In recent blog posts, we’ve focused quite a bit on the need for brands to focus on creating personalized customer experiences. This should come as no surprise to anyone in the CX space, with McKinsey reporting that 71% of customers expect a personalized experience and that 76% become frustrated if they don’t receive one.
To effectively personalize a customer experience, leveraging individual consumer information—sometimes very sensitive information—is required. When you consider that Attention Insight reveals that 80% of consumers are “worried about how companies collect their data as well as what it’s used for,” it’s evident that many companies will find themselves in a personalization vs. privacy balancing act. And with regulatory bodies continuing to pay close attention and issue new regulations, this balancing act will remain in place.
So just how do you provide a personalized experience while addressing consumer privacy concerns? Here are some high-level tips for consideration:
- Be Transparent About What Data Is Collected: Cisco’s well-respected 2022 Consumer Privacy Survey found that as personalization continues to evolve, the overwhelming majority of consumers want more transparency on how their data is collected and used. It goes on to find that consumers inherently trust brands when they understand what data will be used and for what purposes. By communicating proactively with customers and listening to them about preferences and consent, you will solve many of their concerns.
- When Possible, Focus on Zero-Party Data. While first-party data is based on individual consumer behavior, whether through your website, social media channels, or even phone conversation, it is “passively” acquired and used. And this can lead to consumer confusion/concerns if not used appropriately. Zero-party data comes solely from information that is intentionally and proactively provided by a customer to a brand through those same channels. While first-party data is still highly effective when used properly, placing a greater focus on zero-party data willingly provided a customer will go a long way into providing a personalized experience that the customer actually desires. It’s important to take a step back and consider what data is actually needed for each use case, allowing you to collect and utilize the minimum data required for success, and through the least invasive (and most safe) methods.
- Have a Strong Compliance Function In Place: While this may seem obvious on the surface, I’ve seen the opposite time and time again over the course of my career. In an effort to innovate and grow, too many companies fail to develop a true, organization-wide compliance function that will address these issues before any new initiative is launched. At Servicing Solutions, compliance is part of the fabric of our company and starts with our executive leadership team. Whether it is routine customer care, loan servicing, collections, asset recovery or sales/lead generation activities, our compliance function plays a key role in ensuring that the personalization and data security balancing act is addressed.
- Don’t Lose Sight of The Regulatory Environment: The various regulatory bodies that monitor companies that directly transact with customers are regularly changing or adding regulations, and there can be costly penalties for not following these. This is especially true when evolving technologies (such as AI and Machine Learning) are heavily utilized, or when entire new categories are introduced. The Buy Now Pay Later industry is a great example of this. After impressive growth that led the industry to be a media and Wall Street darling, some cracks began to show after a lack of focus on compliance issues. Regulatory agencies began to implement more stringent policies, which caught the attention of the mainstream media, including the New York Times. Taking a step back to anticipate compliance issues before launching a product or service will pay significant dividends in the long run.
Ready to “Invest in Real Experience” to develop personalized customer experiences that provide consumers with the peace of mind that their data is secure? We’d love to chat. Reach out to us at sales@servicingsolutions.com.