Gartner: Why privacy and personalisation go hand in hand for driving business growth

There's no doubt personalisation improves the customer experience. But it requires foregoing some degree of privacy, which people are more likely to do this if they have trust in the business and see the value in why they're sharing personal information. 

That's the message from Gartner VP analyst, Penny Gillespie, speaking at the Gartner Customer Experience & Technologies Summit in Sydney this week on how businesses can leverage both personalisation and privacy to drive value. 

Gillespie said businesses can't simply compete on the four Ps of marketing - product, price, promotion and place - and hope to be a cut above the best. It's particularly the case in the digital world, where many products are similar and search is the new placement. The arena brands must play in today is based on value.

Gillespie cited a well-known privacy paradox to explain the importance of value in the mind of customers.

"Ask 100 people if they care about privacy and 85 will say Yes. Ask those same 100 people if they'll give you a DNA sample just to get a free Big Mac, and 85 will say yes," she pointed out.

Rather than personalisation as the enemy of privacy, the two should be seen as in a symbiotic relationship where each relies on and requires the other, Gillespie said. Because businesses failing to offer personalisation while also building consumer trust will simply lose out.

According to the 13th Accenture Strategy Global Consumer Pulse Research, 44 per cent of customers are frustrated when companies fail to deliver relevant, personalised shopping experiences. In addition, 41 per cent switched brands last year due to poor personalisation and lack of trust. This resulted in US organisations losing $756 billion last year as a result of poor personalisation and lack of trust.

In her presentation, Gillespie noted that by 2020, companies that earn and maintain digital trust with customers will see increased digital commerce profits greater than 20 per cent of their competitors. But they have to earn trust to get there.

"Privacy unlocks the value of personal data to achieve the personalisation you need to drive a positive customer experience and increase business value,"  she said. 

For Gillespie, the equation is a simple one: Enabling personal data and applying analytics in a way that is transparent and respect privacy and builds trust produces personalisation that produces businesses value.

Key is thinking about privacy and incorporating it into the experience for customers so they understand why businesses are collecting data, and having transparency around your data and how to fix it if it’s wrong, she continued. Understanding the context in which the data is collected is another important consideration when building a privacy framework to enable greater personalisation.

"We often say to businesses that just because the technology enables it [collection of certain data], doesn’t mean you have to do it. Catering to individual needs of your customers and what's needed," she advised. "Everybody loses without customisation. But if it's not done well, your customers will go away."

Yet creating a positive personalised experience can’t be achieved without knowing the customer. This requires organisations be both customer-centric and data-centric. Privacy principles ensures the appropriate level of knowledge about the customer, she continued.

"The edict is a simple one: 'Know how I am. Don’t waste my time'," Gillespie said.

Getting there means leveraging technology, earning the trust of customers, embracing personal data collection and finally reaping the benefits. Gillespie acknowledged increasing complexity around gathering and understanding customer data from so many sources. 

"It’s become more complicated: The number of channels that touch the customer has expanded and includes digital commerce, Web, mobile, social. With every channel expansion there's an increase in touchpoints in the customer journey," she said. "The challenge for businesses is knowing your customer and knowing they're the same person interacting through all those different touchpoints."

Longer-term, Gillespie predicted a time when delivering to customer needs will requires businesses to not just supply a product but understand this purchase as part of something else. For example, recognising buying a new dress may reflect a need for a special event outfit, while buying a lounge is part of renovating.

"In the commerce of the future, businesses might partner with others because they understand customers and how they will use products in larger context. Think: Uber and straight through processing," Gillespie added.

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