Why do retailers need data?
In today’s world, data has more value than gold which is proven by the number of rigid data privacy policies emerging over the decade. The data privacy policies not only safeguard customer information but also helps customers trust the organizations they choose to share them with. Relatively, to emerge as the winner in the current competitive retail market, retailers need data to understand customer expectations and preferences. The pandemic had changed consumer behavior with a push to digital and it continues to do so even as the world opens back up. One aspect that has strongly emerged is that for a fulfilling experience and to ensure market sustainability, retailers must focus on seamless offerings across channels and establish personalization.
However, the secret sauce to crafting a personalized experience is none other than decoding the humongous volume of data available at every touch-point.
The customer data once sieved comprises customer’s geography, product discovery to purchase journey, buying patterns, device ids, IP address, and much more. The data is then analyzed using various algorithms to generate meaningful insights, which help retailers in decision-making. For example, retailers can quickly understand when to offer a discount or which product should be recommended to prevent incomplete purchases.
Thus, data is crucial both for customers and retailers since it allows the former to receive a personalized experience while the latter gets a scope to make a mark. At the same time it needs to be balanced in respect to privacy. As per industry reports, 2/3rd of consumers willingly pay more to ensure data privacy.
Challenges retailers face in implementing data privacy
Let us also understand the challenges retailers face while implementing data privacy.
- Unauthorized access: Organizations should comply with the privacy standards specific to the country of operation to ensure protection of customer data from unauthorized access or third parties.
- Data growth: As the world becomes digitalized, there is immense data inflow at every touchpoint leading to unstructured data overload making it difficult for retailers to store which may eventually lead to data privacy issues.
- External services: There are various technologies/software in the market for data analysis, which retailers use to derive results since not everyone has in-house capability. This leads to consumer data residing in multiple systems, which might be owned by 3rd parties leading to data privacy challenges.
- Effective data governance: Humans are the weakest link in terms of data privacy but you need a data analytics team to leverage data and enhance customer experience. So, to minimize the risk of data theft or data breach, retailers must set an effective data governance which is expensive.
- Mandatory guidelines like GDPR: give information about these and how more countries are adopting it
Why should retailers focus on data privacy?
Data privacy is a tightrope walk since customers now-a-days seek a personalized experience and are ready to part with data in return for instant gratification. However, customer loyalty towards a brand depends proactively on how each brand handles data privacy. Thus, a robust data privacy program is the need of the hour to ensure data security and dish out a personalized experience to customers.
The key aspects retailers should focus while developing a data privacy strategy are:
- Maintain transparency: Retailers should keep consumers informed from time to time about how, why, and which data is collected to increase transparency and build trust.
- Well-informed employees: Retailers should build a culture in the organization where all employees should function while keeping customer’s privacy in mind.
- Data Management: Retailers should manage the data while following the regulations like the GDPR or the CCPA. Should also leverage various data security strategies like tokenization and sanitization to protect large volumes of data.
- Security and Infrastructure: Retailers should implement data privacy within every level of the organization and secure customer data by adopting the best strategies, protective measures, programs, and infrastructure.
- Anonymization: There is a considerable move to anonymize and instead of linking to a customer, identify a customer segment and personalize. It is a great area of interest, which while doesn’t identify a person as an entity can still give insights into characteristics of a customer segment to the retailer.
Data is indeed the new currency. However, retailers need to skillfully extract the right information from the data available to them to empower them in this highly technology-driven market, or risk loosing valuable customers. Moreover, there is the risk of data breaches and non-compliance, which might pose the risk of losing hard earned customer loyalty. It shall eventually spoil a brand’s reputation and make them lose customers. So, it is essential that retailers maintain the right balance between Personalization and Data Privacy, while ensuring the entire process is customer-centric.
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