It’s a difficult question for retailers to address: are you personalizing services for your customers, or intruding on their privacy?

Big Data and analytics technologies have promised to lead to a golden era for retailers and consumers alike, providing ways to deliver highly personalized services to a greater number of, and more satisfied, customers. But now there are strong signs that such personalization is in danger of fuelling the notion that data privacy is being eroded.

A new report from Capgemini, Privacy Please: Why Retailers Need to Rethink Personalization, finds that an overwhelming majority of consumers have adverse views on retailers’ privacy initiatives, often as a result of badly executed personalization. Based on more than 220,000 social media conversations covering 65 large retailers globally, the report reveals that 93% of all consumer sentiment is negative when it comes to retailer privacy, with data security and intrusive behavior key drivers of that negativity.

It’s not that consumers don’t like personalization: The research found that 80% of all sentiment on personalization was positive. It’s just that dissatisfaction with privacy policies can strongly tip the balance the other way. Fully 86% of customers perceive that retailers struggle to strike a balance between personalization and privacy.

The very methods being put in place to provide more personalized services now threaten to compromise data privacy. Retailers have many sources of information on their customers, and used separately that data remains relatively anonymous. But once it is analyzed and cross-referenced to build a more complete profile, the anonymity of customers can be jeopardized—much to their annoyance.

The use of more sophisticated analytics tools means retailers must become more savvy about how to ensure data privacy is not breached. Algorithms can help to build granular profiles of consumer activities, but without some element of human intervention offers can turn out to be highly inappropriate. As a result, while personalization requires the use of more data, many consumers are pushing back against such requests.

Measures must be put in place to safeguard data, establish transparent and thorough privacy policies and governance mechanisms that prioritize data, and to strengthen authentication methods to prevent hacking. Some tricky questions need to be addressed: Is our data storage secure? Do we provide clear communication on how data is collected, used and shared? Can we give users greater control over data, including the ability to erase it? Can we create a contextually rich view of the customer across multiple channels for accurate personalization? Is the data approach respectful of the fact that consumers are increasingly aware that their data has a monetary value and are retailers offering fair exchange for it?

Retailers need to rebuild consumer trust and ensure they are better at using data to enhance the customer experience. Answering such difficult questions honestly could be the difference between winning or losing customers.

(About the author: Maggie Buggie is a research analyst at Capgemini)

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