April 4, 2013
BrainTrust Query: Please Track Me?
Through a special arrangement, presented here for discussion is a summary of a current article from AdExchanger.com, a digital advertising news and discussion site.
Fundamentally, people prefer to be treated personally. We like being called by name at our favorite restaurant. A resort hotel is often lauded for the way it recalls the preferences of repeat guests. How much better is it to return to that Starbucks barista who remembers how we take our coffee? But when businesses take that personal approach online, consumers often feel uneasy because they don’t understand the ways in which their data is being collected and used.
Efforts led by the Digital Advertising Alliance and others are encouraging companies to become more transparent about data collection and enabling more intuitive measures for consumers to opt out of online tracking.
But, instead of an opt-out approach, what if we considered letting consumers opt in?
Paying consumers for permission to use their data is not new. The broadcast advertising industry is built on radio and TV ratings, gleaned from consumers incentivized to allow their media exposure data to be collected. Retailers offer discounts to convince shoppers to scan their loyalty card so their preferences can be used to personalize future communications. Even free online services such as Facebook and Twitter provide a service worth something to the user in exchange for collecting data about them and permission to commercialize it. However, even within these examples, the more transparent the incentives to the consumer, the more likely the marketer-consumer relationship will thrive.
We are beginning to see baby steps in this direction already. Businesses such as Enliken explicitly offer a way for consumers to see their personal information in exchange for payment. Niche social media networks are emerging that offer consumers a "get paid to play" model. Websites like Personal.com are creating entire business models by helping customers decide with whom, when, and where to engage.
In an opt-in world, consumers get a fair price for use of their data and they retain complete control over whether and how their data is used. Their ability to revoke this data at any time gives them comfort to share it more broadly with marketers. The marketer replaces inferred data with real data that the consumer is incentivized to provide accurately, improving the relevance of customer interactions. The marketplace not the marketer determines the right balance between personal and intrusive for each customer.
I believe consumers want the ability to develop the same relationships online as they have in the real world. As marketers, this should be the relationship we strive for as well.
BrainTrust
Recent Discussions
Discussion Questions
How receptive are consumers to providing personal data in exchange for personalization and incentives? What hurdles do you see in shifting from the opt-out model to more of an opt-in one? Which opt-in approach do you see working best for stores?
Poll
Opt-in works best when the consumer perceives that the benefits of participating outweigh the risks or efforts of doing so. It’s a value equation in their mind, with a number of implicit assumptions and expectations about the brand.
Investigating those implicit expectations may be the next wave of research findings.
The corollary to the loyalty card already exists online in the form of user accounts. For example, I have a user account on amazon.com and Amazon uses that to greet me when I visit and recommends products that may interest me. I have a certain level of control in the recommendations in that I can tell Amazon that certain purchases were gifts or some items I was looking at are not typical for me, so they do not impact the recommendations. As an opt-in for a specific brand, this works pretty well.
As for a ubiquitous opt-in for advertisers, this will unlikely meet the need as counting on consumers to do anything in large enough numbers for mass advertisers (like display) to take advantage of is probably not going to happen.
People love personalization and being treated as individuals, however they do not value these things at the expense of receiving an overabundance of e-mail or spam or at the expense of misdirected personalization. Consumers learn quickly which marketers know the difference. Every marketer needs to act skillfully within the right domain and have the right experts available to get it right. With many consumers it’s one click and you’re out.
There exists a large amount of variation in customers being receptive regarding personalization and incentives. Consumers in younger age groups are more willing to give away their data to receive personalization. As the age level increases, the willingness to share data decreases. Over time, the need for the opt-in approach will erode as each generation moves to the forefront of the economy.
An opt-in approach that would work best for stores would be allowing users to choose their experience. They can opt-in and have their data sold and receive more advertisements, product suggestions, and increased emails. In return, users who opt-in will receive lower prices across the site. Those who do not opt-in will receive high prices and a less personalized experience.
