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Consumers Want Personalization, but Not the Way Retailers Are Offering It

Retailers take heed: consumers are keen on personalization, but if it’s done in a way that encroaches on their privacy, many of them will walk.

A newly published survey by Kelton Research and SheerID on “Privacy, Personalization and Promotions,” reveals American consumers’ concerns about data privacy are at odds with how retailers and their marketing departments are serving up those personalized offers and promotions.

“Americans want brands to require consent before using personal data for targeted marketing by a 2:1 margin. But they also highly value offers developed for them,” the study noted.

The predicament puts many brands at a loss for how best to move forward.

For one, according to the study, companies should consider limiting the data they collect for an offer to solely what’s paramount.

“For shoppers to embrace exclusive offers, brands need to avoid collecting highly personal information, streamline the process, and screen out ineligible buyers,” the report noted. “Consumers are far more likely to trust a brand when they can explicitly indicate their interest in an exclusive offer, and when they know a third-part vendor is validating their eligibility.”

Exclusive offers are becoming increasingly key to getting choosy consumers to part with their often otherwise dedicated disposable income. Sixty-eight percent of consumers surveyed for the report ranked exclusive coupons above those available to everyone, and a substantial 94 percent said they’d take advantage of an exclusive offer.

The reason, according to the report, is that it makes them feel good.

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Fifty-four percent of consumers said an exclusive offer would make them feel rewarded, 47 percent said excited and 36 percent pointed to personalized offers as something that makes them feel special.

And at a time when traditional brands have become more of a letdown for shoppers being attracted by more niche and unique startups, brands should also be excited about exclusive offers and the potential they pose for the bottom line.

“The majority (58 percent) of consumers who would use an exclusive offer say it would increase their likelihood to purchase, while at least two in five note the offer would speed up a purchasing decision (48 percent) or increase how much they originally planned to spend (40 percent),” the report noted.

Though infleuncers’ influence is increasing as more consumers take their cues from bloggers on the ‘Gram, the SheerID report said 61 percent of Americans still prefer to learn about new products and brands directly from the brand—a 3:1 difference over bloggers.

Naturally, this fact varies by generation, with 66 percent of boomers keen on brands over bloggers compared to 54 percent of millennials—38 percent of whom say they look to social influencers over brands, compared to just 7 percent of boomers who say so.

But despite putting stock in what brands have to say about products, consumers don’t want to dish out all of their personal info just to benefit from a deal. They want the option of indicating their interest in an offer.

“More consumers would most prefer to opt-in (40 percent) to a promotion or exclusive offer than have brands use information they willingly provide on social media (13 percent) or their activity on a brand’s website (17 percent) to determine whether they should receive the offer.”

That means Instagram shouldn’t be serving shoppers ads based on photos they’ve liked or comments they’ve posted, nor should clicking on a cherry blossom pink dress on a website mean that brand can email you to ask why you left it behind.

The ability to opt-in to an exclusive offer, however, also poses concerns for consumers about how their data will be shared, and recent data breaches are only fueling that unease. A little more than half of consumers are worried about the security measures being taken to keep their data safe, and 41 percent indicated discomfort over the idea of someone else falsely accessing their exclusive offer information.

Two things brands can do are ensure the verification process for an offer is instantaneous and that they use a third-party to complete that verification. And the third-party verification is key because it appeases a need for both the shopper and the seller: the shopper feels more comfortable that the information they’ve shared will be safe, and the seller can avoid consumers using offers not meant for them.

“Over one-third (35 percent) of those who have redeemed an exclusive offer admit they’ve done so when they knew they really didn’t qualify,” the report noted, adding that, “Millennials are around twice as likely as Gen Xers (48 percent vs. 23 percent) to have wrongfully redeemed an exclusive offer not meant for them, and nearly seven as likely as boomers (7 percent).

And consumers don’t like it when the discover an “exclusive” offer wasn’t really exclusive. Eighty-percent, in fact, said they’d lost trust in the brand, and 53 percent said they’d shop the brand less often if they didn’t maintain the exclusivity of an offer.

The silver lining here, is that brands still hold a lot of power, and those that take the steps to wield it responsibly will be best positioned to benefit from consumer loyalty.

“Based on the findings, brands have so much to be excited about, but only if they can earn and hold their customers’ trust,” SheerID CEO Jake Weatherly, said. “This is a wake-up call: as Americans insist on more transparency into how their data is used, it’s incumbent upon brands to get the privacy piece right and establish more integrity in customer relationships, particularly when delivering highly personalized offers.”