Striking the Balance Between Personalisation and Privacy

By Benjamin Fine, Co-Founder and CEO of Formsort

There’s a lot to be said for personalisation. It has changed the customer experience and helped make doing business easier, enabling better targeting, communication, and product and service development. In many ways, it has been a game changer. But it brings with it one major shortcoming: the question of privacy. Effective personalisation can only happen when you gather enough customer data. Still, after years of data misuse by bad actors, customers are becoming increasingly protective of their data. While they enjoy the benefits of personalisation, there’s a fine line between personalisation and prying.  So, how can your business make the most of personalisation without invading your customer’s privacy?

Understanding the line between helpful personalisation and privacy invasion

Personalisation in business isn’t anything new. For decades, businesses have attempted to personalise their services and ads through in-depth research. The reason it’s become such a concern of late is because technology is helping to improve personalisation. With generative AI, reams of data can be processed in moments, which means that most businesses’ previously useless stores of customer information are now accessible. It can also be used to personalise almost every customer-orientated action a business undertakes – service, communication, marketing, and advertising. Call centres can even use this combination of data and AI to tailor live phone calls to enhance sales and customer service scores.

While this raises ethical questions – some of which we’ll leave for another day – it can also benefit customers. Connecting them with the products and services they’re interested in while freeing them from irrelevant content. However, when you take that process too far and use too much personalisation, customers quickly feel intruded upon. It can make a brand feel creepy and stalkerish, damaging brand reputation, hampering customer loyalty and sales, and tarnishing brand identity. And even when personalisation doesn’t alienate the customer, it can still limit sales by narrowing the customer’s field of view. So, while some personalisation is inarguably beneficial, businesses have to know where to draw the line.

How to maintain the balance between privacy and personalisation

There’s a lot to be said on this topic, but protecting customer privacy while maximising the potential of personalisation ultimately comes down to three core common sense practices. Smarter data collection, transparent data practices, and better data use. So, let’s break those actions down.

Smarter data collection

You don’t need to know everything. For the last twenty or thirty years, businesses have adopted a catch-all approach to data collection – because they could and because it was easier than selective data capturing. And for a long time, it didn’t matter because very little of that collected data could be processed. As I’ve already said, AI has changed that. Every scrap of data collected can now be processed and used. Many companies use it for no reason. Taking a smarter approach to data collection means that you can furnish your business with the information you need to create all the tailored content and advertising you need, ensuring that it’s insightful, relevant, and beneficial to both your business and your customers. But it also means that you can leave all the rest behind, allowing your customers to keep their privacy and your business to take an ethical stand. Refining your forms is the key to achieving this, and the first place you should look if you care about your customers.

Transparent data practices

Consumers have become a lot shrewder when it comes to digital privacy – they’ve had to, businesses have driven them to it. More of us automatically click the ‘reject all’ cookie button because we’re so tired of feeling observed and tracked. As a consequence, many businesses have taken steps to make this harder – whether through long, jargon-riddled consent forms with multiple questions to reject, or through the removal of free content when cookies are denied. But when you use brief, plain language to explain what your cookies are for, customers become more receptive. In fact, the majority of people are actually happy for their data to be used responsibly. But lack of transparency creates distrust, and leads to a loss of custom.

Better data use

Personal data use is worrying for most people – in fact 95% of consumers are concerned about how their data is used. If you can ensure that your customer data is used to their benefit – whether to refine products, enhance services, or create better experiences – and show customers that you are doing so, you can build trust and loyalty. So, alongside your transparent data practices, it’s sensible to split test everything that collected data may be used for – marketing campaigns, communication, targeting, and customer experience – to ensure that you’re always using data to generate the best results for the customer.

Personalisation has become such an integral part of most business’ service and marketing strategies that bad habits have become hard to reverse. Breaking poor privacy practices will require effort – ongoing effort – for the long-term. But a privacy-first approach to personalisation holds the potential to carry enormous benefits for both consumers and the businesses that serve them. So, while there are no simple, quick fixes available, the results can only be worthwhile.

Benjamin Fine is the Co-Founder and CEO of Formsort, an online form builder for companies with advanced data protection features. Prior to Formsort, Ben launched and scaled digital mortgage lender better.com (NASDAQ: BETR). He began his career as an investor at the Blackstone Group. Ben holds a B.A. in Applied Mathematics from Harvard College.