Consumers generally are agreeable to giving up personal information, (with notable caveats), as long as the perceived benefit of doing so is worthwhile. Unfortunately, in many cases the benefits do not live up to the consumer’s expectations and they either opt-out, or more commonly, just stop paying attention to the communications from the retailer.
From my experience the “opt-in” approach is a better way to go in that it provides a database of willing and at least initially interested participants. Open rates, click throughs and other activation metrics will undoubtedly be higher with this approach compared to “opt-out.” Intuitively, the retailer is trading “quality” for “quantity” with the opt-in approach, but with either approach, it is incumbent upon the retailer to insure the the customer data is being used to provide meaningful, relevant content, or the shopper will not only opt-out, but likely begin shopping elsewhere!
The key point is relevance, whether it’s a recommended product, advertisement or some other kind of special offer. Marketers who invest in the ability to deliver personalized messages will be rewarded. Those who don’t will find their efforts winding up in the junk mail folder along with ding to their brand image.
When it is personalized and relevant, advertising transforms into welcome and appreciated suggestions. Consumers value the relationship more, even if it’s on an unconscious level. That’s a benchmark that marketers should strive for.
There are challenges to the opt-in model. The main one being the work and effort it will take consumers to educate themselves, read each marketer’s terms and conditions, keep up with the changes in the policies, etc. It’s unlikely to become a mainstream methodology for helping consumers manage their personal information.
“… consumers often feel uneasy because they don’t understand the ways in which their data is being collected and used.”
Shame on marketers for not making sure that consumers know exactly what information is collected, how it will be used and perhaps most importantly, how it will benefit them. The intrusiveness of communication varies inversely with its relevance (including timeliness) to the consumer’s life. Providing product information to consumers while they are considering the purchase is typically received as helpful rather than intrusive.
The problem is that marketers can’t seem to control themselves from over communicating and want to stretch the bounds of relevance beyond comprehension for most people. Applying mass communication (let’s send everyone this) strategies to people who have opted in to what they feel will be targeted messages is a sure way to the junk mail folder and unhappy customers.
“Consumers often feel uneasy because they don’t understand the ways in which their data is being collected and used.”
Nice try, but I disagree: consumers opt out because they know EXACTLY what will be done with the data (indeed, if they’re mistaken at all, they’re probably underestimating the nuisance they’re creating). Will bribing people increase the opt-ins ?? Probably a little.
Opt in works when there are clear lines on the benefit and trust in the brand that there will not be an abuse of the trust. If I opt in on surrendering personal data in exchange for personalization and incentives, it needs to be delivered in a way that is unobtrusive and beneficial to the customer experience. The personalization should be there to improve the customer satisfaction, not just for the business to resell the data or send 10 Emails a day.
I think if you are going to run a true value proposition through the use of personal data, then you have to give consumers a choice of how to share their information. LoyaltyOne’s AIR MILES Reward Program (the coalition program we operate in Canada) is permission based, and 99.99 percent of our customers opt to share their information with us.
If a company is going to run a value exchange-based relationship with consumers, then you need to gain their trust. And the best way to gain customer trust and commitment is by being permission-based, and by giving them the opportunity to choose whether they will share information with you. This kind of opt-in commitment, combined with transparency and reasonable data collection, to elevate the consumer relationship to the kind of holistic level that delivers the highest quality of information. Such solid loyalty will of course result in stronger relationships, better profits, higher sales, and increased relevance.
Supermarkets have used the opt-in method for years—it’s called the ‘loyalty card’. You give your card to the clerk to have it swiped, downloading your purchase information. You do this willing to ‘earn points’.
This is a poor consideration of the cost of our privacy. The expense of sharing personal information, without having complete control on whom has access to it, as well as for how long, it tremendous. Since this information is not finitely controlled by the consumer, once it has been shared, this is another issue. Despite all assurances, information data banks are continually being violated and data is accessed by outsiders on a regular basis. Security, absolute control, and a finite life on information are not guaranteed, which translates into the consumer taking the risk, not the information holder.
