Perception Problem – 74% of U.S. and Canadian Consumers Don’t See Benefit of Exchanging Personal Information

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Perception Problem – 74% of U.S. and Canadian Consumers Don’t See Benefit of Exchanging Personal Information, LoyaltyOne Research Shows

52% Say Marketers Use Data to “Better Serve Me”

23% of Consumers Forgo a Purchase Out of Concern about Use of Their Data

Seventy-four percent of American and Canadian consumers said they don’t feel they’re receiving a benefit from sharing personal information with marketers, according to the latest survey research from LoyaltyOne.

Just 52% said they somewhat or strongly agree with the statement that companies use their personal data “so they can better serve me.” Breaking down the somewhat and strongly agree responders, only 9% said they strongly agree that companies use their information to serve them better.

Hardly more encouraging, 54% said they expect improved customer service in exchange for their data, and 55% said they expect access to exclusive events or offers.

Toronto-based LoyaltyOne, a global provider of loyalty strategies, customer analytics and relationship marketing services, completed online surveys in July 2011 with 1,000 American and 1,000 Canadian respondents. The research was designed to test consumer attitudes about personal data collection and use by marketers.

Findings released today reveal that marketers need to solve an important perception problem about the benefits accruing to the consumer for exchanging personal information.

Underscoring the perception problem — consumers tallied below 50% in acknowledging several of the basic benefits on the customer side of the personal information exchange equation:

• Tailored offers based on what I buy (49%)
• Advanced information on new products and services (41%)
• Communications based on my preferences (41%)
• Easier buying process (39%)
• Preferential treatment (36%)
• Product assortment improvements based on what they know I buy (36%).

Product discounts, a benefit not necessarily associated with the development of a long-term relationship between customer and company, scored highest (71%) as the offer that consumers expect to receive in exchange for their information.

“The message isn’t getting across to the consumer that the primary reason marketers use customer behavior data is to enhance the individual customer experience and build a deeper relationship,” LoyaltyOne President Bryan Pearson said.

Pearson directs six global enterprises at LoyaltyOne, including Canada’s AIR MILES Reward Program. He has written a book titled The Loyalty Leap: Turning Customer Information into Customer Intimacy, to be published in May 2012 by Penguin Group in both the United States and Canada.

On Nov. 1, 2011, Pearson will lead a 30-minute webinar about responsible data use marketing. The title is Winning Shopper Loyalty in an Age of Privacy Concerns: U.S. and Canadian Research Results. Free registration and information is available at http://loyaltyevents.webex.com.

The LoyaltyOne research also revealed that consumers’ actions sometimes speak louder than their words. When asked, what, if anything, have you done in the past 12 months to protect your personal information, 41% of American and Canadian survey takers said they’ve used cash instead of a credit card to protect their personal information. Respondents who said they have been notified that their personal information had been compromised were more likely to take action to protect themselves. Those who said they have been negatively affected by a compromise of their personal information were even more likely to take action.

Twenty-three percent of respondents said they decided not to make a purchase from a company out of concern about use of their personal information.

Pearson’s five basic principles for using data responsibly to create real value for customers are as follows:

1. Be Transparent – Express in straightforward language what you are trying to do, what you’re achieving, what’s in it for the customer, what’s not in it for the customer.
2. Give Consumers a Choice — In the loyalty program arena, to run a value exchange-based relationship with the consumer you need to gain trust. The best way to gain trust and commitment is by giving customers the opportunity to choose whether they share information. Permission-based or not, responsible marketers can add value for the consumer if data is respected. Problems arise when marketers cross the “creepy” barriers into the ultra-personal areas such as health, finance and sex, and marketing to children.
3. Safeguard Consumer Data – The best precaution is to keep only the data necessary to serve the customer and take proper steps to protect it. Use data only as directed and always, repeat always, destroy data with care.
4. Monitor Frequency of Usage – Don’t wear out the consumer’s trust. Make sure communications aren’t too frequent and are relevant to the customer’s needs.
5. Mutuality of Value – Create real value for the customer. It’s not about the product exchange, cash, points or coupons. It’s about something bigger – relevancy.

Additional details about the LoyaltyOne survey are published in a report titled Challenges that Data-Use Marketers Face in a Privacy-Worried World: A Report on U.S. and Canadian Consumer Attitudes about Responsible Data Collection and Use. The survey is a representative, true random sampling of U.S. and Canadian consumers. Weights were applied by population size to create blended U.S.-Canadian total results. Statistical significance is calculated at the 95% confidence level. The report is available free of charge at www.loyalty.com/knowledge/articles/privacy-perception-problem.

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