No Data Deal Is Worth Compromising Your Customer Experience

Last Christmas, I bought a friend of mine a subscription to a science and culture magazine. She had discovered the magazine during downtime at work, so she was delighted when they started showing up at her door.

The gift was a hit, despite the fact that I’d misspelled her name. But then other magazines offers started to arrive in the mail. Then came requests for donations from charitable groups. Next, travel agency ads. And then came the political mailers.

Once she activated her digital subscription, things got worse. Although Google’s algorithm kept some spam out of her inbox, the same companies crowding her mailbox turned up there. Eventually, she ditched that email address for one the magazine didn’t know about.
How did she know that the magazine had sold her data? Because my misspelling showed up everywhere. Fed up, she checked the magazine’s privacy policy; with no recourse but to cancel her subscription, she did so months before it ran out.

Customer Experience Matters More

By selling my friend’s data, the magazine lost her business. So what did it gain in return? Probably around $0.20. Although the value of a customer’s data varies according to their life circumstances, seldom does it sell for more than a dollar.

In aggregate, user data sales add up. But no amount of ad money can erase the stain that selling it leaves on the customer experience. In research published this past May, data exchange Insights Network noted that 90% of consumers consider it unethical for companies to share personal data without the user’s consent. Although some customers will look past data sharing they see as unethical, those like my friend won’t.

Whether my friend is the exception or the norm isn’t important. What’s important is that nearly three-quarters of consumers consider the customer experience an important factor in their purchasing decisions, according to a PwC report published earlier this year. And nothing puts the customer experience in jeopardy quite like unethical use of personal data.

Treat customer data like your own

Customers have different expectations, of course, for how you should handle their data. So how can you tweak your data policies to deliver the best experience for the most customers? Follow the Golden Rule: Treat user data as you’d want your own to be treated. In other words:

1. Don’t buy data; ask for it.

In the U.S. alone, companies spend more than $10 billion annually on third-party audience data. The trouble is, 65% of consumers are uncomfortable with their personal data being shared with for-profit firms, according to the Insights Network report.

But where, if not from data vendors, can you get customer insights? What about customers themselves? Snapchat and other firms focused on the customer experience are partnering with companies like Jebbit to collect what’s known as declared data. Declared data is first-party information that consumers volunteer about their motivations, intentions, interests, and preferences.

Although it might seem impossible to gather enough declared data for Big Data initiatives, Jebbit points out that online experiences and conversations can make collection scalable. Plus, because customers volunteer it, declared data tends to be far more accurate than third-party data, which two-thirds of surveyed consumers told Deloitte is mostly inaccurate.

2. Give the customer something in return.

The question is, are consumers actually willing to share their data? Most are—provided they get something in return. According to a survey by Acxiom and industry group Data & Marketing Association, 58% of consumers make decisions on a case-by-case basis as to whether a service enhancement is worth sharing their data.

What, exactly, do customers want in exchange? In a world, personalization. Epsilon research shows that 80% of consumers are more likely to buy from brands that offer personalized experiences. Most consumers realize that products and services can’t be tailored to them unless they share some amount of personal data.

If you need inspiration, look to Spotify. Not only does the music service leverage user data to create customized Discover Weekly playlists, but it builds bottomless Daily Mixes in the user’s favorite genres. Last but not least, its Release Radar helps users find new releases by their favorite artists.

3. Get consent before sharing or selling user data—or better yet, don’t sell it at all.

While the U.S. doesn’t have a comprehensive law like the European Union’s General Data Protection Regulation, which requires companies to obtain the customer’s consent before sharing or selling their data, new legislation like the California Consumer Privacy Act indicates a shift in that direction. Simply because the practice is currently legal in the U.S., doesn’t mean it’s a smart business move.

To show that you’re serious about protecting your customers’ data, start by updating your privacy policy to make clear that you’ll seek informed consent before selling or sharing their information. The University of Michigan’s Inter-university Consortium for Political and Social Research provides a primer on model language as well as phrases to avoid. Although it’s focused on research data, best-in-class companies take a similar approach to their marketing data.

In a time when the customer experience matters most, surreptitiously selling user data simply isn’t a smart move. The science magazine might’ve made a quarter by doing so, but it also turned a paying customer into a quitter.