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A Personalized Customer Experience: How to Use Data Responsibly

We are what we consume — and that holds true down to the content we consume. In the world of business marketing, it’s a known fact that personalizing the customer experience is essential for keeping customers engaged and satisfied. However, it's important to make sure that personalization doesn't turn creepy or unwanted in your customer’s perspective. Today, we’re diving into the topic of businesses using data responsibly.  

A Personalized Customer Experience: How to Use Data Responsibly

To create effective customer experiences, today’s companies need to design the right strategy to use data responsibly — and luckily, we're here to help.

From adding names to email subject lines to creating contextualized customer experiences across multiple user interactions, personalization is here to stay. It’s no wonder why: McKinsey & Company has found that companies who leverage personalization can see increased revenue and retention lifts of 10-30%.  

On a similar note, Netflix estimated that 80% of time consumers spend streaming is a result of its personalized recommendations. That's why it is essential to learn how to use data responsibly and properly when crafting customer experiences.

Consumer Privacy is Vital

Most recently, our society's overall push toward greater privacy protections has substantially grown. With the arrival of legislation such as GDPR & CCPA in 2018 and 2020, respectively, and Apple bringing iOS 14.5 in 2021, underlining its commitment to safeguarding consumer data, privacy concerns are more prevalent than ever. It's now clearly stated that brands need to uphold consumer privacy when collecting customer data — or else they are subjected to face heavy penalties (not to mention losing the trust of consumers).

When discussing responsible and compliant data collection, first-party customer data should be the name of the game. After all, with it you can track consent preference as well as create a value exchange between what consumers are providing and what you’re offering in exchange. Although it sounds simple, it can be a lot to tackle!

Thankfully, data complexity doesn't have to be your undoing. To simplify the collection and management of customer data, you can turn to a Customer Data Platform (CDP). These platforms are the ultimate solution when it comes to both simplifying complexities and preventing data chaos.  

Through these, companies can store data from multiple sources in one unified space, allowing them to audit data quality and support compliance with the applicable laws.

How Can You Collect Data Responsibly?

At DrivenIQ, we understand the need for care and tact when it comes to customer data collection. Let's take Pinterest as an excellent example. Pinterest has created a plain language privacy policy that is transparent, free of jargon, clear, and easily comprehensible to even the most average user.  

Additionally, if you go onto Pinterest’s website or app, it has created a value exchange that requires data sharing in order to gain access to the ads, recommendations, and other tools, which in turn personalizes the platform’s customer experience.

That said, it’s equally important not to overstep. For example, there was much uproar when Pinterest sent emails with a headline such as “You’re getting married!” to users who were single and had pinned wedding-related content.

This type of mistake can often be avoided by adopting a customer-centric mindset and understanding the connectedness of data, as well as understanding the users' values. You should always have a goal-oriented approach when it comes to personalization. Collect only the data that helps in achieving your goals in terms of better customer experiences, increased retention, and revenue.  

It also helps to have a simpler approach at the top of the funnel, as opposed to a more personalized one when heading down it — as the latter requires more engagement data.

For example, at a higher point in the funnel, you can consider using data such as location or name when personalizing customer experiences, and as you go down, you may want to add in more complex data and create a clearer, one-on-one personalization experience.

Building Your Tech Stack

Now it’s time to create your tech stack to power your personalization strategy, and for that, a CDP is your ticket! The CDP should have certain key features, such as privacy-forwardness, identity resolution, data quality tooling, depth and breadth of integrations, and AI personalization.  

How do you go about building the rest of your tech stack? Here are some of the steps you should take.

1. Identify customer insights you want to capture and use in personalization. It helps to have a complete 360-degree customer view that covers identity, context, behavior, and intent from an analytics perspective.

2. See which data sources produce the insights you want to collect and use from organizations such as third party data providers, CRM and Data Management Platforms (DMPs).

3. Integrate your tech stack with the CDP. Depending on your unique setup, you should integrate tools like analytics, marketing cloud systems, customer service portals, and even data warehouses to centralize all of your data and insights to be used in personalization.

4. It is important to have an AI-driven personalization tool that actively analyzes the data collected by your CDP (and its associated data sources) and makes it available to be used in adding personalization throughout your customer experiences.

CDP: The Nuts and Bolts

A CDP will serve as the foundation of your tech stack. Building one will allow you to lay the grounds for personalizing customer experiences. We recommend using it with other essential tools such as analytics, marketing cloud systems, customer service portals, data warehouses, and AI-driven personalization systems.  

This way, you will make sure that you receive and use the data in a responsible and compliant manner to deliver meaningful experiences throughout your customers’ journey — as we know, customers expect these more than ever.  

It’s important to remember that, with data, size matters: The larger and broader your tech stack, the more tools you will be able to access for personalization purposes.

Customer Insights: The World at Your Feet

Once the tech stack is in place, you will have a wide variety of customer insights to help inform meaningful personalization strategies. Using these insights allows you to create customer experiences that are both valuable and tailored toward audiences, inducing further loyalty and engagement.  

Additionally, you can also use these insights to gain a better understanding of customer behaviors, which is great for optimizing customer journeys, as well as predicting potential actions and needs.

Opt-In to Using Data Responsibly

What could be better than having a wide variety of customer data and insights for crafting personalized experiences?  

As with any data-driven process, privacy should remain one of the cornerstones when it comes to collecting first-party data as part of your personalization and customer experience strategy.  

This means understanding the importance of creating a value exchange between what consumers provide and what you offer, taking into account applicable laws (a trusted CDP is ideal for this) and having a customer-centric approach when collecting, managing, and using that data.

It’s time to take the plunge and get going! With an effective personalization strategy and data-driven tech stack, your organization can create an amazing customer experience that will keep customers coming back for more.  

Ready to take the plunge into data-driven marketing strategies? Learn how DrivenIQ’s Solutions empower businesses to use data responsibly.