If the consumer trusts the retailer, they will give the data. That simple. The key is the relationship. If I trust you, I’ll give you what you need to treat me right.
The mistake is how retailers use—or should I say abuse—the information. Smart consumers know what they don’t like and won’t part with information unless they know, like and trust the retailer. They don’t have to opt out. They just won’t opt in.
The best opt in strategy will first take place because of trust, as mentioned above. Second will be a clearly and simply stated policy about how they will use the info.
Use data, don’t abuse it. Customers are pretty much willing to provide personal data to get personalization benefits. But retailers should avoid overdoing it to the limit that it becomes spooky. Also, care should be taken around data which is no longer relevant. e.g. sending a “happy anniversary” greeting after a divorce! Building trust through stages of relationship is equally important. Don’t start personalizing everything from day one. You don’t want to push customers away from you. Take a phased approach.
The comments are exactly the discussion I believe needs to be had. Marketers should start focusing on quality of relationships with customers instead of quantity. They should invest more in keeping their existing customers satisfied by ensuring that all communications are relevant. They should ensure that they always maintain the trust of their customers.
To do this, we should look to learn lessons from how relationships are built in the offline world.
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Opt-in works best when the consumer perceives that the benefits of participating outweigh the risks or efforts of doing so. It’s a value equation in their mind, with a number of implicit assumptions and expectations about the brand.
Investigating those implicit expectations may be the next wave of research findings.
The corollary to the loyalty card already exists online in the form of user accounts. For example, I have a user account on amazon.com and Amazon uses that to greet me when I visit and recommends products that may interest me. I have a certain level of control in the recommendations in that I can tell Amazon that certain purchases were gifts or some items I was looking at are not typical for me, so they do not impact the recommendations. As an opt-in for a specific brand, this works pretty well.
As for a ubiquitous opt-in for advertisers, this will unlikely meet the need as counting on consumers to do anything in large enough numbers for mass advertisers (like display) to take advantage of is probably not going to happen.
People love personalization and being treated as individuals, however they do not value these things at the expense of receiving an overabundance of e-mail or spam or at the expense of misdirected personalization. Consumers learn quickly which marketers know the difference. Every marketer needs to act skillfully within the right domain and have the right experts available to get it right. With many consumers it’s one click and you’re out.
There exists a large amount of variation in customers being receptive regarding personalization and incentives. Consumers in younger age groups are more willing to give away their data to receive personalization. As the age level increases, the willingness to share data decreases. Over time, the need for the opt-in approach will erode as each generation moves to the forefront of the economy.
An opt-in approach that would work best for stores would be allowing users to choose their experience. They can opt-in and have their data sold and receive more advertisements, product suggestions, and increased emails. In return, users who opt-in will receive lower prices across the site. Those who do not opt-in will receive high prices and a less personalized experience.
Consumers generally are agreeable to giving up personal information, (with notable caveats), as long as the perceived benefit of doing so is worthwhile. Unfortunately, in many cases the benefits do not live up to the consumer’s expectations and they either opt-out, or more commonly, just stop paying attention to the communications from the retailer.
From my experience the “opt-in” approach is a better way to go in that it provides a database of willing and at least initially interested participants. Open rates, click throughs and other activation metrics will undoubtedly be higher with this approach compared to “opt-out.” Intuitively, the retailer is trading “quality” for “quantity” with the opt-in approach, but with either approach, it is incumbent upon the retailer to insure the the customer data is being used to provide meaningful, relevant content, or the shopper will not only opt-out, but likely begin shopping elsewhere!
The key point is relevance, whether it’s a recommended product, advertisement or some other kind of special offer. Marketers who invest in the ability to deliver personalized messages will be rewarded. Those who don’t will find their efforts winding up in the junk mail folder along with ding to their brand image.
When it is personalized and relevant, advertising transforms into welcome and appreciated suggestions. Consumers value the relationship more, even if it’s on an unconscious level. That’s a benchmark that marketers should strive for.
