On May 26, the Internal Revenue Service said that its computer systems had been hacked, giving criminals access to the past tax returns of more than 100,000 people. It is just the latest a long string of incidents that understandably give consumers pause when they’re asked to forfeit personal information.
What can retailers, in particular, do to earn the trust of consumers?
These days, consumers can barely buy a pack of gum without being asked for personal information, often creating friction between consumers and retailers. On the one hand, retailers view the use of customer data as a source of competitive advantage. On the other hand, consumers are anxious about how their personal information may be used.
While the stakeholders’ collective in this issue isn’t going to turn the technology clock back, the need to resolve the tension between customer anxiety and retailer interests is clear and present, particularly as retailers seek to deliver highly personalized shopping experiences.
Retailers need to be transparent about the data they gather, give customers control over their data and offer fair value in return for it. This engenders trust and may potentially earn deeper access to customer data. The World Economic Forum recently published a report, “The Evolution of Trust in Business,” in which they make a correlation between building trust and business competitiveness. Extrapolating from that report, it can be argued that retailers need to build trust with customers – easing their fears about privacy – while at the same time preserving their business interests.
In a recent study conducted by the design firm ‘frog,’ customers around the world seem to assign different values to various types of personal data. This fragmented thinking is important to understand, since omni-channel retailers have to address this issue on a global scale and avoid applying a one-size-fits-all approach to privacy. For example, consumers in Germany value data about their health history more than other data types, while consumers in the US perceive government identification data as being of the highest value.
The general notion here is for consumer value to exceed the perceived cost of that data that they are giving up. This research shows that the more trusted a brand is, the more willing consumers are in sharing data. Therefore, if consumer data leads to long-term competitive advantage, building trust is table stakes to gaining that advantage.
The frog research team studied best-in-class examples of retailers leading this effort, and have come up with 3 principles:
1. Educate your consumer: Make sure your customers know how you will use their data. Britain’s Channel 4 seems to doing an excellent job at this. See here.
2. Give them control: Allowing consumers to control the data that gets shared (even if they don’t actually exercise that control) is believed to build trust between consumers and brands. Google’s “Right to be Forgotten” project in the EU is one example.
3. Deliver value: This is the one that appeals to retailers the most. Personalization, promotions, and other finely tuned initiatives drive a unique digital experience tailored to the shopper. That is the Holy Grail that retailers are pursuing – the one that engenders trust and loyalty.