In light of the leaked tape of Mitt Romney and topless photos of Duchess Kate – is privacy dead?
We surveyed 2,000 U.S. and Canadian consumers to find out what they thought about privacy, trust and data exchange. What scenarios cross the line from clever to creepy? The answers may surprise you.
Skepticism, Safeguarding, Suspicion
Our 2012 LoyaltyOne Privacy Study reveals that only 42 percent of consumers trust companies with their personal information. Results from the survey also show increasing skepticism about the perceived benefits of sharing information, a declining willingness to share it – even in return for relevant offers – and a higher level of suspicion regarding the ways companies collect and use data.
These feelings likely result from heightened concerns regarding information security and privacy. Headlines of the past year emphasized not only data incidents, but also the information-gathering capabilities that new technologies possess. Lawmakers are calling for legislation, yet the percentage of consumers who say they’ve been notified of an incident is slightly down from 2011, at 30 percent.
Shrinking Value
The first section of our study compares consumer perceptions in 2012 to those in 2011. While the year-over-year analysis reveals no dramatic declines, the results nonetheless point to an unmistakable trend: Efforts by marketers to create relevant experiences through data analysis may not be resonating.
This disconnect may be due to lack of execution, irrelevant communication or simply front-page headlines about privacy lapses and how companies are using data. But the year-over-year results are consistent in that they reveal growing consumer cynicism about the benefits of sharing personal information and deteriorating acceptance of the ways companies use it.
For instance, more than three-quarters of survey respondents – 78 percent – do not feel they receive any benefit at all from sharing information, up from 74 percent in 2011. Fewer than half of respondents feel that companies use their personal data to better serve the consumer, an 8 percent slip from 2011.
The Disappointed Consumer
Consumers are turning an increasingly deaf ear to the promise of recognition and rewards in return for their information. As seen in Exhibit 1, the percentage of respondents who would share more personal data if it meant receiving relevant product and service offers dipped significantly, from 67percent to 63 percent.
These figures indicate a sense of disappointment among consumers. They imply that after years of providing their personal information, consumers are not receiving suitable value in return. In the public’s eye, the information exchange is skewed to favor the company, and so the onus is now on businesses to demonstrate the advantages to the consumer.
The Say-Do Gap
Of course, a common hazard of any consumer survey is its tendency to return results that are diametrically opposed to what happens in the real world. This is called “the say-do gap,” and it is particularly evident when it comes to emerging technologies. For example, consumers may say that they are aggressively opposed to mobile tracking, yet they regularly check into location-based apps such as Gowalla or Foursquare.
The say-do phenomenon is at play in the study’s second group of questions, which gauge the kind of information consumers would be willing to share with a trusted company, as well as attitudes about mobile tracking.
The results show that consumers willingly make themselves very accessible. Our respondents listed an average of 23 potential touch points through which marketers can reach them, such as mobile apps, online accounts and reward program membership. Forty-eight percent said they own smartphones.
But for a Price…
Yet consumers say they are highly reluctant to be tracked via mobile. As seen in Exhibit 2, respondents say they would rather give up personal and mental health information, sexual ori- entation and political affiliation than their location via smartphone, even to a trusted company. Consumers are so wary about making their location information public that their willingness to divulge it is on par with sharing the number of sexual partners, at about 15 percent.
It turns out that location information does have its price. More than a quarter of survey respondents would give up their whereabouts for a chance to win an iPad or weekend getaway. Cash would entice more than half.
This inclination to barter may be a result of growing savvy, since 78 percent of consumers believe their data is an asset to companies. This realization, combined with a lack of relevant experiences in return, could explain why respondents are less trusting of companies with their personal information.
Trust and Distrust in the Age of Technology
Companies can collect various amounts of consumer data these days – about education, family size, automobile model and more. However, consumer values, such as trust, are hardest to nail down. It’s a bit of a Catch-22 situation: Evolving technologies enable companies to better gather detailed personal data. As a result, consumer privacy concerns grow stronger. Brand trust is threatened.
The research shows that only 42 percent of consumers trust business. And while it is logical to expect that those who trust, rather than distrust, business disclose more information, it does not diminish the competitive advantage of being able to access this data.
