The Future Of Privacy And Customer Experience
When a grocer offers loyal customers special deals those customers are happy — but when those same customers realize an insurance provider tapped into deeply personal information found in their private online conversations and social media, those customers are furious. Data privacy is a fluid concept according to the Economist. A recent survey from EY shows half of digitally savvy customers were happy to share more data with their bank if they got something back but it depends on context.
Another study from the Annenberg School for Communication at the University of Pennsylvania tells a different story — that most people are strongly opposed to the idea of trading personal data for more personalized experiences. The report, titled The Tradeoff Fallacy: How Marketers Are Misrepresenting American Consumers And Opening Them Up to Exploitation suggests that most people are strongly opposed to the idea of trading personal data for more personalized experiences.
So how do we determine what experiences customers want and what they deem invasive? For starters, ask them. Every day customers quickly give consent for companies to use their data — many times because they are uninformed. After all who really reads every word of a terms and conditions form? No one. In a study with 500 participants, a clause was included in terms and conditions (of a fictitious social network) that suggested users give their firstborn as a form of payment. This was highlighted on NPR’s The Hidden Brain with Shankar Vedantam. The study revealed that 98% of participants agreed to the terms — to giving away their first born. When we have our customer-hat on we know it’s not totally fair for companies to send customers legal forms that are 1000 words in length. We know no one will read them.
The truth is for banks and insurance companies, customer data helps them save many. Using customer data is cheaper than hiring an underwriter. Data can predict whether someone will get sick or drive into a cement wall. A good algorithm will tell the insurance company that and more. Some customers don’t notice-or don’t care-how their data is being used. According to a recent Gallup poll, “44% of millennials in the United States believe that their personal information is kept private “all” or “most of the time” by the businesses or companies they do business with.”
At the same time another study shows that most Americans are fairly cynical and hopeless about how they can prevent companies of taking advantage of their data. People in the U.S. generally believe there is nothing they can do to prevent or stop the sale and misuse of their personal data. In Europe the cynicism is even more apparent. According to the European Commission’s statistics agency, Eurostat, 81% of Europeans feel they don’t wholly control their online data; 69% worry that firms may use their data for purposes other than those advertised.
Customers already don’t trust you — what are you going to do to build a relationship with your customers based on value and trust? If you can be different than other companies by being transparent, by simplifying complex terms and conditions forms — you will set your customer experience apart from your competitors.
Companies today need a data watchdog-a person or a group-that ensures the company is not being creepy with customer data. While in the short term using customer data that isn’t gathered through kosher means might seem like a good idea, in the long-term you will destroy your customer relationships. Wear your customer hat more often when it comes to data. How would the customer feel about these terms and conditions if they took the time to truly understand them? I’ve said this before and I’ll say it again. Don’t be afraid to illustrate in very simple terms what you are doing with your customer’s data. Illustrate a cartoon, a drawing, or a few bullet points about the major implications. In the end a transparent relationship with your customers around their data will improve the relationship you have with your customer, and your reputation in general.
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