How to Balance the Fine Line Between Personalization and Data Privacy

Illustrator: Adan Augusto
data privacy and personalization balance

You must personalize your communication to keep your brand messaging relevant and provide customers with the experience they deserve (and demand). The only way to achieve this is to utilize consumers' data. 

While 71% of consumers expect a personalized experience, they don’t want brands to get too personal with their messages. Consumers can misconstrue this as invading their privacy, prompting them to avoid your business. 

As a business, to rip the full benefits of personalized communication, you must balance the fine line between personalization and data privacy. This will allow you to guide customers through their buyer journey, increase sales, keep them engaged and build brand loyalty. Additionally, smartly utilizing your customer's data will encourage customers to share more valuable data.

As consumers become more protective of their data and government regulations keep mounting, businesses must learn to walk the thin line when collecting data and personalizing their communication. In this article, we’ll share how to balance personalizing customer messaging and respecting data privacy. 

What Is Personalized Experience 

Personalization is the process of offering a tailored experience to your prospects and customers, allowing you to cater to them in the best possible way. Personalization requires businesses to utilize clients' data to offer individualized messages that solve their problems. 

Personalization has evolved since the days of addressing prospects by their first names. Today, customers give their business to brands that listen to them, know them, pay attention to their specific needs and remember them. To personalize their customer experience, brands must collect, analyze, and effectively use data from clients to create campaigns, content, and experience that address the needs of their audiences.

The biggest challenge brands face when personalizing their customer experience is effectively using the customer's data without invading their privacy. In simpler terms, how do you provide an individual experience for every client without making them feel like you are stalking them or being creepy? 

4 Ways to Balance Personalization and Data Privacy 

To effectively provide customers with a personalized experience, businesses must be less intrusive and more authentic. They have to adopt strategies that strengthen their relationships with customers. 

The first thing business owners and marketers need to do is to know their customers. This will allow them to understand how to target, create messages that resonate with them, and, most importantly, walk the thin line of personalization. As one marketing expert puts it, “Personalization is like seasoning. The right spice can make the meal, while a pinch of the wrong spice can spell disaster.”

With that in mind, here are four ways to balance personalization and data privacy to avoid disaster.

Build your Reputation 

Personalization is among the most powerful tools brands can use to build customer trust and differentiate themselves from competitors. It allows brands to demonstrate to their customers that they are valued as individuals, not generic clients. But for brands to reap its benefits, they must incorporate the best personalization practices in their process.

Building trust with clients starts from the moment they come across your brand. For example, what should you do if you sell home decor plants and a prospect visits your website, consents to all cookies, browses your products, signs up for a newsletter, and leaves without buying? The steps you take will decide how you build a connection with that customer.

Bad personalization that kills trust could be following them around the Internet from social media to Google search and bombarding the customer with ads about your product. They'll immediately find this distasteful and creepy and will likely never interact with your brand.

On the other hand, good personalization will involve sending them a newsletter containing helpful content like "how to decorate your study desk with decor flowers." Clients will find this valuable, and you can start taking them through your buyer channel.

Other ways to build trust and ensure customers' data and privacy are protected is to:

  1. Prominently display your data and privacy policy 
  2. Give clients the freedom to customize their data and cookies settings
  3. Avoid hard sale messages and opt to create meaningful relationships with users
  4. Use the right tools to track and engage customers depending on their needs
  5. Improve your entire customer experience and listen to clients' feedback
  6. Show your commitment to protecting the financial data of customers, especially now that open banking is taking root 

Encourage Customers to Share Data

Data collection plays a significant role in personalization. It allows businesses to understand their clients and enhance customer experience. But since Google is phasing out third-party cookies, brands have been forced to rely on the first-party cookies that customers provide voluntarily. 

Getting customers to share their data is challenging as they've become pickier with who they give their data. As a marketer, you have to do more than earn prospects' trust. You have to provide value that can entice them. Offer your clients something useful that could differentiate you from competitors. That can be high-quality content, discounts, rewards, etc. 

Another strategy you can implement to collect customer data is introducing self-service and interactive marketing. Businesses can achieve this by using chatbots, quizzes, surveys & polls, and running contests. These practices will keep users engaged and encourage them to provide valuable data you can use to strengthen your personalization messaging.

Collect only Data you Need

As you are aware, data is the most important thing in personalization. It allows you to meet the personalization your customers expect through their buyer journey. But how much data should you collect?

Consumers will give you their data as they expect personalized experiences. However, it's essential that you only ask for and collect data that you need and what clients are offering to give. Don't force clients to share more than they're willing to or collect too much data just to misuse it by tracking them everywhere or sending “too personal messages.” You will be breaking the balance and run the risk of scaring them off. 

When you limit how much data you collect and how you utilize the ones consumers provide, you will be able to provide a personalized experience without violating clients' privacy. To better understand the audience, businesses should also invest in emerging technologies like machine learning which has the potential to improve customer experience by up to 34%.

As you collect customers' data, implement good practices such as offering cookie customization, abide by General Data Protection Regulation (GDPR) guidelines and respond to Subject Access Requests (SARs.) This will display transparency, build trust, and encourage customers to share more data to fuel your personalization efforts.

Communicate your Data and Privacy Policy Clearly 

According to Pew Research Center, over 80% of respondents reported that the risks they face because of data collection by companies outweigh the advantages. To address these concerns, brands must convince customers how they intend to use their data and how personalization is good for them. And this starts by communicating data and privacy policy clearly to buy customers' trust.

How can companies achieve that?

  1. Promise customers the option to opt out of sharing data and have their data deleted. 
  2. Display security badges on your website to show customers their data and privacy are protected. 
  3. Tell customers who you'll share their data with and let them consent, e.g., marketing partners. For example, as an insurance company, you can specify who your data should be shared with. Inquiring about what data is shared is a good question to ask insurance companies in this regard. 
  4. Notify users whenever there are changes to your policies 
  5. Breakdown your privacy and data policies in easy to understand manner by using FAQ style and infographics 

Don’t Compromise Your Client’s Privacy 

In an effort to improve personalization by collecting data from customers, you should ensure that you don’t risk their privacy. This will not only be devastating to the client's privacy but could be disastrous to your business. A data breach or weak security that leads to the loss or theft of clients' information can tank your business and open you up to lawsuits. To prevent this, invest in the latest technologies to safeguard users' data.

As a business, you should also comply with laws governing data privacy. The GDPR is the industry standard, but different markets and countries have versions. These guidelines are regularly updated, and following them will help you keep up with trends.