This question is particularly relevant in light of the new General Data Protection Regulation (GDPR), which has been effective in Europe since the end of May 2018.
Regardless of improved legislative protection of data privacy, the collection and analysis of personal data often raises customers’ concerns and can lead to their refusal to disclose it. Thus, privacy concerns represent a major obstacle preventing marketing managers from using valuable customer data and establishing strong personal relationships with their customers.
To investigate this issue further, I conducted a focus group as a qualitative pre-study and a quantitative study including an online survey of 250 participants. For both studies, the connected car served as a use case. I identified five customer segments according to their privacy perceptions as well as preferences and established recommendations on how to quell the concerns of each segment:
- Privacy Fundamentalists: These customers place the highest importance on privacy and protecting their data. It is almost impossible to significantly decrease their concerns as they perceive high risks in the way firms use personal data.
As it is difficult to convince Privacy Fundamentalists to disclose their data, increase their trust in your company to attenuate their concerns regarding your company’s data use.
- Control Addicts: Customers in this segment perceive a high risk regarding data use by service providers in general. Hence, they place high importance on privacy and want to maintain a high degree of control over their data.
Convince Control Addicts to provide their data by offering them a high level of control over how their data is collected.
- Convenience Seekers: These customers are primarily interested in valuable benefits and convenience. They are willing to trade both their data and a certain degree of control over it to ensure them.
Ensure that Convenience Seekers know that providing their data leads to valuable services and enhanced convenience.
- The Flexible Ones: There are multiple ways to allay the privacy concerns of this segment. These customers are happy to receive benefits and exert some control over how their data is collected and used.
Provide the Flexible Ones with at least one of the above-mentioned options to reduce their privacy concerns.
- Brand Loyalists: These customers have a positive attitude toward your company and trust your data practices. They are more likely to share their data with your company than with an unknown external service provider.
To decrease any privacy concerns Brand Loyalists may have, proactively inform them that your company represents the service provider, including data collection, analysis, and storage.
Knowing these different customer types and accommodating their individual needs is a first important step in decreasing their privacy concerns. There are three ways to effectively reduce customers’ risk perceptions regarding data disclosure while concurrently increasing the likelihood of data disclosure:
Importance of data control
Provide your customers with a degree of control over the data collection process. Customers want to be able to choose whether they agree to the disclosure of their data on an individual or regular basis. In other words, it is more likely that they will provide their data if they can opt to disclose it for a restricted period. But be careful, each customer is different. Control Addicts may want to provide their confirmation every single time, while customers of the other segments may find it more convenient to be asked on an annual basis only.
High level of data transparency
Provide your customers a high level of transparency regarding how their data is used. This recommendation is in line with findings from Capgemini’s Cars Online Study 2017, which confirms just how important transparency in the use of personal data is for customers. Transparency can be achieved by providing brief notices about data usage and an overview of the collected individual data. Customers often want a summary of how the firm uses their data in addition to the privacy statement required by law. Because privacy statements are often complex and detailed, there is a demand for a short text that summarizes the data use in a simple way. Furthermore, customers may want to access their individual data set in order to gain concrete insights into how their data is being used.
Valuable benefits as compensator
Offer your customers attractive and valuable benefits related to data disclosure to compensate for their privacy concerns. In the connected car context, benefits such as safety enhancement and time savings may encourage customers to disclose their data. It is important that these benefits be mentioned explicitly in your communication with customers.
To build a consistent customer database and, in turn, establish strong customer relationships, provide your customers with a degree of control, high transparency, and valuable benefits in terms of how you collect and disclose their data!
If you take these factors into consideration in your processes and communications, you will act in a truly customer-centric way, improve customer satisfaction, intensify your customer relationships, and increase your business success. However, because customers differ in their privacy perceptions and preferences, it is important that you tailor the above-mentioned options accordingly.
Now that you know how to reduce personal data privacy concerns, stay tuned for the next article of our blog in the series on the power of artificial intelligence and process automation and how they need to be integrated into the CRM landscape.