How can retailers remain personal in an age of privacy?
With the implementation of the General Data Protection Regulation (GDPR) fast approaching, speculation around how these new rules will affect businesses’ ability to understand and communicate with their customers intensifies. With media conversations fuelling panic among those likely to be affected, it’s understandable that retailers feel worried about the potential implications for their sector.
One area which will certainly impact retailers is consent, without which they will not be able to contact their customers. Consent refers to the permission given by an individual to allow the processing of their personal data. Under GDPR, there will be much stricter guidelines which will require retailers to be far more transparent when it comes to asking for this permission. Draft guidance from the ICO, released last month, indicates that pre-ticked opt-in boxes will no longer be sufficient. Companies will need to obtain unambiguous consent with active opt-in protocols, after first providing granular details on how data will be used. Consent requests cannot be buried in the terms and conditions pages or be a precondition of signing up to a service.
For retailers, GDPR should be viewed as a fundamentally positive development. It will put consumers at the centre of marketing and will promote more transparency and trust between brands and their customers, ultimately establishing more profitable relationships. Although a crackdown on consent is likely to reduce the size of customer databases, retailers need to focus on nurturing relationships with those who want to be contacted. It is now about quality over quantity.
We expect a correlation to develop between the size of a retailer and the willingness of consumers to give consent. Household names and well-trusted brands such as Amazon and Sainsbury’s are unlikely to struggle to obtain this permission. Many well-known retailers such as these have a loyalty scheme, which requires customer data in return for personalised rewards. Customers recognise the value exchange in sharing their information in return for a relevant and tailored customer experience. At the other end of the spectrum, smaller independent retailers or those who have suffered damage to their reputation will have less of an appeal, and will ultimately find it harder to secure data consent.
With this in mind, one question which remains on everyone’s lips is how retailers can ensure they source this consent from consumers, in order to maintain relationships in the wake of GDPR?
Retailers need to maximise their chances of securing data permissions in the run up to the May 2018 implementation date, which means acting swiftly. Devising highly targeted marketing campaigns to source consent is likely to be an effective starting point. Segmenting customer databases into smaller groups on the basis of lifestyle, behaviour and communications preferences will enable retailers to develop highly personalised campaigns. Each campaign can demonstrate the advantages of data sharing in a way which resonates with each segment. Inevitably, certain consumers will choose to withhold consent, but customers who do not wish to engage with a brand are far less responsive to marketing campaigns and therefore not profitable to invest in.
Once customers have opted-in to marketing communications, retailers need to make an effort to maintain an appropriate stream of contact to avoid them opting-out again. Marketers know that there are certain times when customers are less likely to have money to spend, such as after the Christmas period. Bombarding people with sales emails in January is not likely to be well received by consumers. It will be especially relevant to make these considerations after GDPR comes into force, as retailers will need to provide clearer opt-out routes and obtain consent on a six month basis.
Whilst it is understandable that retailers may feel daunted by the prospect of GDPR and the implications it will have on the way they communicate with their customers, it is important to highlight that these new rules will have a positive long-term impact. Although it is inevitable that customer databases will reduce in size, customers who have consented to honest and tailored communications will be more profitable in the long run. Retailers have nothing to fear about the new age of consent, and those who navigate it effectively are set for a more lucrative future.
by Scott Logie, Customer Engagement Director at REaD Group