Two-thirds of consumers do not understand how personal data is used

As consumers become more aware of their personal data, its value and how it is used it has become a key concern. The latest APEX report reveals the key marketing challenges brands will face in using customer data to build relationships.

Two-thirds of consumers do not understand how personal data is used

With more than half of consumers (58%) indicating they want to build long-term relationships with brands, brands have so far been failing to deliver the personalisation customers expect. In fact, the report found that a third of consumers view irrelevant retail offers as the biggest marketing mistake made by brands, and almost half (48%) think when it comes to relationship ‘building’, all they see after-sale are spam emails.

Personalisation across the board does not meet expectations. Over two-thirds of consumers (68%) do not know how their data is being used by brands. This knowledge gap, combined with the implementation of GDPR and the ongoing discussions of data being used in political discussions, has spiked consumer interest in data use and privacy.

However, while interest has increased, the actual use of data by brands is creating uncertainty, confusion and setting unachievable expectations about the sort of interactions customers should expect.

“The latest APEX report reveals that consumers want a long term relationship with brands, which is clearly an opportunity that needs to be pursued. To succeed in establishing relationships, brands need to show customers that by having their data, they are able to create the long term value they crave. Currently, though many consumers feel brands’ efforts are missing the mark, which is risking weakening customer retention,” said Halldór Lúðvígsson, Managing Director, Omni-channel solutions at report sponsor, Valitor.

Embracing data and privacy

The good news for brands, however, is that consumers are still happy to provide them with personal data, as long as it is used in the right way. In fact, 75% of consumers are comfortable with the concept of a brand holding personal information in order to improve the services and relationship. Consumers also revealed that they are most willing to share email addresses (42%), followed by clothing size (29%). But in order to keep consumers happy, brands need to ensure that they use this data wisely if they are to encourage the sharing of more types of information.

The impact on the customer relationship

The outdated practice of getting data and then taking a “spray and pray approach” has clearly had negative effects on consumers. For example, over a third (34%) of consumers say that they have been made to feel like a brand no longer wants to impress them once they have parted with their money. Another third (33%) aren’t convinced brands still care about them after the sale is done. While a quarter (25%) highlight the fact that occasional offers are not the same as a proper customer service relationship.

Lúðvígsson explains, “In a world where people are increasingly sceptical about sharing data, brands must look to be open and transparent about why they want it, how they keep it safe and why it is good for the consumer. Then they need to put these words into actions and give their customers an actual personalised experience. A one size fits all approach, simply doesn’t work. The dangers of this are quite clear with recent research highlighting that a bad experience will see 47% of customers not shop at a store again.

“For brands to succeed they need to embrace data and privacy, redefine the data journey and ensure there is a full relationship cycle. Get this right and the pitfalls of privacy and personalisation can be avoided.”

“In such challenging times for brands, bad customer experiences often lead to losing customers. Gartner has predicted that by 2020, poor customer experiences will destroy 30% of digital business projects. Our own research highlights that bad experiences will not only destroy business projects but increase the likelihood of customer churn and negative word-of-mouth by up to 10 times,” says Prof. Dr. Phil Klaus, Professor of Customer Experience Strategy and Management at the International University of Monaco.

“Now, more than ever, this is very bad news for any brand. Managers need to take a long and hard look at how they are treating customers during their entire journey and rapidly turn these bad feelings around. Failure to do so could be catastrophic.”

Key stats from the report:

• The 18-35 age group is far more confident in their understanding of how brands use their data (18-25 were 40%; 26-35 were 43%) compared to the 66+ age group (19%).
•  44% of consumers take notice of marketing communications from a brand:
  • 56% take notice of emails
  • 46% notice free samples/trials
• 52% of 18-25 years – the highest proportion of all age groups (and the emerging customer base for many brands) – are receptive to messaging from brands.
• The oldest consumers, 56-65 and 66+ are the least likely to pay attention to brand marketing.

To download the report CLICK HERE

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