3 Data Collection Trends Critical to Customer Retention in 2022

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In a world where the competition for consumer’s attention is fiercer than ever and consumers have increasing control over what reaches them, brands’ communications have to be as relevant as possible. One-size-fits-all messages will quickly be blocked or ignored.

Data-driven personalization will be key in cutting through the noise and delivering the right messages to the right consumers at the right time.

In 2022, a brand’s ability to deliver personalized experiences will, in turn, depend on its ability to collect meaningful, predictive data in a privacy-friendly and ethical manner. Brands that commit to data privacy, embrace zero-party data, and invest in innovative experience design will find themselves ahead of the competition.

1. Data privacy will be a deciding factor in customer loyalty.

After a year of high-profile data breaches and escalating national dialogue about Big Tech’s responsibility in privacy protection, data privacy is more important to consumers than ever before. A 2021 Wyng survey found that 80 percent of respondents are more concerned about the security of their personal data than they were a year ago and nearly 70 percent claimed that a company’s data policies and ethical collection of data would impact their choice to do business with a company.

In an increasingly cautious consumer landscape, brands that adopt transparent and ethical data practices will increase customer retention.

Irresponsible data collection and management will run afoul of growing privacy protections. Data privacy legislation—like GDPR, CCPA, and CPR—coupled with platform shifts—Google’s phase-out of third-party cookies on the Chrome browser and Apple’s growing suite of privacy protections—are restricting traditional means of data collection, particularly third-party data.

Consider Apple’s new Hide My Email security feature, which allows users to create unique, random email addresses when registering for apps and services. Hide My Email prevents brands from using email addresses to match with other datasets to gain additional information. Moreover, users can delete their addresses anytime they want, giving them full control over which brands are able to contact them.

Apple, whose CEO, Tim Cook, has described privacy as a fundamental human right, stands out as a company building customer loyalty through a commitment to privacy. Brands that embrace ethical, transparent data security practices will build better customer relationships that yield higher lifetime value.

2. Zero-party data will be key to meaningful personalization.

A 2021 McKinsey Global Institute report found that 71 percent of consumers expect companies to deliver personalized interactions and 76 percent get frustrated when this doesn’t happen. A brand’s ability to deliver these personalized interactions is only as good as its data.

First-party data—or data collected through the quiet monitoring of users as they interact with a brand’s owned website or storefront—remains valuable but has limitations. First-party data is a record of historical consumer behavior that requires inference and guesswork when predicting consumer preferences and intentions. It also lacks transparency: consumers don’t know what data a brand has collected and may be surprised when it’s used to personalize an experience.

Zero-party data—or data that a consumer knowing and willingly shares with a brand—is in many ways the opposite of first-party data. In a transparent exchange, a consumer shares their preferences, needs, interests, or motivations to optimize their experience with a brand. Unlike first-party data, zero-party data is inherently forward-looking and predictive; no guesswork is involved.

Let’s consider the case of a skincare brand. A consumer who lands on the brand’s website could be presented with a guided shopping quiz that asks a series of questions about their primary skin goals, skin type, and skin sensitivity so that the brand can provide a personalized recommendation in return. This brief, transparent engagement not only increases the brand’s understanding of the customer, but creates a positive experience that builds customer trust.

In a Wyng survey, over half of respondents say they’d feel more comfortable engaging with a brand if it asked them how they’d like the brand to personalize their experience, instead of guessing based on their online activity. Zero-party data has become the gold standard in data collection.

3. Experience design will play a critical role in data collection.

The challenge with zero-party data is that the only way to acquire it is by asking for it. The question becomes, how does a brand operationalize the processes by which it collects zero-party data? This is where the intersection of experience design and data collection is critical.

The first key to successful experience design is to ask for the right information at the right moments in the customer journey. Guided shopping quizzes, next best questions, surveys, and polls can collect missing essential data points and avoid asking for information the brand already has.

Just as critical is value exchange. Brands have to offer something of value in return for data. Why else would a consumer hand over information about themselves? Value can be offered in the form of product recommendations, more personalized experiences, coupons, or loyalty points. All of these drive higher conversion rates on data collection.

Transparency is important throughout the experience. On the front end, brands need to be clear about how they will use the data—for example, to personalize email communications and website experiences—and obtain the necessary consent. After collecting data, brands need to give consumers ongoing visibility and control over it. This is best done through a customer preference portal on the brand’s website or mobile app where consumers can update, add, or revoke data anytime they want.

Bringing value and transparency to the table is key to collecting zero-party data and personalizing experiences. Brands that commit to privacy-first data practices will see big gains in customer retention in 2022.

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