Customers Want Personalized Experiences AND Privacy. Can They Have Both?

Balancing Data Privacy And Customer Experience

Customers have told us they want streamlined, personalized experiences. At each step in the journey with your brand:

• They want to be recognized and acknowledged.
• They want relevant, personalized offers at the right moment.
• They don’t want to repeat their issue and information over and over as they move from self-service to chatbot to service rep in frustration.

To help your organization deliver on these expectations, four in five customers are even willing to share their data — but with a few caveats, of course. When customers give us their data, they expect to receive relevant discounts, special access to things they like, and seamless experiences that pick up right where they left off.

Your organization needs strong data practices to orchestrate each step of this journey because the risks are high. We all have personal data stored in databases worldwide, and that data can be “leveraged” for good and not-so-good reasons.

Unfortunately, customer data is increasingly at risk of being exposed. Data breaches are on the rise, with more than 3,000 reported breaches in the U.S. in 2023 (up 78% from 2022!). Globally, twice as many people were impacted by a data breach in 2023 than 2022.

When customers hear about data breaches, they are left wondering if their personal data was affected. Do nefarious players now have access to personal information like financial information, purchase history, and even health records? Which organization might risk their data next?

There is a struggle between providing the best customer experience and appropriately protecting consumer privacy. And rightfully so.

Customer Data, Privacy, and AI Research

According to several studies and surveys, customers and organizations are disconnected in a few areas regarding data privacy and the customer experience (it’s a tale as old as time).

Pew Research revealed that the majority of Americans:

• Have little to no understanding about how companies use their personal data (67%).
• Would support additional regulation to protect their personal information (72%).
• Believe they have little to no control over what companies or the government can do with their data (73%).
• Expect artificial intelligence will lead companies to use their data in ways they aren’t comfortable with (81%).

Clearly, organizations have room to better explain why they collect customer data and how they use it. But that’s not all.

Truata’s Global Consumer State of Mind Report—which I participated in for its 2020 edition—showed the majority of global customers:

• Are more likely to be loyal to a brand that uses personal data appropriately (69%).
• Believe companies need to do more to protect their data (76%).
• Have taken steps to reduce their digital footprints (77%).

Growing concern over customer data has led to regulations like the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). Web browsers have even phased out third-party cookies, which were commonly used to track customers across their many online channels.

Although these are clear challenges for customer experience leaders, proving your organization values data privacy can pay off in noticeable ways.

Cisco found that 95% of business security leaders believe the benefits of privacy investments outweigh the costs. By investing in privacy, organizations achieve greater customer loyalty and trust, operational efficiency, and innovation. It’s hard to argue with the value of that!

What should CX leaders do to ensure data privacy?

So what can CX leaders do to address customer data privacy concerns while delivering personalized experiences?

I’ve compiled five core actionable initiatives your leadership team can take to begin ensuring better data privacy for your customers within your organization.

1. Create cross-functional support to proactively address data practices.

Customer experience leaders need to understand and support the data practices required to protect customer information, especially as CX teams consider how to develop their AI strategy.

The key here is for CX to become BFFs with Information and Security leaders so there can be ongoing conversations, open dialogue, and education around how customer data is used. As new customer journeys are designed, data can not be an afterthought.

• Collaborate across your organization to ensure the data is used at the appropriate place in the appropriate way.
• Run through “worst-case” scenarios and design safeguards for both customers and your organization.
• Question whether you need all the data you collect. Refine what you collect and how you use it.
• Limit who on your team can access and manipulate customer data. (But consider what visibility is required to deliver a personalized customer experience, too.)
• Rely on the expertise in your organization. Invite their insights early and often as customer experiences are designed and improved.

2. Make privacy and data control easier for customers.

Let’s face it. Customers aren’t known for reading the fine print. (And nor should they be!) Most customers don’t really know how to control their data. And when they try to find a way, it can become overwhelming.

How easy does your organization make it for your customers to educate and protect themselves?

Customer experiences should provide ample ways to remind customers where and how to take control of their data. Customers are sensitive to “digital creep.” Someone might agree to receive personalized offers from a brand but then be deluged with email offers that don’t feel personal or relevant. They need to feel in control of their experience, and much of this comes down to control over their data.

I like the idea of creating consent and data preference interactive tools, like self-service dashboards or proactive reminders to review data policies for customers.

It doesn’t have to complex and complicated to the customer. It’s about showing them they have control over their information.

3. Communicate clearly about how the data will be used.

Speaking of creating less complexity…it’s time to speak directly and clearly to customers about privacy. Customers are savvier to how their personal data can be bought, sold, and combined. They hear about the data breaches and realize even though they’ve never been a direct customer, somehow their data was impacted.

Proactive, concise messaging is sorely needed in most customer journeys.

This is no small feat. Brands will learn from one another on how to do this well. I would hope after some time there may be accepted best practices and familiar language to use consistently for customers. Customers deserve to know how their data is being used, and shouldn’t have to read through corporate-speak and technical language to find out.

4. Ask your customers what concerns they have.

Voice of the Customer (VoC) programs often neglect concerns around data privacy. But consumers everywhere increasingly connect how their data is handled with their perception of the brand.

• What does acting responsibly mean to your customers?
• What concerns do they have about how their data is used?
• Are they aware of how they can control their personal data with your brand?

Gather customer feedback to determine how to proactively communicate. And don’t forget about their valuable untold feedback to see if they have concerns about how their data is currently being used. Customers want to know you’re focused on protecting their information. Asking them about it is a great way to show them you are taking these issues seriously.

5. Keep learning.

I’m the first to say I’m not a data privacy expert. The way our systems can manage the billions of data points is almost magical to me. But I know enough to know I need to keep learning, and if you’re reading this, you probably would acknowledge the same of yourself.

• We need to stay literate on data issues and rely on experts.
• We need to understand the concerns and how those breaches could happen, even if in theory only.
• We need to go all-in on reducing customer effort. Yet, streamlining and connecting consumer identities must be weighed against the risks of using that data.

Don’t let data issues be something to worry about later. Later is simply too late.

Why should CX leaders care about data privacy?

The short answer is because it’s the right thing to do. If you’re reading this, you’re an internet user and that means your data exists across databases around the world. It’s easy to be empathetic to a reality we all share.

The business answer is: Because it gets results. Better personal data practices lead to more loyal customers. According to Truata, 69% answered they were more likely to be loyal if they trust their data is used appropriately. That’s better business all around.

Data privacy is a complex topic, and it’s easy to let that overwhelm us as leaders, hoping that everything will work out without our close attention. But there’s another way we can look at data privacy: As one of those special cases where doing what’s best for the customer and best for your bottom line can be the same thing.

If you’re looking for more resources to strengthen your data strategy and stay ahead of the many risks and opportunities in CX, subscribe to the Experience Action Podcast.