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Walking the Fine Line Between Consumer Experience and Privacy

Consent as well as robust security protocols play key roles in walking the fine line between data management and consumer privacy expectations. An organization that handles their consumers’ data ethically stands to gain a considerable edge against competitors through greater access to data, consumer trust, and potential to secure more privacy-conscious consumers.

Deepak Gupta
Deepak Gupta
February 24, 2021
5 min read

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Personalization is the key to creating a meaningful experience for consumers across industries. It allows organizations to ensure that the content seen and received by their users is worthwhile and relevant. Needless to say, in striving to create this meaningful experience, brands need to collect an increasing amount of data on their respective consumers.

This growing demand for personalized content and the consequent need to secure an overwhelming amount of data is what breeds the dilemma of consumer experience and data security faced by present-day organizations.

Another aspect of this dilemma is an all-time low consumer trust in brands. The general population has lost faith in brands. This lack of trust has given rise to data security legislations that organizations ought to adhere to: GDPR, CCPA, and the SOX Act amongst many more with several reportedly under conception.

To enjoy the benefits of personalization while balancing adherence to regulations and retention of consumer trust, entities ought to seek the optimal and acceptable degree of data collection and utilization.

The Case for Enabling a Frictionless Consumer Experience

Gartner argues that the value of the traditional 4 Ps of marketing: product, price, promotion, and placement) has faded in the internet-era where prices and product availability are more transparent than ever. This change has made consumer experience the factor that acts as the primary influencer for consumers in this age.

A consumer’s digital experience with the brand is largely dependent on their interaction with the applications of the organization. These applications’ flow and working are increasingly dependent on usage patterns and behavioral inputs of consumers. Hence, the information collected through an individual’s data patterns is necessary to supplement consumer experience.

Artificial Intelligence and Machine Learning enable the worthwhile use of this data. When implemented well, these automated systems help create a catered virtual experience that feels relevant to consumers. A consequent personalized experience increases the potential to increase conversion rates and hence returns on investment. Unsurprisingly, 93% of ecommerce consumers expect personalization in their browsing.

Omnichannel promotions, location-based consumer services, and targeted content barely scratch the surface of personalized content expected by consumers. It’s reasonable to claim that a relevant experience created through these means can make or break a brand. Nevertheless, collection of such sensitive information and its use renders organizations susceptible to data mishandling and potentially exposing it through data breaches.

The ever-present potential for data breaches along with concerns over unethical use of sensitive data are two aspects hurting trust in brands throughout the globe.

The Conflict Between Privacy and Security

The contradictory tendency of the newer generations to share their personal information in exchange for services despite the negligible trust in brands is called the privacy paradox.

Users have – and are – growing more concerned about the manner in which organizations treat their personal information. More than 40% studied in a survey do not trust companies like Amazon, Google, Facebook, and Apple to manage their data lawfully, much less ethically. Even for most organizations: approximately 40% consumers have felt their trust has been compromised when using digital services. Only 31% of participants have indicated that they trust organizations and institutes to treat their personal information and data trustworthily.

On realizing that their trusts have been compromised, consumers can and do tend to reduce their interaction with the brand. This reduction can be in the form of reduced spending, or a boycott of the brand altogether.

Weak and unethical approaches to consumer experience and data security practices have been met with growing regulations on consumer data security. Regulations such as General Data Protection Regulation (GDPR), the SOX Act, HIPAA, and others mean that the companies that fail to act legally and ethically do not only stand to lose their consumer base but also incur heavy fines from regulatory bodies. According to UNCTAD, 128 out of 194 recognized countries have established legislations to protect consumer data and privacy.

But there’s a catch!

Despite all things considered, in reality, companies may be using much less data than consumers may consent to. Studies by Gartner and the Boston Consulting Group conclude that when consumer consent is undertaken, that is, when consumers and other stakeholders are consulted before the use of their data, they may be willing to let companies use much more data than they currently use: making consent the key to perfecting the balancing act.

Maintaining the Balance – Benefits in the C-Suite

  • Undertaking and tracking consumer consent through improved identity solutions increases consumer trust all the while reducing the risk for the organization. For the desired response, consent record can and should allow consumers to have a say in the use, sharing, and commercialization of their data.
  • Greater consent to data use can allow boosted personalization and use of data. Hence, allowing a smooth consumer omnichannel experience. In addition, better and statistical backed business decisions can be undertaken through data inference.
  • Data management risks and compliance costs can be reduced. Through the means of an outcome-based service, real-time risks to stored data can be assessed, hence, meeting data security compliance and reduced potential for legal fines.
  • Such a balanced approach is also likely to give one a competitive edge over organizations that fail to engage in ethical data stewardship practices: increasing the potential to secure a broader consumer base and hence greater revenues.

Conclusion

Consumer data has become a fundamentally crucial aspect of business models. It is needed for personalization to boost consumer experience, to make better business decisions, to generate more revenue through third party transfers, and to allow personalized advertisements. consumers and other stakeholders have come to realize the importance and the use of this data over the past few years as well.

Unfortunately, the current consumer experience and data security practices do not stand in line with consumer privacy expectations. An organization neglecting ethical and legal data use stands to lose out on revenue, incur heavy fines, all the while narrowing their consumer base for the worse.

Consent as well as robust security protocols play key roles in walking the fine line between data management and consumer privacy expectations. An organization that handles their consumers’ data ethically stands to gain a considerable edge against competitors through greater access to data, greater consumer trust, and potential to secure more privacy-conscious consumers.

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Deepak Gupta

Deepak Gupta

Deepak is the CTO and co-founder of LoginRadius, a rapidly-expanding Customer Identity Management provider. He's dedicated to innovating LoginRadius' platform, and loves fooseball and winning poker games!

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