Contrary to common wisdom, our recent IDC Retail Insights Annual Shopper Survey revealed that only a minority of consumers are openly disposed to the "give to get" exchange of private information for guidance dependent on a retailer having access to personal information.
Retailers have to learn to earn the privilege of engaging consumers based on their activities on social network, mobile apps, 3rd party apps, and You Tube, to get beyond their being comfortable with you know with what they've purchased. Only about 50% of retailers have a formal governance process for managing "give to get" data, creating risks for individual retailers and the industry overall.
On the positive side, behaviours associated with privacy spending and guidance seeking, e.g., using five or more connected devices or seven or more apps, are ascendant.
The customer stands centre stage in omni-channel retail. Earning the privilege of relationships, relevance, and reciprocity with today's informed, discriminating, and wilful consumers depends on meeting each one's disposition to granting you rights to their private information in exchange for the opportunity to deliver differentiated value.
A few statistics reveal the extent to which individuals can be followed on social media and profiled with data provided from aggregators such as Experian, Acxiom, Neustar, and others. As reported in the Wall Street Journal from data provided by Acxiom and PrivacyFix in late March:
- 3000+, the number of shopping tendencies Acxiom measures for every U.S. household
- 700 million, the number of consumers worldwide in Acxiom databases
- 1205, the number of the top 2150 U.S. websites where Facebook can track its members
- 2000+, the number of times per day a person's online activity is tracked
Shoppers split about equally into two groups, those who choose privacy over relevancy and those who prefer relevancy over privacy, 53% to 47%. But by an almost two to one margin, 62% to 38%, more consumers feel that they do not have enough control over what retailers can learn about them.
From the customer's perspective it's a "give to get" proposition; from a retailer's it's "learn to earn". There are green lights for opportunity and bright red lines for danger on both sides of the road.
We used a "negative to positive ratio" akin to the method news pundits use to handicap politicians to measure consumers' "give to get" sentiments. Across all shoppers surveyed only two of the nine data types, items purchased and website activities, had favourable negative-to-positive ratios of less than one. The remaining seven had ratios ranging from 2.2 (store and website behaviours) to 4.2 (behaviour on third-party mobile apps). Media sites visited, driving patterns, You Tube behaviours, and social network activities earned ratios of 3.2 to 4.0.
There are financial and customer loyalty risks in following the common wisdom that your customers are the "give to get" type--disenfranchising customers who prefer privacy. Consumers segment into three "giving" types--what they will share and four "getting" types--what they want in return.
Omni-channel retailers attract each "giving" and "getting" type in different proportions depending on their basis of competition, not based solely on their customers' age. Among the largest twelve omni-channel retailers those differentiating on service, selling high attachment merchandise, and attracting higher income customers disproportionately attract customers more disposed to "giving for getting". Those differentiating on value, selling commodity-like products, and attracting modest income customers disproportionately attract customers of the opposite ilk.
Retailers should engage privacy spenders and guidance seekers in digital and mobile media with life-centric messages extended possibly to social media activities. Keep the privilege of personal engagement. Be cautious engaging privacy hoarders and stay on product promotions focused on product performance and benefits. Earn the privilege of personal engagement.
The issue at hand--creating brand and financial value by managing the "give to get" exchange of private information for the right to provide context-sensitive guidance--needs to be managed within the context of the omni-channel transformation of retail: digital transformation of marketing, commerce, and merchandising, enterprise integration, and fulfilment broadly defined from product ideation to sale and delivery.
In the near term "give to get" will play out within a context five interlocking factors:
- The customer experiences retailers create with the use of customers' personal information
- Data-security and proper-use safeguards employed by data aggregators
- Development of voluntary industry standards governing the use of personal data
- Acceleration or abatement of the societal trend toward personal data generation (e.g., wearable sensors), broader sharing, and trading as a currency
- The regulatory environment for collection, distribution, and use of personal data
Only about 50% of retailers have a formal governance process for managing "give to get" data, creating risks for those without such a process and the industry overall. On the positive side, about three in four consumers trust some non-retail brands, data aggregators such as Google, Microsoft, and Apple included, Behaviours associated with privacy spending and guidance seeking, e.g., using five or more connected devices or seven or more apps, are ascendant.
Trust in Google presents a paradox--it is the largest data aggregator of the bunch yet it ranks highest among brands consumers trust. In contrast about 50% trusted Amazon, another data aggregator and the only retailer among the brands studied.
Should bitcoins carry the motto "In Google We Trust"?
Posted by Greg Girard, Program Director, IDC Merchandise Strategies