As consumer privacy regulations continue to evolve, and tech companies place restrictions on data collection, marketers are struggling to find the balance between respecting data privacy and providing the relevant experiences their customers expect. And while many companies claim that privacy is a priority, Lisa Loftis says not enough are doing something about it.
“Companies might be talking about privacy, but many are doing only that — talking,” said Loftis, principal management consultant, Customer Intelligence at SAS. “In Experience 2030, Futurum found that only 48% of companies strongly agree on the value of a proactive approach to transparency involving data privacy, and 77% agree that they sometimes implement a program they know not to be secure to gain a time-to-market or competitive advantage. Companies that want to build loyalty and trust during the ‘privacy wars’ need to do more than give lip service to these requirements.”
SAS, an analytics and marketing software and solutions provider based in Cary, NC, is a sponsor of CMSWire’s virtual Digital Experience (DX) Summit. Loftis will present the session, “Where First-Party Data Goes, Tech Must Follow.” CMSWire spoke with her about what’s happening in the world of consumer privacy today and how being more proactive in protecting consumer privacy helps build trust and ROI.
The Ever-Changing Digital Privacy Landscape
Simpler Media Group: You’ve been helping organizations with customer strategy for more than 30 years. How did you get started and what has kept you in it for all these years?
Lisa Loftis: When I started, back in 1986, the industry was nascent, and we were in on the ground floor of something that clearly had tremendous potential. In those days, most industries were firmly product focused (banking was a noticeable exception), customer relationship management was an emerging term (CX did not exist), Seth Godin was writing “Permission Marketing,” a book based on concepts that are as relevant today as they were decades ago, and digital activity was a thing of the future, not the present.
Here’s an example that shows just how far into the future today’s digital capabilities actually were when people were starting to see the potential of customer focus: I had several longer-term consulting engagements in Europe where we carried our important engagement documents (paper) onto the plane in duffle bags and purchased leave-behind portable printers in each of the countries where we worked. Not quite walking to school five miles uphill in the snow, but pretty close.
It’s been tremendously fun to watch technology catch up to the ideas of the thought leaders of the ’80s and ’90s, and gratifying to have played a part in shaping the thinking around CX and the technology that fuels it. I stay because it’s been a wild ride of innovation and change, always interesting — never boring, and I don’t see that changing any time soon.
SMG: What are some of the biggest trends or concerns that organizations need to pay attention to in the digital privacy landscape today?
Loftis: The biggest concerns revolve around undisclosed data collection and tracking of user activity. Governments and technology companies are both weighing in on this issue. From the tech perspective, browsers Firefox and Safari have blocked third-party cookies since 2013, and in 2019 Safari started disabling all cookies after seven days, eliminating the ability to use even first-party cookies to track users over time.
Google threw the world into turmoil when they announced that they would no longer build or support any browser technology designed to perpetuate individual-level data tracking — including cookies. Apple has also introduced email changes that make it harder for advertisers to see if an email has been opened, and their app privacy reports let users opt out of tracking, letting them know which data is being collected and how it’s being used.
Governments are also involved with regulations such as the General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA) and the upcoming revision of the EU ePrivacy directive. The revision looks to clamp down even more on consent and cookies, possibly to the extent of requiring an explicit opt-in from consumers to use any individually identifying web or device data (including first-party cookies) in analytics.
Gaining Consumer Trust — and Their Data — By Adding Value
SMG: In a previous CMSWire article, you talked about how using first-party data can provide real value to customers. Can you talk about the value this data provides?
Loftis: I’ve been writing about this in my CMSWire articles since news about GDPR surfaced in 2016. If you want customers to opt in to collecting and using information in analytics, to authenticate on websites, and to participate in two-way dialogue, you have to provide them with value. I see two ways to do this.
First is the fun stuff — using great creative, gamification and even compensating customers directly for providing their data. IDC predicts that this will become more prevalent with 35% of companies openly incentivizing their customers to provide data and engage with the brand.
The second way to add value is by making the best use of the data customers provide, making sure that communications are relevant, timely and fit the customer’s situation at that moment. Several of the 2022 marketing trends and predictions highlight exactly where we’re going with this. Take the switch to a hybrid digital/physical engagement model as an example. Deloitte predicts that 75% of companies will be investing in the development of these kind of experiences, with 43% doing so in order to increase personalization and 40% aiming for better customer connection.
Hyper-personalization is something else we’ve been hearing a lot about lately. It means that marketers create contextual communications and experiences for every customer to fit their individual needs. This targeted interaction creates value for the customer, as well as for companies. Deloitte predicts that hyper-personalization can result in eight times higher marketing ROI and a 10% sales lift.
Both of these trends will require a deep customer understanding, sophisticated analytics and the right martech.
SMG: What are your best recommendations for organizations that are either at the start of their data privacy journey, or that want to strengthen their existing program?
Loftis: Organizations should provide transparency and trust by monitoring current data collection and use practices, and ensuring that they comply with both regulations and customer expectations. Round out customer profiles with the digital activity that provides deep understanding of customers. Incorporate analytically-driven personalization practices into marketing activity to ensure that communications are relevant, timely and contextualized.
Finally, check the martech infrastructure to be sure it can provide the capabilities needed to deliver these communications and protect privacy. This will generally require a multichannel marketing hub or enterprise marketing tool suite with embedded consumer data platform (CDP) capabilities and the ability to embed sophisticated analytics into marketing activity in real time. For those who want to extend first-party data beyond the marketing department, an automated decisioning engine that can integrate with the enterprise marketing suite is also a requirement.
What’s Ahead in Digital Privacy
SMG: What do you see coming down the line in the next three to five years for digital privacy?
Loftis: While I don’t have a crystal ball, I think it’s pretty simple. Government-driven regulations will continue to tighten up. ePrivacy will be revised to require consent as an opt-in for most digital data collection. And more states will implement privacy restrictions in the United States — possibly leading to a national law like the GDPR but incorporating digital data as well. This will provide customers with much more control around how their personal data is collected and used while giving them first right of refusal for anything not essential to business operations around data.
In addition, some tech business models may have to change as programmatic ad buying and third-party data brokers will lose the ability to target identified individuals with third-party data. In this situation, companies will have to implement the things we’ve discussed in this interview, or they’ll lose access to their customer data, and possibly lose their customer base as well.
SMG: What does your ideal world of data privacy, customer trust and business advantage look like?
Loftis: One where companies provide a high level of transparency and consent around the collection and use of personal data, and where they have a first-party data strategy that enables them to develop the customer understanding and analytical capabilities that provide the continuous value exchange that we’ve been talking about. To borrow a concept from Permission Marketing: It’s only in this world where marketers will develop the trust needed to engage in a conversation with their customers that can turn them from prospects to customers, and ultimately to friends who welcome communication and actively engage.