The ecommerce industry has greatly benefited from the explosion of customer-centric data analytics. Industry leaders have been able to leverage it to great effect, fueling their various marketing, advertising and website content personalization efforts, yielding game-changing sales conversion lift.
Contemporary online shopping companies have even been rampantly gathering, tracking, and even buying data regarding individuals’ shopping intent, cross-platform browsing behavior and owned media interactions to compile dynamic, frighteningly detailed customer profiles. These profiles are then used to create targeted marketing campaigns that can effectively hook and reel in customers. One only need to look at how Facebook Ads and Amazon product recommendations seem to accurately coincide with a person’s needs and wants to see how effective and even eerie these methods can be.
However, the consumer backlash against these practices has been building momentum. An increasing number of users have now become more discerning of how their personal data is being used. In addition, privacy regulations such as the GDPR and CCPA now have stringent provisions on how companies can gather, store and use consumer data, making it difficult to now use these “intrusive” marketing methods. Third-party cookies are now being phased out, and web browsers that block all data collection are rising in popularity.
As a result, merchants are now at a critical juncture where they have to find a balance between maximizing their data investments and still effectively engaging customers while making sure that consumer privacy is respected.
Why Data Privacy Become an Issue in the First Place
Data privacy regulations are now regarded as a critical safeguard to public good and a pillar of an individual’s rights in the digital age.
A great deal of this trend can be attributed to the number of headline-grabbing episodes of data blunders involving businesses, such as:
- In-your-face advertising. Companies routinely buy and sell consumer data to create targeted ads. They typically rely on browser cookies and trackers to collect enough information to create profiles of their audience. Advertising used by networks such as Google and Criteo can also feel intrusive to consumers. As much as 79% of people say that they feel they’re being tracked because of ads for items they’ve looked for before, a targeting method known as “retargeting.”
- Creepy experiences. Consumers have reported feeling unnerved by brands due to their use of personal information. Some 21% of millennials say that they have had a creepy brand experience, and 40% of brands admit to being creepy.
- Misuse of data. Data firm Cambridge Analytica reportedly gained access to private information of more than 87 million Facebook users to help influence elections in several territories. The latest documents released by former Cambridge Analytica business development director Brittany Kaiser even suggest that sensitive data collected by companies is still being used to influence politics worldwide. And Facebook is still under fire for the manner in which its algorithms surface posts that encourage divisiveness between people, based on their values.
- Data breaches. Businesses have fallen victim to data breaches that left users exposed to cybercrime and fraud. For instance, hotel group Marriott suffered a major data breach in 2018 that affected records of over 500 million customers that included mailing addresses, payment and contact information and passport numbers.
How Ecommerce Benefits from Customer Data
Ecommerce companies use data to drive personalization and targeted advertising and marketing to boost their conversion and sales in a highly competitive market. In fact, 40% of executives report that their personalization efforts have had a direct impact on maximizing sales, basket size, and profits in direct-to-consumer channels such as ecommerce.
Data also helps businesses identify certain groups of people that are most likely to buy their products. As such, they will be able to target their marketing to interested customers and won’t waste resources on groups that are less likely to buy from their brand.
In addition, companies can also track consumer activities to provide them with better customer experience and recommend products and services based on their context. Around 75% of today’s buyers expect businesses to anticipate their needs and make relevant suggestions.
For example, online fashion retailer ASOS has a dynamic interface that changes based on user browsing and search history. If a user has previously searched for men’s clothing, for instance, the user will automatically be redirected to the men’s section the next time they browse to ASOS’s homepage.
Compliant Data Use Is Just Table Stakes
The emergence of data privacy regulations has prompted many businesses to rethink their data efforts as these laws carry the real threat of litigation and very hefty fines. And given the importance of data for a business’ success, they have little choice but to adjust their methods and adopt tools that make their data efforts compliant.
But compliance with regulations is just the beginning. Nowadays, it seems that additional regulations are constantly under deliberation at trade organizations and legislative bodies around the world. It’s also possible to remain compliant while still freaking out your customers, so ecommerce data managers would do well to always err on the side of less intrusiveness rather than more.
Seeking permission from visitors and providing transparency into data use policies are key in all this. This means that companies must always ask for consent before they collect user data. Websites must now contain a cookie permission notice that explains what data will be collected and for what purposes. It’s important that customers have a choice to accept or decline. Companies even have to keep records of which customers have actually given consent.
Likewise, customers must also be given the option to opt in or opt out of promotional materials. They must first affirm that they’re willing to receive marketing emails before organizations can send them one. In addition, companies must only ask for relevant information and be transparent in the data they collect in their sign-up forms.
Under privacy laws, consumers can also withdraw their consent, ask for their data records, and request that their histories be deleted. Companies must provide their customers with options to unsubscribe from mailing lists, deny access to data collection, and delete their histories and records on a website. Businesses must also be able to provide a copy of collected consumer data that includes information about which parties the data was shared with and the purpose of the collection – within 30 days after the request was made.
Achieving compliance is no easy feat. Fortunately, the emergence of compliance tools and platforms can help companies implement all these necessary changes to their channels. Other compliance applications can even automatically generate data reports to help companies fulfill data requests from users.
Privacy regulations also make companies more accountable for the protection of consumer data. The adoption of security solutions such as antivirus apps, firewalls and access controls can safeguard sensitive information from being intercepted.
Overall, companies must also review the impression that their user experiences create. Customers must feel safe throughout their journey and that they aren’t creeped out by any of the website or application’s behavior at all. User testing and feedback are critical in building such experiences.
Finding the Right Balance
Being respectful of people’s privacy is indeed a matter of doing the right thing and regulatory compliance, but it’s also understandable that business leaders would aim to optimize interfaces and paid media activity for sales conversions. They are running businesses after all.
Ecommerce companies need to perform their due diligence to remain compliant while using careful personalization to drive their sales. Ultimately, the most important thing is that your customers always feel that their privacy is being respected, that you’re looking after their best interests, and no lines are being crossed.