Balancing Personalization and Privacy in Retail

Balancing in RetailConsumer expectations are higher than ever. Technology innovation and a rising number of retail providers have added fuel to this fire. Heavy competition means shoppers are voting with their wallets. Crafting a retail experience that meets the customer’s needs is no small feat. The challenge for retailers is figuring out what exactly shoppers expect of them, and what consumers are willing to divulge to make that experience happen.

For many retailers, personalization currently means suggesting items based on a customer’s purchasing history. But that alone is not enough. In fact, when shoppers perceive personalization efforts as “clumsy” or “impersonal” it can actually hurt more than it helps. For example, if your automated system suggests a shopper might like a shirt in red because they just bought the same one in blue, that’s not very useful.

 A study by Virent shows that 80 percent of consumers surveyed said they like services that are personalized to their needs. However, 49 percent of U.S. consumers still say they “never” or only “sometimes” receive personalized service while they’re in a store.  On average, consumers will spend 4.7 percent more in-store when they receive better, more personalized service. This adds up to approximately $150 billion in lost revenue for retailers in 2016 just for in-store sales.

Here are the top personalization options consumer are looking for, according to Accenture:

In Store

- 82 percent welcome automatic discounts at checkout for loyalty points or coupons.

- 57 percent want real-time promotions.

- 54 percent want complimentary item suggestions.


- 64 percent want the website and content optimized for their device.

- 59 percent welcome promotions for items they are considering or have waiting in their shopping cart.

Balancing in RetailFinding the Sweet Spot

Though the majority of consumers want recommendations and service that is personalized to them, there’s a fine line for how much information they are willing to share for retailers to make it happen. A report by Capgemini Consulting analyzed more than 220,000 social media conversations relating to 65 retailers. Only 14 percent of the retailers analyzed had a positive consumer sentiment on both personalization and privacy. Nearly 29 percent scored badly on both, and 57 percent scored positively on personalization but negatively on privacy. The successful 14 percent of retailers had these three things in common:

 1) Personalization initiatives that offer tangible value and give consumers control over their data.

2) Treat technology as a means to drive customer satisfaction, rather than as an enabler.

3) Have solid data management practices in place and proactively communicate those practices to customers.

 There was no significant difference in customer sentiment between online and brick and mortar retailers, or large or small companies, indicating successful personalization is equally attainable for any retailer.

Be Direct and Transparent

Customers won’t give you their data if they don’t know what you’re doing with it. Likewise, they won’t respond well to personalization if it’s not clear how you’re getting the information you’re using. Providing a direct value or benefit to customers in exchange for info keeps personalization efforts transparent and customer-friendly. For example, makeup and skincare companies such as Sephora and Murad have options where shoppers can enter information about their skin type to get product recommendations. StitchFix asks a lot of questions about your personal style, preferences, and size so they have a better chance of sending you apparel that fits your body type and style. Customers willingly provide detailed information because it’s clear how it will better their experience.

Put the Customer in Control

The easiest way to figure out what the customer wants is to ask them. When gathering customer data, let them opt-in to different personalization programs. Accenture reports that 88 percent of shoppers prefer to determine how their data can be used. Giving shoppers options and being clear about how and when their data will be used goes a long way in establishing trust. Allow customers to easily see, edit, add and remove information from their profile whenever they want. A transparent relationship will help ensure all your personalization efforts are well received instead of intrusive.