How to Protect Customer Data and Still Deliver Personalized Experiences

Customer experience has outpaced pricing and product as a key brand differentiator in recent years. Given this trend, businesses need to deliver contextual experiences and bridge personalization gaps by making the most of their customer data.

The Data-Driven Personalization and Privacy Paradox

Data-driven personalization helps brands to build customer loyalty, generate faster ROI and discover new growth opportunities. While “knowing” customers through their data helps brands deliver tailored experiences, consumers often worry how their personal data is collected, stored and used. In response to these concerns, some regions have implemented data regulations (such as GDPR and CCPA) to ensure customer data is kept appropriately private and secure.

To navigate these regulations, maintain trust and make the most of consumer data, marketers need to strike the right balance between personalization and privacy.

Roughly half of consumers are willing to share personal data in exchange for a better brand experience. Only 30% would do the same for money or goods – illustrating just how important experiences are to consumers.

This also illustrates the privacy paradox – the conspicuous disparity between customers’ concerns about privacy and their actual online behavior. For example, 86% of the US population consider data privacy a growing concern and 73% of consumers don’t feel they have enough control over how companies use their data. But, at the same time, surveys show that 80% of consumers are fine with brands collecting purchase histories, 77% don’t mind the collection of personal preferences and 67% think it’s acceptable for businesses to collect demographic information. Nearly a third are even comfortable with brands collecting employment, financial and health data.

Also, consumers readily act on brands’ use of their data. Personalized recommendations have driven 92% of consumers to make purchases, 91% say they’re more likely to buy from brands that offer relevant recommendations and 72% only engage with personalized content.

How Can You Address the Privacy Paradox?  

Consumers want the benefits of sharing their data, but they also want to know you’re being responsible with it. You can also face serious penalties for mishandling private information. To address the paradox and ensure compliance while providing personalized experiences you need to find a balance between the two concerns.

Data privacy, compliance and security

The average cost of an organization falling victim to a data breach has reached an all-time high. According to a 2023 study by IBM, the average cost per breach has grown over the last three years by 15% to $4.45 million. This is a global average, with the cost-per-breach average in the US spiking up to $9.48 million.

The same report lists noncompliance as one of the top three factors amplifying those costs. Many legal and compliance teams just aren’t fully acquainted with the intricacies of data privacy laws. And increases in international data transfers, digital transformation, cloud migration, remote working, large datasets and the changing business and technology landscape continue to compound the problem.

To implement a systematic compliance framework, organizations should first define and document the standards they wish to adopt to manage personal data – aligning their own standards with all necessary compliance guidelines. The strategy should involve all key stakeholders and organizational units. It’s important to enlist SMEs who can develop compliant policies and practices. To protect personally identifiable information (PII) and sensitive personal information (SPI), companies need to identify and tag personal data when it’s collected. They should devise measures to track, locate and safeguard personal data in accordance with the recommended standards. With a robust consent management platform, organizations can ensure compliance and allow users to control how the data will be shared.

How to protect customer data

Gather only essential data.
Collect only the data you need to deliver value to your customers. Brands shouldn’t collect data just to show that they know the customer, but to provide experiences and services that are relevant in the moment. If consumers recognize that your access to their data provides them with value, they’ll be willing to disclose more information.

Make data collection and usage transparent.
Company websites, mobile apps and other touchpoints should clearly describe the kinds of personal data they collect and how they do it. Businesses should also design use cases around tailored offers and highlight how they’re able to make them happen when they know enough about their customers.

Provide links to your brand’s privacy policies and explain them in simple language, avoiding legal jargon. Allow the customer to decide what data they’ll share with you, who else will have access to it and how long it will be stored in your database.

Implement robust data governance practices.
Too many organizations fail to prioritize data governance. They develop a set of policies and set them aside or consider them solely IT’s concern. Guidelines, best practices and capabilities aren’t widely known – much less valued.

