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3 Ways to Foster Consumer Trust in a Personalized World

Data is being used by businesses in innovative and illustrious ways to generate widespread value. Companies should be as inventive in respecting users' wishes without inhibiting data's exponential promise for economic growth.
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The benefits of personalization enabled by enhanced data collection have been touted by marketers and the industries they advance for years. Their data-gathering policies are justified by the "tradeoffs" a seemingly consenting user base understands in sacrificing their data as quid pro quo for the benefits of targeted service offerings and occasional discounts. While the advantages of companies harnessing user data in mutually beneficial ways are an advancement in digital B2C relationships, they should not be take as given. The facts instead point to a public that is wary of companies' privacy policies, confused with how their information is tracked and employed and, for the most part, resigned to inescapable surveillance and asymmetrical power structures - all which paint a rather bleak market picture.

Recent studies from
and the
show that of people studied:
  • Less than 25% agree with the general notion of tradeoffs.
  • 91% disagree (77% strongly) that it is a fair exchange for companies to collect information from individuals without their knowledge.
  • 45% have little-to-no trust that businesses use their information in secure ways that protect their privacy.
  • 78% are "highly concerned" about companies selling their data to third parties.
  • 72% believe that what companies know about them from their online behavior can hurt them.

Contrary to a world where resignation is misconstrued for informed consent, most consumers lack basic knowledge to make educated cost-benefit decisions about their data. In the absence of robust digital consumer protection laws, there is space for influential companies to fill the void. Data can be used as an enormous force for good to enrich individuals' online experiences; this should not be understated. However, the growing tide of consumer disempowerment, inaccessible corporate data policy, and possibility for exploitation should also not be ignored. Fortunately, there are ways that businesses can recognize users' privacy needs while still realizing ROI from their data-driven marketing campaigns. Marketers can leverage increased transparency into the algorithms analyzing user information and the tools users have in managing this access. Not only will this help to win consumer trust and, ideally, resulting loyalty, but research shows that those who feel informed are more inclined to provide their information to these companies, resulting in enhanced personalization of services.

To take advantage of this opportunity and bridge what analyst Jessica Groopman terms the "communication and consent gap", pioneering companies can experiment with emerging best practices in the area:

1) Communicate how and why customer data is used and with whom it is shared
Marketers should provide granular and transparent opt-in and -out policies. One-time terms of service agreements written in opaque legalese that users must blindly accept should be replaced with candid and dynamic data privacy propositions that users explicitly opt-in to. Similarly, the burden of proof as to why users should give up personal information should lie with the marketer. For each type of data requested (e.g. location, past purchases, app behavior), companies should provide a clear and consistent rubric for why it is necessary for the user experience and demonstrate the use cases for each piece of information.

Customer excitement, not apprehension, for how companies use their data innovatively and securely should be a primary business concern. As Fortune's Stacey Higginbotham indicates, since companies are "building business models for the connected era around data and providing context so companies can build services, it seems like getting consumers on board should become more of a priority." The public has the right to know how companies profile them and who will have access to which subsets of their data (including third parties), for how long, for what purposes, and under what conditions. Additionally, it should be clear how it is protected from unauthorized access and data breaches.

2) Institute thoughtful notification design
How information is communicated is at least as important as what is communicated. Blanket terms of service are as ineffective as incessant and disruptive notifications at conveying critical messages to users, which is especially dangerous with matters as sensitive as privacy and data policy. One-size-fits-all policies result in inadvertent lock-in of users with little effective insight into what is being shared and virtually no ability to opt-out. Companies can work with user experience designers to creatively convey complex concepts in ways that condense them into digestible, timely, and non-intrusive morsels of information that the user needs to know, how he is best apt to receive it. However this is conveyed, consumers should be aware that they can grant and retract data as their preferences change over time. When users feel informed and in control, it lays the groundwork for respectful and constructive market relationships.

3) Spearhead industry best practice
To standardize this commitment to data privacy, Groopman suggests something similar to nutrition labels outlining companies' data-sharing practices, while others envision privacy seals of approval endorsed by institutions like VeriSign or TRUSTe. Obviously any type of certification or other common practice needs some type of industry-level consensus. Still, this is more plausible in the near-term than any effective regulation. In the interim, industry consortiums and public interest organizations can come together to develop unambiguous interpretations of "transparency" that represent end-user interests, publicly discrediting businesses that perform poorly and extolling those that do well, thereby encouraging consumers to "vote with their wallets."

Another proposal is to employ the power of crowdsourcing to collectively interpret obscure corporate legal wording to both help clarify what these policies are saying, as well as allow users the confidence to argue those they find objectionable. Companies that can spearhead such practices will emerge as leaders in the journey to win consumer trust.

Data is being used by businesses in innovative and illustrious ways to generate widespread value. Companies should be as inventive in respecting users' wishes without inhibiting data's exponential promise for economic growth. To make the transition to a reality where digital citizens exhibit control over their information, marketers need to advance the themes explored above which promote consumer education through thoughtful notification design and transparent, granular, and dynamic opt-in policies. These joint efforts between businesses, individuals, and industry organizations will not only enhance participating companies' public images but, more importantly, create trusting, enduring, and mutually-beneficial relationships between marketers and their valued customers.

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