Personalization works.

From ad creative tailored to a user’s location, to customized product recommendations based on browsing history, today’s time-scarce convenience-hungry consumers demand relevant online experiences.

Four fifths of consumers want services tailored to their interests and – as a result – effective personalization techniques can drive a threefold increase in consumer engagement, drastically boosting ROI.

The challenge of personalization is that it requires data, high quality data, and plenty of it. Spotify’s Adam Bly recently revealed the platform’s highly successful content recommendation engine is fueled by more than 100 billion user-generated data events each day. While Spotify employs the highest levels of data privacy – as emphasized by Bly – many businesses are wary of using data for personalization due to privacy fears.

At a time when data privacy is a major concern – 2016 witnessed a record number of data breaches – the risks of using consumer data to tailor user experiences may seem too great for the reward. And with ongoing shifts in the global privacy environment, online businesses are feeling increasingly vulnerable and confused. Many find themselves asking whether they need to pull back on personalizing the customer experience to comply with changing data protection regulations.

But the traditional belief that customer experience and data responsibility are mutually exclusive no longer holds true. By adopting the right approach, data can be used to deliver highly personalized and relevant messaging without intruding on user privacy.

An example of imminent change in the global data privacy landscape is the General Data Protection Regulation (GDPR), which applies to any business collecting or processing data relating to EU citizens, no matter where they are located. Due to come into force in May 2018, the regulation aims to give individuals more control over their personal information. With so many US-based businesses operating across borders, compliance with the GDPR is vital. The EU-US Privacy Shield Framework – approved last year – provides a mechanism for complying with data protection requirements on both sides when data is transferred across the Atlantic from the EU.

Businesses must also be aware of state level privacy laws and how much they vary between regions. California is arguably leading the way in this area; it was the first state to enact a security breach notification law. State level laws and amendments continue to change, and businesses must keep abreast of the latest developments.

While these changing regulations may first appear daunting, they are not to be feared and instead should be viewed as an opportunity to build consumer trust and loyalty. By placing data protection as a top priority, fully complying with the new regulations, and communicating data practices clearly and transparently, digital businesses can demonstrate how seriously they take customer privacy rights and as a result, enhance the overall user experience.

Entering into an open dialogue about the types of data collected, the purpose of data processing, and the benefits consumers receive as a result can only strengthen relationships, and businesses can use this opportunity to reassure consumers their data is protected.

In an increasingly crowded marketplace, personalized experiences are essential to cut through the noise and engage consumers, so online businesses must not sacrifice this competitive advantage to comply with data privacy laws. By seeing new data regulations as an opportunity to strengthen customer relationships, and ensuring all data runs through a central hub, digital businesses can embrace personalization with confidence it will enhance – rather than damage – the customer experience.

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