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Personalization: At What Cost?

Audrey Steeves | 10/30/2024

With more customer data being collected than ever before, new opportunities for personalization are cropping up left and right. The ability to effectively tailor experiences now lies in a company's ability to manage this mountain of data.  Understanding what to collect, how to effectively use it, and how to select the right technology to support these initiatives is a challenge that keeps contact center leaders up at night.


As exciting as this is for CX leaders, personalization can be a touchy subject for individuals on the receiving end. Customers have raised related concerns about their privacy and the importance of consent within the practice of collecting and utilizing this personal information. 


We are now navigating an unprecedented dynamic. Surveillance technology is everywhere–from our phones and computers, to cameras in and around buildings, to point-of-sale systems. In the United States, it is virtually inescapable. Much like AI, the rapid developments in both the technology and burgeoning use cases has left government and other regulatory bodies scrambling to provide guardrails and ethical best practices. 


Where personalization was historically limited by the tools and systems that allow companies to collect and analyze this information, it is now almost limitless. This has major implications for what “good personalization” actually is. 


Good versus bad personalization


Consider two hypotheticals. You receive a direct mail advertisement for noise-canceling headphones. The flier contains a generous discount code alongside copy sympathizing with construction that’s being completed on your block, which has been generating a noisy racket the past couple of weeks. This type of personalization feels considerate, genuinely useful, and is based on information that is not protected–while the headphones company has your address, if they used public information from the city, it wouldn’t be associated with your identity. This is the type of personalization customers appreciate and use to make future buying decisions.


Alternatively, imagine you begin noticing an onslaught of advertisements for a specific pharmaceutical product you recently began taking. You’ve Googled this product, talked about it at home (in front of your Alexa…) and sent messages about it to friends and family. As one of the millions of Americans who don’t fully understand the complexity of data privacy laws, cookies, and protected data, you feel confused and betrayed. Even worse, these advertisements are showing up on your work computer, fully visible to coworkers. Whether the companies involved in this type of “bad personalization” are acting legally is beside the point–CX leaders need to ensure all customer interactions are abiding by common sense codes of respect, or they risk permanently destroying their customers’ trust and brand image.


Providing valuable personalization


Companies cannot afford to remain stagnant on personalization. In today’s markets, if you’re competing on the customer experience, you’re competing on personalization. Rather than looking to create the most personalized experiences, CX leaders should think critically about how to appeal to customers pragmatically using the age-old persuasion strategies.


Using this framework, we outline the Do’s and Don’ts for effective personalization in 2024:


Ethos

DO: Demonstrate your authority and credibility by reaffirming your company’s commitment to protecting customer data and prioritizing privacy over profit. Even if your company isn’t rolling out new personalization initiatives, proactive communication with customers enhances customer trust. After all, other bad actors can exploit customer data and digital channels, and privacy conscientiousness is a differentiator in and of itself in today’s economy. 


DON’T: Begin using customer data in profoundly new or highly specific segmenting initiatives just because you have the authority to do so. Many of these ideas that sound good on paper are the same ideas that strike customers as invasive and unnecessary.


Pathos

DO: Appeal to the emotional state of the customer who is using or thinking about your product. Generally, technology early-adopter types are much more amenable to groundbreaking personalization because they find this technology more exciting than concerning. For example, smart wearables like the WHOOP and the Oura ring attract a user base of tech-savvy folks excited by innovation, who likely have a better understanding of privacy laws and systems than the average person. While these customers find a lot of value in these wearables, those on the other end of the technology familiarity spectrum would balk at the idea of sharing so much health and location data with a company—and paying them to hold onto it.


DON’T: Use the data at your disposal to take advantage of the emotional state of customers. One could make the argument that all selling and advertising takes advantage of customers by appealing to their emotions, but highly personalized experiences raise the stakes on such issues. One contentious example of such selling is the use of dynamic pricing for highly sought ticketed events, something Ticketmaster has become infamous for. Even more sinister, prior to the Department of Transportation’s recent crackdown, airlines would regularly hike prices for travelers attempting to flee an area due to natural disasters. Though the case can always be made for “supply and demand” driving prices, it is clear customers are fed up with these omniscient pricing tactics.

 

Logos

DO: Ensure your communications with customers are honest and compliant. If your messaging is backed up by true claims about your product or services, customers will be less likely to doubt your authenticity. If you’re leveraging customer information to provide highly personalized experiences, direct customers to a resource where they can look into the data your company has access to and how it is being used. Regulation is likely to catch up to innovation eventually, and preemptively collecting this information for customers will set your company apart should increased transparency laws go into place. 


DON’T: Take a “what they don’t know can’t hurt them” approach to customer data. Whether a result of new laws and regulations or just one curious journalist, your company’s personal data practices are likely to come out eventually. To build long-lasting relationships with customers built on trust, do not take for granted how much of a dealbreaker privacy is to all sorts of demographics of customers. 

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