The vast majority of customers have no idea how businesses are using the personal dataRead More
Customers ‘unaware’ of how firms use their data
The vast majority of customers have no idea how businesses are using the personal data they possess, while many also do not trust companies to be responsible in their use of this information.
This is according to new research from the Chartered Institute of Marketing (CIM), which revealed nine of of ten customers are in the dark about how their personal data is used. Meanwhile, 57 per cent did not trust companies to take good care of their data, while 51 per cent complained they had been contacted by organisations that misuse their data.
For many businesses, gathering more detailed and personal information on their customers is a vital part of their big data analytics strategy, as it allows them to tailor their offerings and marketing messages more precisely. This provides a better experience for customers and helps boost business' revenue.
Overall, people are happy for certain data to be used by companies, provided they understand what this will involve. More than two-thirds of consumers (67 per cent) stated they would share more personal information if organisations were more transparent about their plan for it.
Chief executive of the CIM Chris Daly commented: "The solution is clear, marketers need to brush up on the rules, demonstrate clearly the value-add personal data offers in delivering a more personalised experience and ultimately reduce the fear by being open throughout the process."
However, businesses will have to think carefully about how they achieve this transparency. Many may believe that simply updating terms and conditions to explain what they do with data will be adequate, but the CIM's research suggests this may not be good enough to satisfy many consumers.
Only 16 per cent of respondents stated they always read terms and conditions, with many put off by the lengthy and often confusing documents. Therefore, businesses will need to find simpler, clearer ways of communicating to their customers about how they use data.
The research also found there is a mismatch between consumers and businesses when it comes to what data they view as acceptable to share. For instance, more than seven out of ten consumers (71 per cent) stated they were not comfortable with businesses tracking their location via their smartphones. However, one in five businesses are already using geolocation tools to do this.
More that two-thirds (68 per cent) of consumers also expressed reservations about providing information from their social media platforms – something 44 per cent of firms use in their marketing analytics.
One of the biggest concerns that users have is that their information may fall into the wrong hands – either as a result of being sold on to third parties or compromised in a data breach.
"People are nervous about sharing personal data – fears of data breaches and misuse has them on high alert," Mr Daly said.
There have been a series of high-profile incidents in recent months and years that have compromised the personal details of consumers, the most recent of which came when Yahoo! admitted the information of up to 500 million users was stolen in 2014.
Therefore, businesses will have to address these fears if they are to get the necessary buy-in from customers to make personalised, big data-based marketing an effective solution.