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Brands have to ask permission in a straightforward way when collecting data and must maintain transparency regarding all its uses if they want to earn consumer trust, according to a new report by Bain.
The idea that consumers will concede their data if rewarded has gained traction in the past couple of years as collection tactics have proliferated. However, no matter how handsomely a consumer is compensated, consumers do not want companies selling their data to third parties.
"The survey showed little variation in attitudes due to demographics or online sophistication," said Eric Almquist, a Bain partner in the firm's customer strategy & marketing and retail practices, Boston.
Bain & Company surveyed 900 United States consumers for the "Digital Privacy Survey."
Getting wary
The world has been awash in consumer data for at least a decade and will only become more inundated in the years to come as technology penetrates most remaining areas of life.
While informed citizens have been concerned about their data being collected since it became plausible, the subject erupted in the general public mainly following dissident Edward Snowden's revelations about the National Security Agency.
Since then, the specter of Big Brother has loomed over most digital activity, hampering, at least from a PR perspective, brands' abilities to mine data.
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Consumers worry about third parties cobbling together profiles that amount to purported digital fingerprints, which are then sold wholesale for marketing purposes.
Consequently, calls for regulation have increased and companies have faced mounting criticism.
Compounding the problem has been the spate of point-of-sale breaches over the past few years at big name retailers such as Neiman Marcus (see story) and thousands of smaller players.
Overall, the current state of Big Data is fraught, with concerns revolving around ruthless collection and security flaws, forcing brands to act delicately to avoid alienating consumers.
Bain's latest report examines current perceptions among U.S. consumers.
The survey found that 91 percent of respondents do not want their data sold by companies, even if compensation is promised.
Monetary compensation will not budge those opposed to having their data used or shared, according to the report.
This level of resistance cuts across all levels of Internet users, from novices to experts, debunking the belief that those who understand the benefits of giving up data are more tolerant.
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Also, awareness of the widespread collection and use of data is high. Eighty percent of respondents know their data is being used in a variety of ways.
Sixty-seven percent of consumers said that use of personal data should be illegal without prior consent.
Government and financial companies face the staunchest resistance, with 70 percent of respondents saying they do want these institutions sharing their data at all.
Forty-three percent of consumers felt similarly about retailers and airlines. Bain claims that these differences reflect loyalty programs that have existed in retail and travel over the years and simply the nature of data being exchanged in varying circumstances.
Respondents were more open about product reviews and user-contributed content being shared. Tolerance once again plummets among consumers for selling or sharing purchase behavior and demographic data, and it is nearly nonexistent for family and friend networks and health information.
Staying clean
As concerns grow, brands have become better at conducting and framing data collection.
According to a report by L2, the “creepiness cliff” for consumer data collection always seems to be one step away, but consumers have become more tolerant to various practices as the shopping experience improves and brands act in more mannered ways.
Brands are moving their CRM programs to cloud-based solutions that better integrate data collected from diverse channels. As data silos collapse, brands can better shape data collection practices to minimize customer repulsion (see story).
Many marketers view consumer data as the ultimate cipher for understanding purchase patterns, but contextual data is what colors in the larger picture, according to a session at ad:tech New York 2014.
The situational variables surrounding a purchase, such as the weather, are oftentimes as telling as a consumer’s behavioral profile. As marketers continue to clarify the path to purchase, ensuring that all components are identified and weighed fairly will enable effective budget allocation (see story).
Ultimately, keeping consumers in the loop is an essential component to any data strategy.
"Open and transparent communication is a good place for any company to start," said Rasmus Wegener, founder of Bain's advanced analytics practice, Boston.
Final Take
Joe McCarthy, staff reporter on Luxury Daily, New York