Consumers are becoming more hesitant to share personal information with marketers—not only for security and privacy reasons, but because they don’t believe there’s any real benefit in doing so.
In 2012, 78% of those surveyed by LoyaltyOne say they don’t gain from sharing their information, down from 74% a year ago. Similarly, only 48% believe providing personal data yields better service, down from 52%, and 63% anticipate relevant product and service offers, a drop from 67%.
This is an indication of the general frustration consumers feel with the business world, says Bryan Pearson, president of LoyaltyOne. “Consumers have a broad knowledge of the fact that they are being tracked, and they have an expectation that there will be some sort of value to that.”
The problem, according to Pearson, is that this expectation is not being met. Combine that with foundation trust issues generated by reports of data breaches, new information gathering technologies and a rise in the total number of new loyalty programs and program activity, and the change in consumer attitudes is understandable.
That said, the reality of consumers’ biggest apparent fear seems to be diminishing. The percentage of consumers who say they have been notified of a data-related incident is 30%—down slightly from 2011, according to the 2012 LoyaltyOne Privacy Study.
Pearson speculates that what consumers deem privacy issues are really relevancy issues. “It is easier to express where you are afraid of something happening versus being hopeful toward a positive outcome,” he says.
If this is the case, marketers have an opportunity to correct these impressions, Pearson adds. And because relatively few, such as Apple, have offerings that allow them to sidestep most price-based concerns, marketers will need to use data to create relevancy-based value propositions.
They will be rewarded for doing so. Nearly three quarters of survey respondents who trust businesses they deal with would offer more personal information if products and services reflect the data they give, compared with 54% of those who don’t trust businesses.
“Companies need to be clear about what they are doing and the value they are trying to create,” Pearson says. “If nothing happens, you get what we are seeing in the survey.”
LoyaltyOne’s study shows an odd schism in the personal information consumers are willing to share. Half are comfortable disclosing their religion, and almost as many willingly mention their sexual orientation or political affiliation. But only 36% will discuss health data and 24% willingly disclose their online browsing history.
A scant 15% are comfortable with marketers knowing their exact location as reported via their smartphones, despite the rise in popularity of location-based apps such as Foursquare or Gowalla. But this last statistic may underscore the need for marketers to demonstrate the value proposition of collecting this data: More then one-quarter of respondents would give up their location in exchange for a chance to win prizes such as iPads or weekend getaways, and more than half would surrender it for cash.
The LoyaltyOne study even offers some guidelines for using information. It presented consumers with a series of scenarios and asked whether the respondents found them clever or creepy. More than three quarters feel that offers for products to alleviate a malady they self-reported to a pharmacy healthy program were clever, and 72% were happy for grocery websites to store their order history and make recipe recommendations based off it.
Corralling the Creepy Factor
But 27% were disturbed by the idea of automatically receiving offers on their smartphones when they are near a retailer’s physical location. And one third of consumers rated instances in which they browse online for a specific product, and are then served up ads for the product they had been browsing for on unrelated sites as creepy.
That last point should be especially disturbing for ad networks. While Pearson didn’t comment specifically on this marketing model, he did note that having ads follow individuals around might make them uncomfortable. And it could also result in surprises such as gift purchases being inadvertently revealed, if computers are shared, such as by families.
LoyaltyOne offers five suggestions for companies wishing to improve trust factors with consumers.
1. Prove your integrity. Without being prompted, companies must demonstrate their honesty and reliability to consumers.
2. Restart the virtuous cycle. Marketers have to transparently show that the data they collect is well secured. Doing so will reassure consumers regarding privacy protections.
3. Educate and explain. Consumers are especially wary of emerging technologies, even if these technologies will ultimately lead to better offers. Companies should take every opportunity to educate and demonstrate the immediate benefits of participating in these channels.
4. Reinforce the value exchange. Consumers need to see the benefits of sharing specific data points demonstrated to them through receiving offers of value equal to or greater than the information they have shared.
5. Demonstrate. Offers have to be relevant, and reflect how the personal data collected from consumers is being used to their benefit.
The questionnaires that serve as the backbone of LoyaltyOne’s report were conducted between Jun 4-18 of this year. Two thousand consumers (1,000 in Canada and the United States) 18 years of age and older were surveyed, with the individuals representing a true random sample in each country.
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