After years in which they have been using increasing amounts of data to build highly customized user experiences, today’s companies are facing a moment of truth in which customer privacy and the ability to safeguard all the data at their disposal is now being questioned. Yes, customers want hyper-relevant digital experiences, but they also want to have digital trust that their data is not being shared with third parties or otherwise being compromised.
Those were just two of themes that emerged from the 13th annual Accenture Strategy Global Consumer Pulse Research report. The wide-ranging Accenture report was global in nature, covering the changing attitudes and expectations of more than 25,000 consumers around the world, including 2,000 in the United States. In doing so, the report provides a comprehensive snapshot look at how both consumers and the companies that sell to them are responding to the changing dimensions of customer privacy and digital trust.
The economic costs of failing to protect customer privacy
According to Accenture, companies are having a difficult time balancing the issues of customization and customer privacy. For example, 41 percent of consumers switched companies last year due to either poor personalization or a lack of digital trust. All in all, Accenture pegs the economic cost at nearly $756 billion in terms of lost customers due to eroding consumer trust.
Obviously, companies that get the balance right between hyper-personalization and customer privacy will win the digital trust of their customers – and perhaps woo over new customers as well. Thus, as Accenture notes in another report (“Put Your Trust in Hyper-Relevance”), the ball is in the court of the world’s largest companies: Can they deliver meaningful, contextual experiences to their customers without encroaching on customer privacy?
How much customization do customers really need or want?
Yet, as Accenture notes, consumers are hardly shying away from hyper-relevant, contextual experiences online. If anything, they are showing increased appetite for these types of customer experiences. As long as these experiences make their lives easier or more meaningful, anywhere from 40 to 50 percent of customers would embrace them.
For example, consider the fact that 43 percent of U.S. consumers are more likely to shop with companies that always personalize their experiences. Another 47 percent of consumers expect specialized treatment for being a good customer. And a surprisingly high number – 48 percent – would use smart re-ordering services triggered by sensors around the home that would automatically order items that were out of stock (such as a gallon of milk in the refrigerator).
However, there is a cautionary tale in here about customer privacy. Take the example of smart digital assistants – both the type that you use on your smartphone and the types like Google Home or Amazon Echo. Nearly one-third (36 percent) of U.S. consumers say they are already using digital assistants to make their lives easier and more convenient. However, a similarly high percentage (40 percent) said that it can be “creepy” when the customization goes too far. And 43 percent of U.S. consumers said they fear a day when all their intelligent devices and services will simply know too much about them and their daily behaviors.
Digital trust in an era of Big Data
This “digital trust deficit” – the gap between what companies provide and what customers expect – will likely widen in the coming years, thanks to the relentless march of technology. With the Internet of Things growing at an exponential rate, it’s easy to imagine a scenario in which both the home and the workplace are filled with digital devices collecting data on us.
When you combine personal data (such as basic demographic data) with data gleaned from tracking behavior online, and then add in geo-location data, companies are able to create very sophisticated profiles of average users. Even when users think they are anonymous, they might not be. It can be unnerving the first time you realize that a company knows not just who you are, but also where you are physically located in real time (such as a text message for a special promotion streaming in from a retailer that you just passed at the local shopping mall).
And, with the rise of artificial intelligence, it’s going to be even trickier for companies to navigate the brave new world of customer privacy and digital trust. Right now, 31 percent of U.S. consumers say that they would find value in services that “intuitively learn” about their behaviors and preferences. It’s easy to see how many companies would interpret this as a green “go” signal to embark on a new machine learning or artificial intelligence initiative in order to collect consumer data and then predict future customer behaviors.
However, technological innovation can be a double-edged sword for customer privacy. In the ever-expanding race to deliver exactly what customers want at exactly the right time, there is the risk of overstepping the boundaries. And that’s going to be especially the case with the increasing popularity of biometric and genomic data that might be available. If you’re signing up for direct-to-consumer genetic testing, be careful of where data about your DNA might end up! The types of data that can be collected seem to be proliferating by the day.
Takeaway lessons on customer privacy
By an overwhelming majority (92 percent), U.S. consumers say that it is important for companies to protect their customer privacy. And 79 percent find not being able to trust a company with personal information to be a top source of frustration. Furthermore, 66 percent say that they want companies to be more open and transparent with their data. In short, consumer privacy matters. Customers care deeply about how companies are sharing their data.
Right balance right of hyper-personalization and customer #privacy will win the digital #trust of customers.
Click to Tweet
Thus, companies are faced with a tall task to win over the digital trust of customers. They must show that they are constantly innovating in terms of designing meaningful new hyper-relevant experiences, but they must also show customers that they are taking into account their security and privacy to protect personal information. Going forward, the companies that manage this delicate balancing act between customer privacy and digital trust will be the winners in the modern digital economy.