Businesses use personalization to increase conversion and customer retention. Buyers are willing to share data if they understand why it’s needed. If a seller demands too much personal information, it can lead to customer abandonment. Experts at an ecommerce website development company explain how to avoid crossing the line between personalization and privacy.
What is Personalization, and Why Does a Business Need it?
Personalization is the adaptation of content, offers, interfaces, and communications to the user based on collected data. Its primary goal is to increase a company’s profits. This is achieved by:
- improving business awareness among various target audiences;
- increasing the average order value;
- preventing customer churn;
- increasing customer lifetime value by increasing order volume.
Businesses analyze customer behavior on the website, their interests (shopping cart, search queries, social media activity). Based on the data collected, the company can offer exactly what they are looking for. The result: the customer makes a purchase, returns for more, and recommends the online store.
How Customers Perceive Personalization
Some customers perceive personalization as an element of surveillance. But when it makes their lives easier, they share information.
Buyer experiences complex:
- Care. The seller offers exactly what they need;
- Fear. When the customer realizes the business knows too much, interaction with the seller ceases.
Perceptions of personalization are influenced by the customer’s age. Customers born in the second half of the last century prefer personal control over their purchases. Millennials and Generation Z perceive personalization positively, but jealously guard their personal space.
Where Does Personalization Begin to Violate Privacy?
The line between a personalized approach and an invasion of privacy is fine. If the customer feels threatened, the business has crossed that line.
Key points that are guaranteed to cause a customer to unsubscribe:
- Processing information about the customer’s health, financial status, gender identity, and sexual preferences;
- Lack of transparent consent. The customer must confirm permission to collect data;
- Use of non-obvious sources of information. For example, analyzing social media interactions and browser history;
- Retargeting and frequent repetitive touches. A buyer sees the same ad 20 times a day on different devices. The likelihood of a seller being blocked in this case is up to 75%.
Legislation and Market Self-Regulation
Laws pertaining to the privacy of personal data of users have been created. The wordings used are different in each country but the laws are all founded on the following principles:
- legality;
- fairness, transparency, and accuracy;
- purpose limitation;
- integrity and confidentiality;
- data minimization;
- limited storage period;
- accountability.
The user should be able to access information and make corrections and erase. The consequences of law violation include fines, churning of customers, and reputation.
Finding a Balance Between Personalization and Privacy
The second pillar is the adherence to the law, and the realization that personalization is more profitable to the customer than the enterprise.
General recommendations:
- minimize the amount of personal information;
- informed consent from the customer to provide data;
- clear settings and controls, the ability to opt out of personalization.
When all these factors work together, customers stay longer, make purchases, and recommend the seller to friends and acquaintances. Trust is a valuable asset; excessive intrusion into a customer’s privacy damages reputation and certainly doesn’t justify marketing costs.
