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“In brands we trust”?: How your use of customer data can make or break loyalty

When was the last time you handed over your contact details to a brand? Did you fill out your personal data willingly, even happily, knowing you’d receive more personalised service as a result? Or, as a fellow marketer, did you feel a pang of guilt as you gave them your “junk” email address?

A recent study by the Chartered Institute of Marketing found that 68% of marketers were hesitant to share their data with brands because they knew how the data would likely be used and exploited. This is a rather concerning statistic – if marketers don’t trust other marketers, how can we expect consumers to?

Earning customers’ trust is essential to winning their loyalty. A survey by ESCP Europe found that trust has a big impact on loyalty – driving somewhere between 22% to 44%.

Boston Consulting Group found that when customers learn their data has been misused – that is, collected without their knowledge or used for a purpose other than the one it was originally provided for – their spending with a brand can decrease by a third.

As a result of this, studies are finding that consumers are reluctant to share their data, with many saying they’re uncomfortable about the amount of data brands hold on them and how it’s used.

The Privacy Paradox

The trouble is, customers seem to want at least some level of personalisation – especially key groups like Millennials. Irrelevant marketing messages tend to make them disengage. But to deliver tailored marketing and loyalty programmes, brands need customer data – the same data consumers are reluctant to hand over. This is often referred to as the “privacy paradox”.

In a study by Ipsos MORI and Ctrl-Shift, 74% of consumers said they were worried about how their data was collected, and 56% were uncomfortable with the idea that their behaviour could be used to profile them.

So what can brands do to inspire greater customer trust with regard to their data? Ultimately it’s about transparency – using customer data ethically and being clear about your practices.

Keep their data safe

Data breaches tend to be big news, and there’s no doubt they can erode consumers’ trust and confidence in a brand. Make sure you’ve invested in a database that can keep your customers’ information secure and protected from both internal and external threats.

Have clear security procedures and processes in place to ensure that data – especially personally identifiable information – is handled well. And let customers know the steps you’re taking – a privacy policy or other legal page on your website is a good place for this.

Be clear about how you’re going to use it

Handling customers’ data well doesn’t just mean protecting it against hackers and external threats, though. It’s also about using this data ethically, in ways your customers understand and agree to.

In fact, consumers’ shopping habits suggest ethical use of data is more important than data security – Boston Consulting Group’s study also found that consumers were more likely to ditch a brand that
had knowingly misused their data, than one that was the victim of a data breach.

In the CIM study, 67% of consumers said they’d share data if brands were more transparent about how that data would be used.

It’s important, then, to be clear about what you’re doing with the information that’s been shared with you. When asking a customer for different types of data, you might include explanations of how you’ll use each piece of information – for example, “we use your location to show you offers that are available at your local store” or “we use your gender to show you products that are most relevant”.

Give them control

One of the main concerns consumers consistently voice is that they aren’t aware of how much data a company holds on them, or what their rights are when it comes to controlling the use of that data. According to a study by the University of Pennsylvania, 84% of consumers want to have control over what brands can learn about them, but 65% feel they have little ability to do so.

To earn someone’s trust, it’s a good idea to show you trust them back. Show your customers a bit of goodwill by allowing them to see what data you hold on them, and to control what information they want to share. For example, if they change their mind about sharing their address, let them delete it from your database.

Make sharing worthwhile – but not a necessity

Some companies may be tempted to coerce customers into parting with their data, offering less-than-stellar service to those who don’t hand over their details. One of the key themes in the University of Pennsylvania study was that many customers who do share their data feel they have little choice if they want decent service or better prices.

And often customers don’t see this exchange as a fair trade-off. The study’s authors describe it as a sense of “resignation” – which really isn’t the emotion you want to inspire if customer loyalty is your goal.

The source of this resignation can largely be addressed by the points above, but there’s still the sense that what marketers are offering in exchange for customer data isn’t really worth it. So, focus on helping customers rather than just selling to them. Use the data they’ve provided to share useful, tailored content, offer more relevant rewards and create a better end-to-end experience.

Ultimately, trust and loyalty go both ways. By being transparent about your use of data and putting customers in control, you’ll make them feel valued and respected – and more likely to trust you with their valuable data.

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