In today’s digital-first environment, corporations collect an immense amount of data about consumers. Whether shopping, working, or simply surfing the web, consumers generate an abundant amount of data that is collected and stored by the websites they interact with.
It should come as no surprise that the following data is almost always up for grabs when one opens a browser:
- Consumer’s name and IP/physical address
- Their search and browsing history
- Their social media accounts and associations
But as time goes on and ecommerce becomes more sophisticated, businesses have also begun looking at highly specified data, including (but not limited to):
- Consumer’s spending habits; i.e. what they buy and when, and what triggers their spending
- Their personal information; i.e. when they’re home and what time they get up in the morning
- Their TV and online viewing preferences
- Their travel patterns
Corporations use this information to better profile and target potential customers, and to compare and link individuals to similar customer personas. They also ingest this data to make decisions that affect specific users, like surfacing certain discounts or quotes on products like health insurance. Beyond this, some businesses may create such a profile so they can better sell a user as a potential customer for social/political campaign targeting or commercial prospecting to other organizations.
Consumer sentiment around this type of data collection varies. A 2021 survey from Capco Intelligence revealed 72% of consumers would willingly share personal data to get lower insurance premiums if given the opportunity. Yet 93% of Americans recently told the Pew Research Center that they believe it’s important to control who can access their personal data.
It’s therefore imperative for businesses that deal with customer data to do so with the utmost respect, caution, and strict adherence to their consumers’ preferences.
What are consumer preferences?
Consumer preferences are an expression of an individual user’s wishes. Some people may be hesitant to share certain information, like their address or Social Security Number, but are happy to grant a business access to their social media data if it means they’ll receive targeted ads geared towards their unique interests. Needless to say, these preferences will differ from customer to customer and business to business.
The very expression of these preferences can tell companies quite a lot about their relationship to each and every customer, especially when included in traditional modeling. Respecting a customer’s wishes helps build loyalty and brand trust, while saving your business marketing dollars by not targeting those who respond negatively to your brand.
Picture this: a loyal customer uses your preferences capabilities to set up a marketing break for the next three months. Instead of taking this as a loss and moving on to the next target, you ask them why they’ve decided to mute your campaigns. The customer informs you they’re saving up to get married and can’t afford your product or solution right now, so upon their return three months later, your company sends them a “Good luck on the wedding!” discount code. You’ve just reminded the customer that your brand respected their preferences, and you’ve sent them a personalized gift. That’s the hallmark of a successful consumer-brand relationship!
Enabling preferences to be flexible and quickly actioned helps your consumers have a more interactive experience in which they can reflect on other areas of their relationship to your business.
The difference between preference and consent
Consent refers to the compliance measures taken to abide by laws such as the European Union’s General Data Protection Regulation law and the various privacy laws in the United States. In order to be in compliance with the law, companies must obtain permission to collect consumer data and track consumer activity across the internet. We most often see this play out online in the form of a pop-up that appears when one visits a website asking a visitor to ‘accept’ or ‘decline’ cookies. Another example is the ‘opt in to communications’ box one checks when sharing an email address with a company.
Consumer consent is markedly different than preferences because it requires consumers to give permission for companies to communicate with them and track their activity online. Consent varies, however, between different laws; for example, in the E.U., consumers are required to opt in to cookie tracking, whereas in the United States, consumers would need to object. All consent laws, however, require companies to make a consumer’s data available to them upon request. And surprisingly, many consumers request visibility into this data, which can cost companies thousands of dollars and hours of time if not properly organized and readily accessible. This is why we’ve seen a rise in the use of consumer preference and consent management platforms, which properly manage and store consumer data, in recent years.
Shifting the paradigm: a more transparent approach
It should go without saying that the ethical use and storage of customer data is an absolute must – from both a legal standpoint and a marketing perspective. With consumers worried about data manipulation, fraud, and various security risks like blackmail or identity theft, businesses must prioritize demonstrating their commitment to ethical data practices.
But best practices go beyond data protection and extend to data transparency. The best brands don’t only protect consumers’ data, they are transparent about what is collected and how it’s used. At Cassie, we’ve seen transparency with the consumer become a major competitive differentiator for some of the biggest brands in the world.
What’s in store for 2023
There are currently five new state privacy laws set to take effect across the United States in 2023, all of which have specific guidelines on selling personal information and running targeted ad campaigns. Each one of these new measures is geared towards providing consumers with additional insight into and control over how their data is being used.
As consumers become more aware of their data rights, both existing and impending, they will drive new expectations for transparency and control for organizations. Any improper use of data will therefore cause damage to brand reputation, and legislation will enable individuals to form groups that demand compensation or fines.
For businesses looking to improve (or maintain) their relationship with customers as it pertains to data privacy, the time to invest in consumer preference management solutions is now. This is a relatively new space, and a lack of education for businesses and consumers alike abounds. Many customers are unaware of the information that’s gathered about them, or the way that it’s shared and used.
By empowering consumers to select their own data sharing preferences, business leaders can bolster the perception of their company in the marketplace, safeguard themselves against potential legal troubles down the road, and demonstrate their commitment to the privacy of their customers.