There are challenges to the opt-in model. The main one being the work and effort it will take consumers to educate themselves, read each marketer’s terms and conditions, keep up with the changes in the policies, etc. It’s unlikely to become a mainstream methodology for helping consumers manage their personal information.
“… consumers often feel uneasy because they don’t understand the ways in which their data is being collected and used.”
Shame on marketers for not making sure that consumers know exactly what information is collected, how it will be used and perhaps most importantly, how it will benefit them. The intrusiveness of communication varies inversely with its relevance (including timeliness) to the consumer’s life. Providing product information to consumers while they are considering the purchase is typically received as helpful rather than intrusive.
The problem is that marketers can’t seem to control themselves from over communicating and want to stretch the bounds of relevance beyond comprehension for most people. Applying mass communication (let’s send everyone this) strategies to people who have opted in to what they feel will be targeted messages is a sure way to the junk mail folder and unhappy customers.
“Consumers often feel uneasy because they don’t understand the ways in which their data is being collected and used.”
Nice try, but I disagree: consumers opt out because they know EXACTLY what will be done with the data (indeed, if they’re mistaken at all, they’re probably underestimating the nuisance they’re creating). Will bribing people increase the opt-ins ?? Probably a little.
Opt in works when there are clear lines on the benefit and trust in the brand that there will not be an abuse of the trust. If I opt in on surrendering personal data in exchange for personalization and incentives, it needs to be delivered in a way that is unobtrusive and beneficial to the customer experience. The personalization should be there to improve the customer satisfaction, not just for the business to resell the data or send 10 Emails a day.
I think if you are going to run a true value proposition through the use of personal data, then you have to give consumers a choice of how to share their information. LoyaltyOne’s AIR MILES Reward Program (the coalition program we operate in Canada) is permission based, and 99.99 percent of our customers opt to share their information with us.
If a company is going to run a value exchange-based relationship with consumers, then you need to gain their trust. And the best way to gain customer trust and commitment is by being permission-based, and by giving them the opportunity to choose whether they will share information with you. This kind of opt-in commitment, combined with transparency and reasonable data collection, to elevate the consumer relationship to the kind of holistic level that delivers the highest quality of information. Such solid loyalty will of course result in stronger relationships, better profits, higher sales, and increased relevance.
Supermarkets have used the opt-in method for years—it’s called the ‘loyalty card’. You give your card to the clerk to have it swiped, downloading your purchase information. You do this willing to ‘earn points’.
This is a poor consideration of the cost of our privacy. The expense of sharing personal information, without having complete control on whom has access to it, as well as for how long, it tremendous. Since this information is not finitely controlled by the consumer, once it has been shared, this is another issue. Despite all assurances, information data banks are continually being violated and data is accessed by outsiders on a regular basis. Security, absolute control, and a finite life on information are not guaranteed, which translates into the consumer taking the risk, not the information holder.
If the consumer trusts the retailer, they will give the data. That simple. The key is the relationship. If I trust you, I’ll give you what you need to treat me right.
The mistake is how retailers use—or should I say abuse—the information. Smart consumers know what they don’t like and won’t part with information unless they know, like and trust the retailer. They don’t have to opt out. They just won’t opt in.
The best opt in strategy will first take place because of trust, as mentioned above. Second will be a clearly and simply stated policy about how they will use the info.
Use data, don’t abuse it. Customers are pretty much willing to provide personal data to get personalization benefits. But retailers should avoid overdoing it to the limit that it becomes spooky. Also, care should be taken around data which is no longer relevant. e.g. sending a “happy anniversary” greeting after a divorce! Building trust through stages of relationship is equally important. Don’t start personalizing everything from day one. You don’t want to push customers away from you. Take a phased approach.
The comments are exactly the discussion I believe needs to be had. Marketers should start focusing on quality of relationships with customers instead of quantity. They should invest more in keeping their existing customers satisfied by ensuring that all communications are relevant. They should ensure that they always maintain the trust of their customers.
To do this, we should look to learn lessons from how relationships are built in the offline world.