July 7, 2020 How to Collect Valuable Consumer Data without Upsetting Customers
Consumers want privacy, businesses want data — here’s how to make everyone happy
As more and more consumer data is collected, with more frequency, and by ever-more-powerful computers, people are increasingly wary of sharing personal information. What data do you collect from your customers? I bet names and email addresses are at the top of the list, of course. But how about birthday, profession, marital status, gender, zip code? Do you monitor buying habits? Keep track of who is taking advantage of your special offers? There is so much information you could collect. But the next question to ask yourself is why is this data valuable to you or, more to the point, what are you going to do with it?
In an increasingly customer-centric world, the ability to capture customer insights and relevant data so you can fine-tune your product offerings and solutions — and make the whole buying experience better for your customers — is vital. Did you know companies that are able to leverage what they know about their customers outperform their peers by 85 percent in sales growth and 25 percent in gross margin? As you start to plan your interactive marketing initiatives, it’s essential to think about the kinds of customer data that will help you know your customers better. From there, you’ll want to create win-win offers by using “predictive power,” i.e., analyzing the data you’ve collected, to figure out ways to deliver what your customers want. Win-win offers help your company’s bottom line and deliver something that your customers want and/or need — you just need to make sure you disclose why you’re asking for certain bits of info.
Companies that are able to leverage what they know about their customers outperform their peers by 85 percent in sales growth and 25 percent in gross margin
For example, if you want to collect your customer’s birthday details, let them know the reason you’d like the info is so you can send them a special gift or discount on their birthday. If you ask for their wedding anniversary, let them know it’s because you want to give them a free date-night dinner, or a one-night stay in your hotel. If you want to know what kinds of pets they have, make sure they know it’s because you’re going to send them coupons for dog or cat or parakeet food.
If you disclose why you want the information, you’re less likely to come across as creepy. Which leads me to my next point…
Don’t be creepy!
A while back, Danielle Citron, an attorney and law professor wrote a piece for Forbes, in which she urged consumers to turn off the default “always” setting on their smartphone apps’ location tracker. You can see why retailers and restaurants would be really interested in knowing where their customers are. But I don’t know about you, when I get a notification in my Starbucks’ app that a store nearby has a two-for-one latte deal going on, it kind of freaks me out. I haven’t given Starbucks explicit permission to track my location — but I haven’t turned the tracking feature off in my phone either because I often use the mobile-ordering feature and the app needs to know where I am when I place my order. It’s a conundrum!
So what’s the best practice here? It’s perfectly acceptable to collect data if your customers give you permission to do so, as long as you use it in the way you’ve told them you would. If you’re asking for a customer’s location so you can send them special offers when they’re near your business, that’s reasonable. As noted earlier, if you want birthdays and anniversaries so you can share special offers, that’s fine, too (it goes without saying that you should also make good on your promises!).
Consumers are increasingly concerned about how their personal data is being used so the last thing you want to do is alienate them. Back in 2018, the General Data Protection Regulations (GDPR) were put into effect in Europe (and also affect businesses in other countries that do business with European Union countries) and the California Consumer Privacy Act (CCPA) went into effect January 1, 2020 showing us that safeguarding data is a growing, global concern.
Among the GDPR requirements you should pay attention to: stricter consent requirements (consent to must be explicit and verifiable); increased rights for individuals with regard to how their data is used and more transparent data-use information (businesses must provide information about how they plan to process or use personal data). Again, even though many countries don’t have their own version of GDPR, you might as well start implementing best practices now so when regulations are introduced, it won’t be too disruptive to the way you do business.
What’s the most valuable customer data?
Besides name and email/mailing address, the next most valuable information will depend on what you sell. You might want people’s age, profession or gender. Or, if you own a retail outlet, the most valuable data you can collect is your customers’ transaction history: what they buy and how often.
You remember the study that supposedly showed men who buy diapers often buy beer at the same time? Even though the story turned out not to be quite accurate, it’s an example of information that could help retailers craft popular promotions. Another example is familiar to anyone who has ever shopped on Amazon or Zappos. You know what I’m talking about, those “recommended for you” suggestions, which automatically deliver product recommendations based on your purchase history and sometimes can be hard to resist.
No matter what, ask only for information you know you will use down the road. Since people tend to abandon forms that ask for too much information, or because they don’t understand why a business is asking for it, you always want to make sure you’re not giving people a reason to leave your website.
What are the best ways to collect data?
These days, businesses have learned to pull data from anywhere and everywhere. Between consumer activity on a website — including sales and customer-service interactions — and social media channels and location (which, as noted in the Starbucks’ example above, uses an internet-connected device’s IP address to build a data profile), businesses can put together a fairly comprehensive profile and use the information to target people’s devices with relevant advertising.
As you build trust with your customers, you might consider collecting “psychographic” data points, like information about their personality, values and lifestyle. You can easily build engaging interactive marketing campaigns that will bring you all sorts of useful data, voluntarily and with total transparency. For example, if you own a travel agency and use a quiz to find out your customer’s “dream vacation” you might be able to market a Disney Cruise to the family with young children. Or a Viking River Cruise to the empty nesters.
What are the best ways to use customer data?
There are plenty of ways you can leverage customer data. You can use it to share discounts and exclusive offers. You can use it to have conversations with your customers, the way this national brand did. You might even take the data you collect from surveys or quizzes to create new products your customers are interested in.
Or you might use the data to create targeted advertising campaigns. The majority of internet users are willing to provide personal information if they believe it will benefit them in some way.
Are you trying to understand customers better so you can make them offers that will improve their lives in some way, like Amazon does with its “recommended for you,” messaging? Or are you collecting information so you can “share” it with other companies, like, say, Facebook has been criticized for doing? Remember, when customers share personal and financial information with you, they’re taking a leap of faith that you won’t lose it or abuse it. They’re trusting you to not spam them every five minutes or make their personal data vulnerable to hackers.