A Privacy-First Approach to Personalization

While regulations may be met with skepticism, consumer privacy regulations are a good thing — not just for consumers but for brands, too. 

Privacy regulations give consumers greater control over the data that is collected and who their data is shared with. Brands gain the opportunity to better manage the data they collect and build stronger, more trusting relationships with customers. 

As privacy laws continue to gain global traction, now is the time for marketers and brands to revamp their data practices and put the “person” back into personalization. To regain consumer trust, today’s brands need to embrace a privacy-first mindset and adopt transparent data collection practices. 

Personalization is a must, but consumers are more skeptical than ever

In the not-so-distant past, consumers were delighted when brands knew their first names and recommended products before they were needed. But in the pursuit of hyper-relevant experiences, some brands treated consumer information as a commodity and lost consumers’ trust along the way. 

Despite the unpopularity of data collection, today’s consumers expect proactive service, personalized interactions, and connected experiences across marketing channels. In fact, 91% of consumers are more likely to shop with brands that provide relevant recommendations to them, and the majority of consumers feel positive (58%) about personalized ads.

So, how do marketers reconcile consumers’ need for individualization with the perception of  distrust toward the way brands use their data? The right balance is difficult for marketers to achieve, but consumer privacy laws offer a solution. 

By adhering to regulations and adopting better data collection practices, brands can regain trust and build customer experiences with integrity. Consumers care about the values and practices of the companies they do business with — and that makes brand trust more valuable for businesses than ever before.  

Get your data ducks in a row

Data collection in a privacy-focused environment begins with understanding the different types of data. The four data types are often conflated, but they’re very different in the eyes of the consumer and the law. It’s important to know your way around the definitions and what you need (or don’t need) to build personalized experiences:

• Zero-party data is information provided intentionally and proactively by consumers (e.g., surveys, questionnaires, profile information)
• First-party data is information collected directly from consumers’ actions (e.g., actions on site, social media engagement, mobile app usage) 
• Second-party data is data collected by another company, directly from consumers
• Third-party data is information collected from a number of sources and bought from data aggregator firms (e.g., third-party cookies) 

Since zero- and first-party data are collected directly from the consumer, they are prioritized by privacy regulations. And because these data types come right from the source, they’re generally more accurate, which helps marketers create higher-quality experiences for consumers. 

Fortunately for brands, the vast majority of consumers (83%) are willing to share their data for a better experience. By collecting consumer data transparently and explaining to consumers the benefits of sharing their information, brands can deliver on high expectations and work with — not against — consumers.

Five considerations when building transparent data practices

While Google pushed back the cookieless future, the reality is that consumers want your privacy policies updated today. Although remodeling your traditional data practices can be tricky, it’s well worth it (and legally mandated). Consider the following as you work to modernize your data practices:

• Adopt a growth mindset 

Many marketers see government-based data regulation as an obstacle that will impede their ability to reach customers, but with a little education on consumer privacy, your team will be ready to reap the benefits of better and cleaner data collection. 

Marketing is on the precipice of great change, meaning there’s a huge opportunity for innovation. Get your team excited about the potential to build a cutting-edge data collection program that could leave a lasting legacy at your organization. 

• Organize your plan for data collection 

Gone are the days of “collect as much information as you possibly can.” Every piece of information you collect needs to serve a purpose because bad hygiene will be revealed in the event of a data breach. 

Data collection must be more strategic and centered around zero- and first-party data. Marketers must ask themselves: (a) what information am I collecting, (b) how will my company use this information, (c) how, if at all, will the information be shared with third parties and (d) for how long do I need to collect this? By asking the tough questions now, you’ll mitigate potential blowback from a data breach or public scrutiny in the future. 

• Communicate practices to customers

Brands need to get consent from customers to collect their information, so it’s critical to be proactive about communication. Intentional messaging on the data you’re tracking and why is the first opportunity to build trust with new customers. 

Too many brands provide long and unreadable privacy policies that aren’t educational. Impress customers at the start of their journey with creative and digestible content. Consumers are generally willing to share their information if they understand the benefits they’ll get in return, like personalized coupons or more relevant recommendations.

• Develop agility
  
  Data privacy regulations are evolving, causing digital marketing to be in a constant state of flux. Marketers can’t simply prepare for what’s next — they need to set a flexible foundation for what’s coming after that. 

Ensure you have an agile martech stack in place that will support you as your personalization practices evolve. Leveraging marketing tools and platforms that enable your collection of zero- and first-party data will allow you to balance consent and user transparency and still personalize with users’ permission.

• Set a high standard for compliance

A variety of states have passed privacy and data laws, and each one has specific obligations. As a marketer, it can be difficult to keep up with the responsibilities of these laws and determine which rules apply to you — especially if you’re also subject to industry-specific regulations like HIPAA and PCI. But the consequences of non-adherence will be costly.

My recommendation is to follow the strictest regulation you must adhere to (most likely, GDPR) and apply that to all of your data collection practices. Be sure to keep up with new legislation as it’s passed to understand how it may affect your current practices.

First-party data is the new norm

The consumer privacy movement is far from over — it’s just getting started. Virginia and Colorado are the latest states to pass comprehensive data privacy laws, with another dozen or so states following in their footsteps. State legislators want to show they value protecting their constituents, and this patchwork legislation shows there’s potential for federal legislation.

By embracing legislation, brands have the opportunity to innovate and develop creative ways to collect data from consumers. Companies that transparently communicate how they collect customer information can build a strong foundation for loyalty and connection at the beginning of the customer journey. 

Sanam Saaber is General Counsel at Iterable.