Breaking Data Privacy: How to Get Your Customers’ Permission?

Last decades saw major changes in the way people and companies interact. In an increasingly complex ecosystem, data is proving to be a key resource for companies that want to leverage information in order to improve targeting and unlock consumer behaviour patterns. But where does that user data come from? And why do people willingly give sensitive data to companies?

To answer these questions, three marketing researchers — Manfred Krafft, Christine M. Arden, and Peter C. Verhoef — created and tested a framework for permission granting. Applied last year to the German market, the model identified a total of eight cost-benefit drivers considered by people when they decide to give their data. Before getting to each of them, allow us to go deeper on permission marketing and why the concept has been discussed recently.

Why is permission marketing suddenly so important?

Although privacy protection is on today’s agenda, permission marketing isn’t quite new. The term can be traced back to 1999, when Seth Godin published a book in which he introduces the idea that, by asking permission, the company improves trustability and creates a higher level of commitment from customers towards the brand. As consequence, results also improve.

Recently, the term has become more popular due to market researches that prove that consumers are more aware and concerned about data privacy. The trend is being followed by companies since, after May 25th, organisations operating in the European Union’s countries will have to comply with the General Data Protection Regulamentation (GDPR). According to it, each customer must be clearly informed about the reasons why companies are collecting data, and also be granted control over their personal data.

The real world implications are reflected by Academia and research organisations. In 2014, while European Parliament was discussing the “right to erasure”, the Marketing Science Institute established “social contracts with customers” as a top priority from 2014 to 2016.

The main 8 motivators for permission granting

Despite the willingness to buy from a large number of vendors, consumers will probably only grant permission to companies capable of gaining their trust and with which they identify. Having said that, designing an efficient and customised permission granting process must be a priority for companies that intend to strengthen their relationship with customers.

Before setting up a random system, it is important to understand what these three authors describe as a privacy calculus, a mental equation that customers solve before accepting to grant permission. In this highly personal (and complex) equation, both economic and psychological pros and cons are considered before the final decision.

But what are exactly the considered costs and benefits?

• Personal relevance

When deciding to give data, customers think about the personal relevance of what they’re about to subscribe. Therefore, companies must align expectations by explaining in which marketing activities the customer will engage and why those actives can bring value. By doing so, they increase both commitment and probability of granting permission. Tailoring messages according to the target must be a part of the process, in order to create the feeling of one-on-one dialogue.

• Entertainment

How many times do you subscribe something just because you had fun with the company? Success cases, such as Heineken’s Go Places, demonstrate that providing an entertaining experience can increase a customers’ willingness to provide data. At the subscription moment, consumers also consider how much useful and entertaining the marketing activities will be. If they see value in them, there’s a higher change of granting permission.

• Incentive and lottery

Incentive and lottery are two different motivators, we muted them together because they’re deeply linked. If the first is more connected to vouchers and discounts available for everyone who agrees to grant permission, the second is more about contests in which there is a small number of winners. Despite the differences, both motivators try to offer something in order to seduce customer and gain their data. Thought this is a common practice on channels like social media, the empirical study found that incentives and lotteries are often seen as a ploy, causing a negative impression on customers.

• Consumer information control

The lost of control over data can be a major deal breaker for most customers. Knowing about that, companies must create the necessary structures for the existence of a data management process, in which users have the freedom to control, modify or delete their personal data, as well as determine the volume of direct marketing messages they receive. If consumers feel that they are in control of the data they provide, the chances of sharing information online increases.

• Registration costs

If you want to increase the probability of permission granting, avoid long forms, endless terms and conditions and complicated questions. Each of these can frighten customers, sending the message that the registration process requires far too much time and effort. In order to increase the probability of success, companies must consider reducing the sign-up step. Solutions such as social media login and pre-filled fields can help.

• Intrusiveness

More than ever, customers are aware of the value of their data for marketing and sales. The popularisation of spam and outbound phone calls led to a generalised sense of distrust and the idea that, by giving their phone number and email, they will be constantly annoyed by someone from the company. Such expectations — that also depend on previous experiences with other brands — can determine the willingness to give or not give data.

• Privacy concerns

Finally, the last cost motivator is related to privacy concerns. Depending on the consumer perception of the value of his information, he may decide that a specific data is irrelevant for the registration purpose and, consequentially, violates his privacy. The concern can also have a negative effect on loyalty programs and mobile advertising, that rely on demographic and psychographic values.

While you are still making the math, please bear in mind that gaining consumers’ permission is only the first step to start a relationship. After that, you are recommended to meet expectations - and hopefully excel them.

This post is based on “Permission Marketing and Privacy Concerns: Why Do Customers (Not) Grant Permissions?” and was written by Gonçalo Motta, Luísa Silva, Patrícia Alves, and Tiago Leão. For more information, click here.