Consumers want personalisation, but don't trust brands with their data

Customers expect personalisation during every brand interaction — but they don’t trust brands to keep their personal data secure and to use it responsibly. That’s the dilemma companies everywhere are currently facing, according to new data from Twilio (NYSE: TWLO) (LTSE: TWLO), the leading customer engagement platform.

The third annual State of Personalization Report 2022 found that 62% of consumers expect personalisation, saying that a brand will lose their loyalty if their experience is not personalised — meanwhile, 49% will become repeat buyers if personalisation is offered. Yet only 40% of consumers say they trust brands to use their data responsibly and keep it safe. 

Twilio’s report shows lack of trust is increasingly affecting consumer buying decisions: 60% of consumers say trustworthiness and transparency are the most important traits of a brand, up from 55% in 2021.

The personalisation vs. privacy paradox

Delivering personalised experiences requires personal data, so changing consumer attitudes towards sharing data online creates a paradox for businesses.

First-party data, or data collected directly from customers with their consent, is optimal for privacy. According to the Twilio report, 63% of consumers say they are fine with personalisation, as long as brands are using their own data and not data purchased or rented from third parties. 

Consumer privacy a generational challenge — and an opportunity

Companies have long “rented” customer relationships from advertisers and social networks. These companies collect behaviour and demographic data and then resell it as targetable audiences. But sweeping privacy regulations — at both the government and corporate levels — are forcing companies to shift from renting to owning their customer relationships. 

This pivot is not a simple one. Half of the companies Twilio surveyed said recent changes to data privacy regulations have made personalisation more difficult. But with Google set to join Firefox and Safari in banning third-party cookies by the end of 2023, the shift to first-party data is no longer optional. 

Many companies are already responding to these changes in consumer preferences, regulations, and technology, with 43% of business leaders embracing first-party data because it provides better privacy for customers. 

Data and technology hurdles to personalisation at scale

Technology remains a hurdle for many companies. Tech giants have fleets of data scientists and massive budgets to achieve personalisation at scale, but Twilio’s report shows the majority of businesses are still struggling to achieve omnichannel personalisation, despite 6 out of 10 respondents reporting increased investment in personalisation in 2022. The most common barriers include lack of technology, unclear ROI, lack of accurate data, and organisational impediments.

Technologies such as customer data platforms give businesses the tools they need to achieve compliance while managing first-party data for personalisation. Customer data platforms collect first-party data at every customer touchpoint to create a single, unified view of the customer. Business leaders are embracing such technologies, with 53% investing in better technology to manage customer data. These companies are equipped to build deeper customer relationships.

“This research points to how recent changes in data privacy regulations has made the personalisation imperative increasingly important and challenging, as customers are sceptical of how brands are handling their data”, said Samantha Richardson, Principal Visioneering Consultant, Twilio. 

“With the end of third-party cookies coming to fruition next year, brands need to put a strategy in place to rebuild trust with consumers and move away from legacy advertising approaches towards a more authentic kind of engagement. Using consensually offered first party data and applying that to learn who your customer is and what they really want is a critical first step here. It’s no longer about retargeting someone who has just bought a product with several other, similar items. Customer data platforms can uncover meaningful insights that will help build genuine customer-first relationships  - and moving in this direction now is about when, not if.”