Shoppers want VIP treatment but refuse data exchange

Further proof has emerged of the data-driven marketing headache brands are facing with a new study showing shoppers expect to receive the “VIP” treatment when it comes to the relationship they have with brands, yet remain concerned about the sharing, use, and protection of their personal data.

Last month, an analysis by agency Precis Digital revealed that, while one-third of UK consumers crave more personalised ads, only a mere 6% are willing to share additional data to facilitate them.

And, according to Twilio’s fourth annual State of Personalisation Report, there is a “Catch 22”, or disconnect, when it comes to brands using data to power customer interactions.

The report maintains that consumers will take decisive action – both good and bad – if their encounters are successfully or unsuccessfully personalised. Over half (51%) of European consumers say they will become repeat buyers after a good personalised experience, while 49% will tell a friend or family member, and a third (33%) will become a member of the brand’s loyalty programme for deals and rewards.

However, an impersonal experience can be a deal breaker for many. In fact, European consumers are less likely to make a purchase (36%), will stop shopping with the brand entirely (19%), or even buy from a competitor instead (18%), highlighting the value that effective personalisation has to offer, and the risks associated with not getting it right.

Despite the customer benefits of data sharing, there remains scepticism among consumers with how brands are using their data.

According to Twilio’s report, over a fifth (22%) of European consumers are less comfortable about their personal data being used for personalisation purposes compared to last year. This year-on-year decline in confidence shows how important it is for brands to be transparent with when, how and why they are collecting data, and be clearer on how customers can reap the rewards of sharing it in the first place, Twilio reckons.

There is also a pressing need for brands to disclose how they manage, store, and secure customer data, given that not even half of consumers (49%) in Europe trust brands to keep their personal data secure and use it responsibly. Having a robust and accessible data privacy and protection strategy will help offset any negative perceptions of brands that consumers have when it comes to their data.

Over a third (36%) of European consumers feel personalisation has become less targeted over the last 12 months, doing nothing to deliver that desired “VIP effect”. With generic or irrelevant ads on the rise, likely due to the phasing out of third-party cookies, the report suggests that brands need to consider first-party data as an alternative.

Not only is first-party data consensually given to businesses by customers or generated by their interactions with them, helping to alleviate consumers’ distrust and scepticism, but it also provides the most up-to-date and valuable insights when building personalised experiences. A win-win for brands and consumers alike.

Sam Richardson, customer engagement consultant at Twilio concludes: “This disconnect between data sharing and personalisation is creating a real conundrum for brands to navigate – you can’t effectively personalise communications without leveraging customer data. It’s a co-dependent relationship.

“However, consumers have their reservations about data sharing. There is a lot of myth busting work for brands to do to reassure their customers and communicate the mutual gains of sharing data – including the rewarding shopping experience for consumers.

“While brands must recognise the value that personalisation strategies can deliver, they must prioritise building that trust and being transparent with how they plan to use it. Transitioning to first-party data retrieval is a logical approach to achieve this.”

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