Does getting to know your customers risk invading their privacy or is there a better way?
The increasing use of technology in a customer’s life (online shopping etc.) has meant that the personal customer interaction known in the past has been lost. Pressures such as time and money have lead customers to competing retail channels and have reduced company loyalty. This has lead companies to realise that in order to regain loyalty they must get to know their customers again. As a result of this many large corporations have increased the use of customer profiling using their spending and payment habits.
Which makes me wonder: at what point does a company know so much about our purchase habits, preferences and life that it becomes intrusive?
Do customers consider it spying or researching?
Fellow CEC’er Laurence recently shared an article published last year titled ‘How Companies Learn your Secrets’. This article delved into the targeted selling by the company Target in the United States. This exposed the information Target gathered on their customers from their purchase habits under the auspice of a loyalty scheme in order to profile customers. These profiles were used to recognise when customers were undergoing a change in lifestyle such as pregnancy, with the aim of tailoring their marketing directly to their changes in circumstances. Previous research based on baby registries in store allowed these companies to give their customers a ‘pregnancy prediction’ score. The data was then used to build a product list that predicted un-registered pregnancies. Target then attempted to encourage customer loyalty with coupons and deals on the related products. Unfortunately their approach was too specific – customers felt that Target had spied on their personal circumstances – when they hadn’t given them explicit permission to (such as by signing up to a baby club).
Rewards schemes such as Fly Buys in Australia and other supermarket rewards programs that record purchasing habits have allowed retailers such a depth of understanding into a person’s life based on their spending habits that they can also anticipate for instance, a bout of depression or an impending holiday.
When enough is enough
Target learnt an important lesson after the backlash they experienced from targeting people too specifically: do not let your customers know you are actively ‘getting to know them’. Their targeted selling approach was too specific, there was no tact behind the selling and it was not authentic. Their customers noticed the obvious sell, and were not encouraged by this approach to start shopping or change their spending habits at Target US.
Is this our own fault?
Many consider that the collecting of data and profiling of customers as being intrinsically intrusive, but have we encouraged this trend by digitising and signing away our rights for the sake of a few airline points?
Companies have discovered that we are more inclined to share our spending habits if we are rewarded. This being said, does the average shopper realise they are being profiled when they scan their rewards card at checkout? I for one will admit that I don’t associate the two together. In the moment, I think about the points I am accruing instead of the product trail I am leaving. The customer may have read the terms and conditions but may not associate their shopping with the data collection needed for profiling. They may feel as though this profiling has not been explicitly explained in the application process.
The price of saved time
Apps such as ‘Beat the Q’ are beginning to shift the focus from personalised customer and staff interactions to time. This new focus is influencing the quality of our human interactions and encouraging us to further avoid human contact. This avoidance of human contact is leading companies to engage in digital profiling of their customers using their credit card details to link purchases and accounts. From this they have found that data based on means of purchase is more reliable for the company as they can track both in store and online spending.
Have we as customers encouraged the increase in customer profiling?
Companies feel they need to keep up with online trends by competing on products that their customers want to buy. How do they know what we want to buy? They profile our spending habits. So this makes me wonder, if we are so against customer profiling, how can we expect great customer experiences from these companies?
What can companies do to re-engage with customers?
Companies need to create an experience that their customers will want to engage with, while providing that little something extra that will encourage loyalty. In order to do this, companies need to conduct some research into the level of targeted selling that customers find appropriate. It seems that in order for both the companies and their customers to have a better relationship, the companies need to be more transparent about their research methods and what each party is getting from the information. They need to remind the customer that they are gathering information about them, give them an opportunity to exclude some information and purchases from their profile and also supply the right outcome for the customer. Some changes are beginning to occur within the field of customer profiling, companies such as YoYo Button in Australia have created an app for retailers to gain customer insight. This approach has been developed to allow the customer to choose what information they will provide, answering questions in exchange for rewards or coupons.
Allowing the customer to decide what information they will provide is beneficial, as they are actively trading their insight for a ‘gift’ making the situation an exchange, not seeming one sided.
Changes in the rewards schemes themselves along with research into customer acceptance will reduce the backlash from failed and intrusive selling approaches. This will help to create great experiences for their customers, as the companies will get to know their customers whilst keeping them comfortable with the situation. In time this will allow the entire experience to improve which in itself will help to encourage customer loyalty.
