Data Security Outweighs Consumer Desire for Personalization

Companies must demonstrate their ability to preserve data privacy in order to repair and prevent the rifts in customer trust caused by recent security breaches.

Though companies now revel in the vast amount of consumer information at their fingertips, these organizations must also respect the overwhelming need for privacy if they're to execute an effective customer strategy. Thus, while businesses are eager to follow their consumers' digital footprints right to the source, marketers must develop their abilities to balance personalization and protection.

SAS's recent "Finding the Right Balance Between Personalization and Privacy" report explores digital habits and emerging consumer preferences, specifically emphasizing the challenges many marketers must address to succeed. The study polled 2,949 global consumers to assess their willingness to provide personal data, as well as their attitudes toward personalization and privacy. Based on consumer usage of smartphones, tablets, and mobile apps, as well as online purchases via PC and mobile, loyalty program memberships, and real-time location data, researchers calculated each respondent's digital footprint score ranging from 0 (no digital footprint) to 100 (greatest possible digital activity), with the average score equaling 56 out of 100.

The following statistics highlight the actions that define these digital footprint scores and the sentiment behind these behaviors:

  • Overall, 83 percent of those polled spend time on social media, with the average respondent perusing the social sphere for 77 minutes each day. Most consumers also use a smartphone (78 percent), completed an online purchase via PC in the last three months (76 percent), and belong to loyalty programs (70 percent).
  • U.S. respondents obtained an average digital footprint score of 56, while the country exhibited the least restrictive data privacy laws of all those surveyed. Portugal, on the other hand, received an overall score of 59 despite having the most restrictive data privacy laws of those polled.
  • Older millennials (age 25 to 29) register the largest digital footprint, with an average score of 67, making them the most digitally dependent of all age groups profiled. However, digital interaction decreases considerably after age 30, with those 60 and older being the least engaged (43).
  • Sixty-nine percent of those polled agree that recent data breach events in the news have increased their concerns about putting sensitive information in the hands of businesses, while 73 percent believe that using personal data without permission constitutes a violation of privacy. However, 57 percent are willing to share information if they're likely to get something in return.
  • Consumers are more likely to share personal information with long-term contract companies, such as banks and credit unions (73 percent) and phone services providers (57 percent), out of necessity, while few are willing to share information with entertainment providers (33 percent).
  • While most consumers are typically willing to provide their names (94 percent) and email addresses (94 percent), and many are likely to share their birth year (78 percent) or birth month (74 percent) in exchange for free offers, few are willing to share their cell (53 percent) or home (43 percent) phone numbers, and only 18 percent will share their credit card or financial data.
  • On a scale of 1 to 5, respondents believe online retailers (3.46) and grocery stores (3.45) provide the best personalization, followed closely by banks and credit unions (3.32). Respondents ranked Amazon number one in personalization overall.

Key takeaway: Though consumers understand that companies are constantly observing their behaviors, businesses continue to walk the fine line between personalization and privacy protection. Ultimately, trustworthy security practices (63 percent), the "give to get" factor (49 percent), purchase frequency (39 percent), product and service preferences (39 percent), and the company's privacy policy (38 percent) act as the primary drivers behind an individual's willingness to share personal information. While consumers are typically eager to share data that will further more meaningful relationships, the recent number of data breaches has many on edge. Thus, companies must actively provide evidence that consumer data will remain safe, while also demonstrating the value they'll receive in return, in order to maintain access to such digital footprint data. For most, privacy and protection now take precedence over personalization. Therefore, companies must approach data security as a competitive differentiator, for those that can ensure information safety and deliver targeted offers will likely dominate within their industries.