When It Comes to Winning Over Customers, Transparency Always Wins
Whether browsing in person or online, customers do not like to feel like they are being watched while they shop. Being monitored will drive most potential buyers away, often resulting in abandoned shopping carts and lost sales.
The recent data supports this, with an in-depth study finding that 41% of shoppers walked away without making a purchase when they were being monitored; this compares to only 20% of shoppers walking away in an unwatched group. The extra defectors lead to a real hit for retailers in the form of lost profit, diminished customer trust, and, of course, loyalty.
Most customers have a general understanding that e-commerce sites are tracking them at a basic level. However, they tend to be much more accepting of companies that only track their final purchase versus those companies that keep tabs on them every step of the way. Just as most of us probably agree that we dislike being followed around a store by an over-attentive salesperson watching our every move, the same can be said for online shoppers.
However, being monitored online takes it to a different and more disconcerting level. This is because most online customer monitoring happens behind the scenes, and customers can’t physically see who is watching them like they can in a store. Most people are unaware that their every click is being tracked until the items they’ve browsed begin following them around the internet and popping up in ads at every turn.
Unsurprisingly, many consumers have a visceral response. Based on recent studies, people crave privacy, especially when it comes to their data. Repeatedly seeing an ad for a pair of shoes you glanced at once online but didn’t buy doesn’t create a warm or trusting feeling of being cared for by a retailer – for many people, it may come across as creepy. There is a way to gain back that trust, and it is all connected to transparency or, to be precise, web transparency.
The importance of customer opt-in
So, how can retailers avoid scaring customers away while still collecting valuable data that will help them personalize and improve the customer experience as well as advertise effectively? The answer is simple: Always give customers an opt-in option of having their data collected. E-commerce companies should look deeply into the customer desire for privacy and make sure they provide such privacy at every step. Consumers have the same expectations about how their data will be used and shared by e-commerce sites as they do for anywhere else on the internet, like a social network.
Let’s take this a step further. As in every other industry, retailers should make it abundantly clear what data is going to be tracked and how it will be used to create a better experience. The following fact should be emphasized: Data collection should always be directly linked to an improved consumer experience. Think about a music service like Spotify, for example.
The service certainly tracks its users and collects data on what they’re listening to and when, but it offers a tangible benefit that users appreciate. This comes in the form of tailored recommendations for discovering other new music that they might like and a year-end report on their listening habits that many users take pride in sharing with friends. The tracking of their listening habits is not seen as “creepy” because it provides a real benefit to their overall Spotify experience.
Taking a page from this playbook, retailers need to focus on providing a tangible improvement to the customer experience as a result of collecting data. This could include offering a specific personalized discount to customers or making their browsing experience better by sorting results based on what they might be interested in most. The one caveat is that the customer must explicitly opt in to having their data used in this way – it can’t be by default. Customers need to know how their data is being collected and why.
Retailers that are worried that most of their customers might opt out, leaving them without the valuable data that fuels their marketing and sales teams, are missing an important point. Data needs to be used as an enhancement to the buying experience – as an asset to both the brand and the customer. The link between the two should be crystal clear. Data is a powerful asset, probably one of the most powerful assets today.
Without a clear and transparent opt-in process, brands risk losing the one thing that is very difficult to get back: customer trust. In an industry like retail, customers have lots of options of where to shop. They can often get the same exact product from a competitor for a similar price. This means that providing the best customer experience that fosters trust is the ultimate competitive advantage, and the winners will be those retailers that prioritize their customers’ desire for privacy and control of their data. Data might be the fuel that most e-commerce decision-making runs on, but retailers can’t forget who actually owns and provides the data – the customer.
Or Lenchner is CEO of Luminati Networks.