Personalizing customer service in the age of privacy

Default consumer expectations include personalized service when interacting with brands online. But they are also increasingly concerned about data privacy.

When it seems like every company is collecting data on them, consumers start to worry.

So how do you deliver personalized customer service in the age of data privacy? It’s a delicate balance that depends on honesty, transparency and thoughtfulness.

How important is personalization?

In short, a lot. Personalization is table stakes these days, and customers make decisions based on how well the shopping experience is tailored to their preferences.

According to Salesforce The state of the connected client In the report, 73% of consumers surveyed expect companies to understand their unique needs and expectations. And while privacy concerns have grown, customer preferences for personalization continue to grow. In the last two years, that number has increased by 11%. It makes sense. customer expectations have increased since the pandemic.

Additionally, more than half of consumers (54%) expect offers to always be personalized.

That’s not all. According to A McKinsey According to the report, 76% of customers are disappointed when personalization doesn’t happen.

How to use personalization to influence buying behavior?

Personalization also influences purchasing decisions. More than three-quarters (76%) of consumers said receiving personalized communications was a key factor in motivating them to consider a brand, and 78% said such content made them more likely to repurchase.

McKinsey asked customers how important different types of personalization are to first-time purchase decisions. Here is what they said.

How to marry data privacy and customer personalization
Source: Next in Personalization 2021 report, McKinsey

As you can see from the chart above, it’s the top five for personalizing interactions

  • Navigation in store and online. Customers want to get to what they want quickly, and they don’t want to scroll through too many options to find it.
  • Product and service recommendations. Just as a salesperson can recommend products based on the customer in front of them, your website should use the information you have to pull out items or services they might like.
  • Formatting messages. “Hello! [First Name]!” great start, but how else can you talk to your customers like you know them? Can you break down by life stage? Preferences? If you have information, use it.
  • Sending targeted promotions. Your customer is late for service. Send them a coupon to encourage a repeat visit.
  • Marking important customer events. Celebrate milestones in your customer’s life, such as birthdays, graduations, or their first home purchase, but don’t stop there. Celebrate their 100th purchase with you, their anniversary, or their first time buying from you. Make it personal so they don’t feel like a number.

“Leading players in personalization are driving results by tailoring offers and reaching the right person at the right time with the right experiences,” McKinsey’s report said.

The problem is when you compare these expectations with the growing focus on information privacy. When it comes down to it, consumers know you already have a huge amount of data, so they want you to show that you know them on a personal level. They expect you to recreate personal, intimate experiences at scale.

Finding a balance between personalization and privacy.

Growing privacy concerns have made personalization a much more difficult task in 2023. Not only are there more laws and regulations around data collection, but customers are much more wary of information-gathering tactics than they used to be.

Here are some best practices for collecting customer information in a privacy-focused way.

  • Always get permission from customers before collecting information. Data privacy laws have become stricter, and the ban on third-party cookies has made it harder to collect information. That means you’ll have to get permission from customers, and ultimately it’ll be harder to track them at all.
  • Start asking questions. As tracking data becomes more difficult, you need to start getting that information directly from your customers. This means asking more questions in customer service and paying more attention to behavior instead of demographics.
  • Collect only what you need. Salesforce reports that 74% of consumers say companies collect more personal information than necessary. It goes without saying, but don’t ask for things like their pet’s names when you make a restaurant reservation. Customers may think you’re stealing their information for nefarious purposes (but we know you’re just being thorough).
  • Explain why you are requesting the information; According to Salesforce, 79% of customers say they are more likely to trust a company with their information if the company clearly explains its use. Be transparent about how you use data, and customers are much more likely to give it to you.

How is AI influencing the privacy conversation?

Customer trust is hard to win these days, so it’s worth paying attention to how you present its use AI: in customer service.

So how do you use AI in customer service without losing customer trust?

Once again, transparency is the answer. 60% of customers would trust AI more if they had more control over its use.

This is what it looks like when you use AI enhanced chat bots in customer service.

  • Let chatbots introduce themselves during the conversation. Customers should always know when they are talking to a bot and when they are talking to a human. No one wins when you try to “wow” customers, no matter how amazing the bot is.
  • Provide a chatbot guide in advance. Let your chatbot explain what it can do and provide some quick directions. For example, explain that a chatbot can help answer simple questions or gather information, but more complex tasks will require a human.
  • Give customers a chance to connect directly with a human. Show customers you respect them by giving them the opportunity to speak directly to a human. Or, if no one is available, let them know when a customer service agent can get back to them.

Win customer trust with integrity and great customer service.

If you take one thing away from this piece, it should be that customers trust good service. Don’t collect endless data to sell, use for predatory practices, or simply let it sit in a database waiting to be hacked. When you show customers that you know who they are,and use it to their advantagethey will become customers for life.

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