The Trust Connection
Key findings support this case. Almost 75 percent of those consumers who trust businesses are willing to provide more personal information in exchange for relevant offers and communications. Of those who don’t trust, only about half were willing to share their data. And Exhibit 3 shows that those who trust are twice as likely to believe that companies use their personal information to serve them better; that’s 67 percent compared to 33 percent of those who distrust.
The trend continues: 66 percent of those who do not trust business expressed concerns about their behavior being tracked while using a loyalty program. But only 48 percent of those who do trust companies had the same concern.
If businesses wish to continue their success, it is imperative that they take control of building increased trust. Companies must deliver on their promises to consumers if they expect to continue collecting their information. Building a strong trust cycle breaks barriers and reduces privacy concerns.
Clever to Some – Creepy to Others
If consumers misunderstand the intentions of companies that use data, it may be due to a select few organizations that – unwittingly or not – applied personal information in ways that surpassed “clever” and were perceived instead as just downright creepy.
Recently, the media drew attention to a national retailer and reported that the retailer’s advanced analytics enabled it to actually identify pregnant women for customized offers. It is a brilliant use of data algorithms. But when the father of a high school student intercepted one of the merchant’s direct mail offers, it stumbled into very sensitive territory. In what became a national news story, the father was unaware of his daughter’s condition.
The sophisticated use of purchase information is clever, and that kind of data use is certainly not limited to one single retailer. But to some consumers who read and commented on the national news story, it seemed creepy and an invasion of privacy. Others, meanwhile, welcomed this level of data analysis – as long as the promotions were relevant to their needs and aspirations.
Where to Draw the Line
This “creeped-out” sentiment was present as well among those who responded to a series of consumer scenarios presented in this survey (see Exhibit 4). For example, roughly seven out of 10 respondents said it is not acceptable to send baby food offers to someone who had merely purchased a pregnancy test (29 percent said it is acceptable). Yet 67 percent approve of a company sending free diaper samples to a woman who had just had a baby – down from 76 percent in 2011.
Consumers also do not like companies sending them offers based on their income, an activity that may be seen as an invasion of privacy. But the clever-creepy line seems most heavily drawn on the map – consumers do not like the idea of their locations being tracked, physically or online, despite the fact that the practice is widespread.
- Just 35 percent of survey respondents said it was acceptable for an online retailer to use cookies to track their online behavior.
- Only 32 percent were accepting of tracking ads on unrelated websites.
- Even fewer liked location-based offers, with only 27% giving the thumbs up to receiving offers on smartphones when they’re near a retailer.
What do consumers find acceptable? The answer basically comes down to good judgment in how the information is used. Companies must balance their own need to target consumers against the recognition of what crosses the consumer creepy line.
For instance, more than three-quarters of respondents said it would be acceptable if a pharmacy sent them offers for diabetic products if they had already joined a pharmacy health program and provided personal health history. Like- wise, 72% said it would be acceptable if a grocer sent them recipes based on their previous online shopping activity that they agreed could be stored by the merchant. Still, both figures are slightly down from 2011.
The cycle is clear. Consumers understand the implications of participating in the data exchange, and for the most part they are willing to play. But there is mounting intolerance for organizations that appear to take advantage of data for the company’s own benefit.
Moving forward
These are compelling results. Too often, the consumer is not experiencing a mutual advantage from sharing his or her data with marketers and businesses. But that could change.
As noted in my book, The Loyalty Leap, businesses already possess the technology and the wherewithal to shift the course of this trend, and to enhance the perceptions of marketing among consumers. They can do it through the responsible use of data.
But to accomplish this, marketers need to:
- Never disrespect the data: Ensure that every communication is relevant and speaks to the consumer’s needs and interests;
- Find ways to create value: Continually seek new ways to recognize and reward the customer with benefits that are meaningful; and
- Listen: Whenever possible, look deeper into the meaning behind transactions to understand what motivates consumers.
And, by the way, even in this election year I won’t ask you about your political preference. If more marketers would be as respectful of their customers’ private information, then everyone would win.
Bryan Pearson is President of LoyaltyOne and author of the Loyalty Leap. For more loyalty insights from Bryan, visit www.pearson4loyalty.com. Download the entire 2012 LoyaltyOne Privacy Study here.
