As businesses, governments and consumers wake up to the implications of data privacy and talk buzzes around legislation and data leaks, brands increasingly face an uncertain landscape when it comes to first-party data. The California Consumer Privacy Act and Europe’s General Data Protection Regulation are just two of the factors ushering in this new data paradigm.
But while data privacy regulations become more stringent, consumer expectations for personalized and excellent customer experiences are also are at an all-time high. So, what does this new world look like for brands?
Here are three trends that we’re likely to see in the coming years:
The costs keep climbing
While the looming omniscience of tech giants like Facebook and Google may have motivated new regulations, the effects of these policies do little to curb the power of market leaders. Indeed, these regulations may ultimately strengthen their hands, solidifying big tech’s near monopoly on high-quality customer data and allowing them to ratchet up the cost of their ad inventory.
This is for two reasons. First, compliance with new regulations can be costly. Simply ensuring compliance is a full-time job requiring additional time, money and headcount. Naturally, bigger, richer companies can better absorb the costs of maintaining customer data than smaller players.
Second, since most new regulatory frameworks require affirmative consent to collect personal information, companies must provide something of value in exchange for this consent. Again, this is an advantage to big companies that have more to offer, thanks to their network effects and large product suites.
Smaller ad networks, demand-side platforms and data management platforms, which aggregate data from smaller properties, are at a distinct disadvantage. Customers will be less likely to share data, meaning these ad networks and their peers will have markedly poorer targeting data.
The end result: Tech giants can charge higher premiums, making it costlier for brands to target and acquire new customers.
Make the most of what you’ve got
With higher acquisition costs, brands will need to better monetize their existing customer relationships. It’s why we’re seeing this new renaissance in loyalty programs. In the last year alone, we’ve seen the launch or relaunch of loyalty programs by marquee brands like Nordstrom and Chipotle.
Moreover, traditional loyalty stalwarts are expanding their partner network. This is no accident. Loyalty offers marketers a huge opportunity to keep customers in their ecosystem and better nurture and monetize that relationship.
Another trend we will likely see emerge is greater investment in upselling and cross-selling technology. This is really in its infancy, largely confined to product recommendations based on past purchases. But this technology will grow more sophisticated with things like personalized product bundling and sequenced offers.
Concierge as king
Companies are reimagining the customer relationship in light of new regulations, creating experiences that are actually enriched as the customer shares more data. In other words, the customer’s investment in the service increases the value of that service.
This approach draws a lot from game design, where the goal is to get people to invest more time, energy and creativity into the gaming experience. Part of the secret is to allow players to unlock new levels with new benefits as they invest more deeply into the gaming experience. This powerful tactic will clearly ensure compliance with the “constant consent” provisions of these new data regulations. But personalization is about more than that. It also affords companies an opportunity to constantly learn about their customers and provide a high-quality experience that only improves over time.
While data-based marketing was already heading in a more personal direction, new regulations are upping the stakes. Brands need to maximize the value of every touchpoint for both the customer and the company and build that value as both parties invest more time, energy and data in the relationship.
Ask yourself: Are you giving customers the rich, personalized experience they crave? And simultaneously, are you effectively incentivizing customers to invest in your brand? Companies that act now to shore up these relationships stand to gain far more trust than faceless brands could ever hope to inspire.