Customers are becoming increasingly wary of sharing any information about themselves, including their shopping habits and preferences. And who can blame them? Many enterprises have failed to adequately protect consumer data from thieves, while others have misused the information in various ways, such as by tracking shopper movements or selling identifiable data without the individual's permission.

Since the Facebook data privacy scandal, more people than ever have recognized the potential pitfalls of sharing too much with too many organizations. "These consumers are worried that providing their data to one company means that several other organizations will eventually obtain their data through data selling," explained Todd Wright, head of customer experience and data privacy solutions at analytics software developer SAS. "Organizations need to be more forthcoming and transparent with the people they hold data on for this trend to reverse," he suggested.

Changing minds

Despite rising consumer skepticism, it's still possible to persuade individuals to disclose key facts about themselves, as well as how to would like to be treated by a retailer or service provider. A recent survey conducted by financial services industry consulting firm Aite Group, for instance, revealed that most auto, health, home and life insurance consumers have at least some interest in joining a rewards program based on information collected from their Internet-based devices.

Tom Treanor

Recent research shows that consumers are willing to give up their personal information for the right rewards, observed Tom Treanor, head of global marketing for Arm Treasure Data, a firm that helps more than 350 brands worldwide analyze customer data. "More than a third indicated they would provide consent for their data to be used in exchange for discounts, offers and product samples," he explained. "A fifth of respondents indicated early access to new products or services, or priority service would entice them to give up their data." Offering loyal fashion fans an early look at a new fall clothing line, for instance, may entice them to share aspects of their shopping history.

Consumers expect to receive some form of value for the data they provide, Wright said. A consumer wants to know that they will get either some form of financial discount or incentive in return. "It cannot be a one-sided relationship where the organization takes without giving," he explained.

Todd Wright

Reaching a comfort zone

Paul Hagen, a senior principal in the customer experience practice at business and technology consulting firm West Monroe Partners, advises his clients to pick the right research techniques for their specific research goals. "Make the research meaningful to customers [and] make sure they feel like their time investment will make a difference in ways that matter to them," he explained. He noted that for best results it's essential to place customer needs over their own. "Ask questions customers care about, not what internal folks need to do their jobs," he advised.

Respondents are most comfortable handing over basic information, such as their email address and birthday, Treanor noted. "Surprisingly, 19% are comfortable sharing browsing or shopping habits for the right deals," he said. "If you are launching a more exclusive loyalty program, chances are your customers will be willing to share contact information and their birthday for real-time deals or gifts, but asking them to share their location will be seen as too intrusive."

Paul Hagen

Enterprises often waste time by asking irrelevant questions that have little or no meaningful impact on customer experience. "With so many companies establishing voice of the customer (VOC) programs, terrible surveys have proliferated and trained people to ignore requests from companies," Hagen observed. It’s not that VOC programs are inherently bad in and of themselves, it's simply that enterprises fail to manage them properly. "The abundance of poorly run survey programs has made meaningful insight collection harder," Hagen explained. "Firms have to build trust with a customer base in order for customers to opt into giving feedback."

Avoiding the creep zone

Marketing programs based on customer responses always run the risk of becoming too highly targeted and veering into the dreaded "creep zone." "Let’s face it, collecting and using a lot of personal information can lead to personalized messages getting 'creepy'," Treanor said. A social network ad or email that reflects a customer's interests or habits too closely, such as referring to his dog's name or the blouse she searched for last night, can hit too close to home. "A company that injects its ads intrusively into the customer experience is a company that doesn't understand its customer well enough," Treanor stated. "Understand where and when it’s meaningful to offer your customers information or products, and get their consent to do so, to avoid crossing that line."

For more on consumer data privacy check out these recent articles:

Data-Driven Nudging: Cool or Uncool?

CIOs: Are you Ready for the California Consumer Privacy Act?

How IT Can Facilitate Great Customer Experiences