In a recent study, more than two-thirds of consumers (69%) report that recent news events have increased their concerns about sharing their data with businesses. So retailer marketers find themselves walking the fine line between enhancing customer personalization and growing privacy concerns over data collection, Adding to this paradox, almost half of retailers (47%) cite personalization is the leading retail technology trend for 2018, according to RIS/Garnter study.
Savvy customers are driving marketers to strike a better balance between their need for data collection and customers’ need for privacy and control. Being more transparent about how you collect and use customer data is a good start, but companies should take it further and ask for explicit consent and offer immediate rewards for sharing. Forward thinking companies are adopting a permission-based approach to avoid alienating the very people they want to learn about: their customers.
91% of respondents in a University of Pennsylvania survey said that a discount was “not a fair exchange for them to collect information about me without my knowing.” According to the study, customers simply “feel resigned” to having their data harvested, yet 57% also say they expect companies they do business with to understand their needs and preferences. In order to earn rewards, 3x as many customers say they are likely to spend more with a brand, be less price sensitive and 4x are likely to buy more.
So what’s a retail marketer to do?
Loyalty programs provide businesses with a perfect opportunity to gather information directly from the customer and personalize messages and offers. The likelihood to share personal information seems to be strongly driven by necessity and the relationship between the customer and business, according to a report by SAS, “Finding the Right Balance Between Personalization and Privacy.” But evidence shows the highest motivator for positively influencing customer behavior and increasing brand loyalty are cash incentives. A CHOICE survey showed that 70% of consumers felt immediate discounts at checkout were an important feature in loyalty programs. Co-founder of Boxever, Dave O’Flanagan, added, “Consumers are not so much adverse to data collection, but feel they are largely not rewarded for the contributions.”
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The Information Trade Off
It’s important for marketers to know what information customers are willing to provide in order to get more personalized communications. Increasingly customers are recognizing their data is a valuable asset and expect a “fair deal” in exchange for sharing their information. Programs that provide simple, immediate and tangible rewards (such as cash-incentives) perform much better than ones that require point accumulation and a long reward cycle. Bain Advanced Analytics founder Rasmus Wegner said, “Open and transparent communcication is a good place to start, but setting out a motivating renumeration framework will increase engagement and trust.”
A Cash-Incentive Program Solution
Encore Incentive’s Customer Loyalty Accelerator program features cash incentives which offer the permission-based transparency, simplicity, and immediacy that today’s customers are seeking in rewards or loyalty incentive. Visit our Features web page to learn more.