But data governance does create value. It’s a central piece of any growth-focused data strategy. Your governance program should help you prioritize high-quality data and embed data capabilities throughout your business, site, apps and other customer touchpoints.

This focus on data governance should start at the top of your organization and have active, expert stewards throughout every department. These stewards should set and enforce your standards for data governance and help sync your data strategy with business priorities and overall corporate strategy.

An intelligent data governance program allows you to identify low risk enterprise data that can be shared with employees and high-risk data like PII, which should be kept under lock and key. Governance is critical for making the most of analytics and user experiences – and it can help you remain compliant and safeguard your data, customer relationships and reputation.

Deliver personalization while ensuring customer data privacy

Data privacy, security and regulatory concerns don’t have to derail your personalization efforts. Good data is the foundation of a successful personalization program – and being mindful of privacy and related issues can help you narrow your focus to gather and act on the most useful and relevant customer data.

As organizations learn to navigate privacy concerns, adopting a crawl-walk-run strategy can help them scale their personalization as their expertise and needs grow.

The crawl-walk-run approach

The crawl-walk-run approach emphasizes setting goals and milestones that are realistic and achievable as you scale your personalization efforts.

Crawl
This stage focuses on using easily collected data and content. For instance, customers’ geolocation data can be used to personalize a section of your homepage with the registration details of an event you’re hosting or sponsoring in their area. You can also set up drip email campaigns to target users who’ve downloaded your content or visited specific pages on your website.

Walk
The walk stage focuses on sharing additional content and collecting more data to target precisely defined user groups. For instance, you can send out reminders to users who’ve registered for an event via your website or mobile app. If a particular page on your website drives more traffic, serve readers more information relevant to that page’s content to improve contextualization.

Run
Running requires additional data collection and research, extensive content creation, and integration with other systems to create a personalized, long-term impact. For example, the data gathered by your CRM can be used to personalize content on your sites or mobile app. The run approach also involves omnichannel experiences, like enabling customers to fulfill orders via e-commerce apps and later sending discount vouchers via email.

The crawl-walk-run approach underscores that the evolution of business technology should align with the evolution of your business. It helps companies understand their customers better across time and with each contact, and it steadily deepens personalization across every touchpoint.

Achieve enhanced personalization with DXPs

To successfully strike the balance between data privacy and personalization, you need the right technology. But traditional digital marketing solutions – like e-commerce apps and CMS platforms – require complex customizations and integrations to deliver personalization. They tend to rely on legacy tech, operate in silos and are slow to catch up with modern customers.

But digital experience platforms (DXPs) like Drupal can fill the personalization gap by providing a unified user experience across all channels and activities. DXPs come equipped with a cohesive and seamlessly integrated set of technologies that drives personalization throughout the entire customer journey.

For example, solutions like WordPress require you to build and launch entire pages – but a DXP lets you create content blocks or components that can be generated dynamically.

DXPs feature built-in algorithms powered by AI; API-first architecture; low code, open architecture; robust tools and capabilities; disaster protection and a strong data foundation. All of this enables DXPs to create real-time personalization and segmentation.

The degree of customization and control granted by DXPs make them perfect hubs for managing customer data and staying aligned with your data governance guidelines.

Protect and Personalize with Material

To strike the right balance between data-driven personalization and user privacy, examine your current data policies and compliance practices.

• Does your organization’s personalization program address your customers’ security and privacy experience?

• What is the current state of your security and privacy tech stack?

• How are you gathering data and generating personalized insights without triggering breaches?

• How secure is your enterprise’s cloud system?

• Is your enterprise tracking risk for critical systems and data assets?

• Are your employees aware of the need to protect customer data?

Delivering personalization at scale while respecting data privacy takes time, effort and expertise. If you’re looking for an experienced partner to help you manage privacy concerns, or to help you develop strategies and adopt technologies that drive personalization while protecting your customers, reach out. Material can help. Let’s start the conversation.