‘Preference panels’ are playing an increasingly important part of the mobile app and website experience, as customers demand a more customisable experience from brands. Forrester suggests this will only increase, as the option gives a more transparent and trusting element to a business, as customers can choose at a granular level how much personalisation they are comfortable with.
  • A/B test your designs. It makes sense to determine whether customers are comfortable with the features of your digital experience by setting up controlled experiments to measure how frequently real customers are engaged. A/B testing is often the common denominator, however Forrester warns of ‘individual customers may rate differently on the creepiness scale’; suggesting that finding out what the scales of personalisation are before implementing something can be priceless.
  • Match versions to predicted creepiness tolerance. In some circumstances, it might make sense to make multiple versions of a digital experience, be it an app or a website, to cater for the different tolerance levels of your customers. Forrester suggests predictive analytics tools, stating that ‘predictive analytics can be used to predict individual creepiness ratings for each of your customers. Once you have scores, you can use them to automatically adjust the experience’.

Data Timebomb

With the EU proposing that opt-in is enshrined as standard, replacing the present legislation which demands that companies offer customers the passive option of opting-out of future marketing contact – the need to harbour customer trust is greater than ever. Yet consumers have never been so infuriated with marketing practices as they are today.

As Kidd notes: ‘The capacity for digital and other marketing channels is just so huge that we are at risk of annoying people. And recent research from the Future Foundation indeed suggests that people are annoyed in unbelievable numbers. If you start from the proposition that the whole adult population is the recipient of some kind of marketing and then 50% of them allegedly have an issue with the marketing that they have encountered and then 15% of the total have made complaints and that only 2% of that total were happy with the outcome of that complaint…that is a lot of angry people.’

And with a legislative timebomb ticking, brands must start to reconsider how they approach customer data.

‘We recommend you approach a data-driven relationship with your customers very transparently,’ warns Schaefer. ‘Be clear about the additional value the customers get from your data insights (e.g. more personalised offers) and explain how your respect their data and will not abuse it for other purposes. Once you achieve this trust, the privacy angst will turn into a positive relationship with a clear benefit on their mind. Do not leave data privacy aspects to individual interpretation, be very clear about how your customer’s data is handled – as this needs to be consistent if you expect your customers to be consistent in their trust towards your brand, too.’

Data-driven marketing provides a powerful competitive advantage in today’s business world. Done correctly, companies can better engage with customers and business can be grown. But done poorly, and brands can not only be in breach of the law, but they can lose valuable custom as well as damaging the brand reputation. And this could mean that the valuable stream of customer data could dry up.