Companies and Consumers (Mostly) See Eye-to-Eye on Data and Privacy, Says New Report
NEW YORK — Consumers value their privacy – just not in quite the ways most business executives assume. Understanding the nuance can lead to greater customer insight, more targeted and effective marketing as well as a reduced risk of privacy breaches.
This is the overriding message from the just-released report from Forbes Insights and Turn, the marketing software and analytics platform, “The Promise of Privacy: Respecting consumers’ limits while realizing the marketing benefits of big data.” The research draws on a unique combination of three interrelated surveys, one targeting corporate marketing programs and then one for each of two distinct customer segments, business to consumers (B2C) and business to business (B2B). Detailed quantitative findings are further illustrated with interviews from leading companies, privacy-focused industry groups and customers.
Understanding the price of privacy
“Most business executives believe that most of their customers are at least concerned – some very concerned – regarding personal privacy,” says Bruce Rogers, chief insights officer and head of the CMO Practice for Forbes Media. “And they’re right in a certain sense.” However, adds Rogers, “feelings about privacy are actually far more nuanced, so much so that in many cases, executives may be mischaracterizing and generally overstating actual customer angst.” Failure to grasp such nuance in personal privacy and respond appropriately, says Rogers, “can limit opportunities as well as increase risks.”
Indeed, over three-quarters of corporate executives, 78%, believe their customers harbor tangible privacy concerns. But in the separate surveys of customers themselves, fewer than 50% of either B2C or B2B customers expressed similar degrees of concern. Other key findings:
• Most companies are actively pursuing data-driven strategies, which are becoming the norm. Four out of five executives say their data programs are meeting or exceeding ROI targets.
• Companies and customers have differing perceptions of when actions are observed. Customers tend to overestimate how often their behavior is tracked on websites, yet they underestimate how much information is gathered during in-person interactions.
• Companies believe customers are willing partners in the exchange of information. Consumers do seem content with the exchange, even though they believe that businesses gain the lion’s share of value. What consumers fear is a privacy breach or the misuse of their data.
What this reveals, says Paul Alfieri, vp of marketing, Turn, “is that while customers absolutely value their privacy, they are willing to share information with brands that earn their trust. And once a consumer trusts your brand, they will continue to trust it until you give them a reason not to.”
However, privacy is a double-edged sword. “While consumers will share information in exchange for subtle improvements to their experience, such as a targeted offers or discounts,” says Alfieri, “a failure to respect privacy, or worse, to commit some form of severe privacy breach destroys all trust and creates catastrophic results for a company that go far beyond lost sales. Brands would be wise to ensure all data collection strategies are transparent to customers.”
Other key insights
The research offers a wide range of additional nuance and insight. Consider:
• 85% of business executives recognize that any significant breaches in customer data security would do great harm to customer relationships, reputation and the bottom line. And the larger the company, the greater the value of its intangibles (e.g., brands) and therefore the greater value at risk.
• 76% of B2C customers indicate they notice that in exchange for sharing information, they are receiving more relevant discounts and offers. Other clearly perceived benefits include recognition as a value customer and loyalty awards.
• 88% of B2B customers say they value improvements in products, and 87% value improvements in services – in each instance stemming from their supplier’s data-driven strategies.
• 82% of companies are taking significant steps to correlate in-house information with data developed by third-party providers.
• 81% of companies are saying their efforts in data-driven strategies are meeting or exceeding ROI targets. Companies say they are most successful in using data collection/analysis to assist with product development, pricing, website design function and call center operation. Efforts are also paying off in terms of better-optimized marketing spending and product/service pricing.
About the research
The main survey was completed by 129 executives from a wide range of companies relatively evenly distributed from under $500 million to over $10 billion in revenue. The B2C and B2B surveys were completed by just over 100 respondents each. All three surveys were completed in September 2013. The research also draws on interviews with 12 executives from various businesses, consulting firms and industry associations.
About Forbes Insights
Forbes Insights is the strategic research and thought leadership practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.
Turn delivers real-time insights that transform the way leading advertising agencies and enterprises make marketing decisions. Our integrated cloud platform enables data management, cross-channel advertising, and advanced analytics from a single login, along with point-and-click access to over 100 premium technology partners. Turn is headquartered in Silicon Valley and provides its products, and services worldwide. For more information, visit turn.com or follow @turnplatform.