Consumers Want Personalized Experiences but Are Wary of Data Sharing

European consumers expect a “VIP” treatment in marketing and interactions with brands but remain cautious about sharing, using, and protecting their personal data. These trends emerge from Twilio’s 4th Annual State of Personalization Report.

As data serves as the foundation for personalization and enhanced brand-customer communication, the 2023 report highlights a “Catch-22” or disconnect when it comes to brands leveraging data to strengthen customer interactions.

Sam Richardson, Customer Engagement Consultant at Twilio, stated:
“With the oversaturation of brands competing for consumers’ attention, data-driven personalization is non-negotiable for organizations aiming to stand out, and it’s something consumers increasingly expect. However, brands must ensure they are using first-party data collected consensually to build trust with consumers. This information can be transformed into relevant communications, fueling timely and personalized engagements that respect customer boundaries.”

The VIP Effect

The report revealed that consumers are likely to take decisive actions—both positive and negative based on the success of their personalized experiences. Over half (51%) of European consumers claim they would become repeat buyers after a positive personalized experience, 49% would recommend the brand to friends or family, and a third (33%) would join the brand’s loyalty program for offers and rewards. However, an impersonal experience can deter many.

In fact, European consumers are less likely to make a purchase (36%), may stop shopping with a brand entirely (19%), or even turn to a competitor (18%) after a poor experience—underscoring the value of effective personalization and the risks associated with getting it wrong.

Distrust in Data

Despite the benefits customers derive from data sharing, skepticism persists regarding how brands use their information. According to Twilio’s report, over one-fifth (22%) of European consumers feel less comfortable with their personal data being used for personalization purposes compared to last year.

This year-over-year decline in trust emphasizes the importance of transparency for brands regarding when, how, and why they collect data. Brands also need to clearly communicate the benefits customers receive from sharing their information.

Additionally, brands must disclose how they manage, store, and protect customer data, as fewer than half of European consumers (49%) trust brands to keep their personal data secure and use it responsibly. A robust and accessible data privacy and protection strategy can help counter negative perceptions consumers may hold regarding their data.

Embracing First-Party Data

Over a third (36%) of European consumers feel that personalization has become less targeted over the past 12 months, failing to deliver the desired VIP effect. With general or irrelevant ads on the rise potentially due to the gradual phasing out of third-party cookiesbrands must explore first-party data as an alternative.

Not only is first-party data provided consensually by customers or generated through their interactions with businesses helping mitigate consumer skepticism but it also offers the most up-to-date and valuable insights for crafting personalized experiences. A win-win for both brands and consumers.

Richardson remarked:
“This disconnect between data sharing and personalization creates a real conundrum for brands to navigate—you can’t effectively personalize communications without leveraging customer data. It’s a dependency relationship. However, consumers remain wary about data sharing. Brands need to dispel myths, reassure customers, and communicate the mutual benefits of data sharing—including an enhanced shopping experience for consumers. While brands must recognize the value of personalization strategies, they should prioritize building trust and being transparent about how they plan to use data. Transitioning to first-party data collection is a logical approach to achieve this.”

Overcoming Barriers

Reassuring customers is about transparency and giving them autonomy. Consumers appreciate knowing they are in control. Businesses can rebuild trust in data sharing by taking the following steps:

1. Emphasize Value Exchange
   Data collection benefits businesses, but it also offers real advantages for consumers. Communicate the perks of personalization and customer experience, highlighting the interdependent relationship between data and personalization as a pathway to these benefits.
2. Be Transparent
   Part of communicating value is being honest about how data will be used and disclosed during collection. This ensures consumers don’t feel misled.
3. Prioritize Privacy, Security, and Ethics
   Implement strong strategies, procedures, and credentials to securely manage and store customer data. Make these measures prominent and accessible to consumers.
4. Offer Autonomy and Respect Customer Preferences
   Ensure opting out of data-sharing practices is an easily accessible option, giving customers the control they desire over their information.

5. Avoid Excessive Data Collection
   Collect only the data you truly need. Gathering redundant data not only adds unnecessary complexity to processing and interpretation but also increases the volume of data businesses must protect.