Data Privacy vs Personalization: How to Attain the Perfect Balance

Data Privacy Strategy graphic

By Alex Dean Co-founder and CEO at Snowplow

Privacy concerns are radically transforming the data landscape. Just look at Meta’s recent $90M data privacy lawsuit to understand how serious the implications can be. Yet, to compete successfully, organizations today must use data collected online to better understand customers and develop personalized solutions.

Under these conditions, what can an average business or even top tech company do to get ahead?

While personalization and privacy may seem hopelessly at odds, it’s possible for businesses to achieve both and thrive. Successfully doing this often depends on building trust and brand loyalty while being transparent with how data is being used to benefit customer experiences.

Actively Listen to Customer Privacy Concerns

It’s no secret — consumers are spending more time online than ever and demanding more from these experiences. While this means users expect businesses to understand and respond to their preferences via more seamless experiences or improved offerings, it also means they are increasingly sensitive to invasions of privacy.

Weary of having their data sold by third parties or their privacy violated for no reason, customers are now increasingly cautious about handing over their information. This is especially true if they don’t have a positive relationship with a brand or are simply in the dark about what their data will be used for.

In other words, consumers want personalization but don’t want to be subjected to needlessly intrusive surveillance for the sake of advertising profiles.

While data collection should only be used to improve business performance and customer experiences, many vendors have fallen into the strategy of rapidly capturing everything they can from the get-go in case the data might be useful later.

This has contributed to an increasing resentment towards middlemen or third parties that track users across brands and websites. As a response, companies should consider alternative methods of collecting data.

To return to the example of Meta, one of the main reasons for customer outcry was that Meta simply built a degree of data capture into their products that was much higher than needed to provide optimal services. Everyone should learn from this mistake when using data in the future.

And, in fact, many newer technology regulations and changes are now preventing such violations of consumers’ privacy.

The Cookie Crumbles and More — New Changes to Data Tracking Regulations

Driven by changes in the way tech companies operate as well as different laws around the globe, data privacy rules and regulations are evolving. For instance, Google’s promise to phase out third-party cookies by 2023 alone will force many businesses to reallocate funds away from years-old legacy advertising tactics.

Similarly, Mozilla’s Enhanced Tracking Protection (ETP) 2.0 will challenge redirect tracking within Firefox by clearing site data sets and cookies by known trackers every 24 hours.

In another change, Apple’s App Tracking Transparency (ATT) framework will force Apple devices to ask for permission before tracking activity across websites and apps.

These shifts and more will drive a focus away from third-party data tracking. This in turn, will likely lead to more first-party data collection strategies and building direct data relationships with customers — through more intelligent products, smarter loyalty programs and methods to reduce consumer risks.

Balancing Privacy and Personalization

Privacy and personalization are now both wildly important and need to be accounted for. One key to achieve this balance is to shift from the goal of understanding everything about customers to simply understanding them well enough to provide great services.

When trying to understand customers well enough for success, sneakily tracking consumers will lead to problems. Additionally, overly relying on third-party web analytics solutions that a business can’t control will cause challenges.

Not only can third-party data solutions cause companies to lose track of what happens to data but such solutions also make it harder to pinpoint which marketing strategies are moving the needle and how to efficiently allocate resources to improve customer interactions.

To move towards a future-proofed data strategy, many can improve by building their own first-party data pipelines or by taking ownership of their data and data processing infrastructure. Doing this may require a business to clearly define what data it wants to capture about a user and it will mean making sure data is only used in a manner that is clearly understood by both the business and customer alike.

Additionally, if third parties are involved, businesses should check with customers to see if they are okay with data being shared and why.

Organizations looking to balance privacy and personalization may also want to gain more control over where data is stored, including who has access to it and when and why it’s being used.

For instance, customer service teams may need to access a specific customer’s profile or history with a company for better assistance. However, product teams may not need individualized user data because they might be able to analyze features via groups of cohorts instead.

Be a Customer Hero — Strive For Transparency and Better Service

It is often difficult to draw clear boundaries between personalization and the privacy needs of customers, as everyone has their own preferences. However, as long as experiences with a business are always improving, customers are often surprisingly relaxed about the method and amount of data a trusted brand collects.

This doesn’t mean customers should be abused though.

Most issues around collecting data are about how personal data is being collected. If customers learn businesses are stealthily collecting info on them and they have no idea where their data ends up, they can become understandably alarmed.

It’s up to businesses to reverse these unethical practices, which means marketers must be honest about how they collect data, what data they collect and how data is ultimately used.

To build a trusted relationship, companies should avoid approaches that might be seen as intrusive and brands should clearly explain to customers how their data is used. To this point, every company can benefit from frequently reassessing its data reporting and collection strategies. This way businesses can regularly assess if they need to track certain personally identifiable info or just how much data is really needed for valuable insights.

To Those Who Haven’t Adjusted Their Data Strategies, Why Wait?

The most up-to-date businesses are already implementing data practices that will prepare them for future changes and online privacy regulations. This will enable them to respect users’ privacy while also continuing to harness tools like in-depth behavioral data to deliver an optimal, personalized service to customers.

So, if you own a business and are not yet taking ownership of data strategy, why wait?

About the Author

Co-founder and CEO, Snowplow, Alex is a polymath: a keen technologist with a passion for functional programming, cloud-based architectures and big data technologies. He also has a passion for innovation and organizational change.

Prior to co-founding Snowplow, Alex worked in technology roles at OpenX and in the Business Intelligence department at Deloitte Consulting, as well as strategy roles at Fathom Partners and Keplar LLP.

Alex has also written a notable text: Event Streams in Action.