CPG Brands, What Are You Doing with My Data?
Recently, we’ve discussed CPG brand loyalty, the need to address evolving consumer behavioral dynamics, and the importance of timing consumer engagement appropriately. In the coming weeks, we will talk about using data to truly know your consumers to drive personalization and engagement. But before we go there, let’s discuss data privacy. Data privacy is critical to developing the trust required to gather, collect, and analyze consumer information.
For many people, the words “data privacy” bring to mind negative stories about data breaches. And there is a good reason for this. The news seems to report one high-profile data breach after another. Earlier this year, clothing retailer Bonobos suffered a “huge data breach” and recently the Colonial Pipeline hack has reinforced consumers’ unease over our general reliance on technology. And these are just the stories we hear about. According to Statista, there were over 1,000 data breaches in the U.S. in 2020.
But as brand managers and marketers, data breaches aren’t the only concern. Consumers expect overall data management practices and principles to be fair, transparent, and consistently followed.
Consumer concern over how companies use personal data began to reach a critical level around 2016. New governmental regulations, such as GDPR, raised consumer awareness regarding the issues associated with the collection of personal data. And then the Facebook / Cambridge Analytica story about the collection and use of personal data during the 2016 U.S. presidential election shook the public.
Fast forward to today, in the U.S., we regularly have congressional hearings on how to regulate the power of companies such as Facebook and Google—power that is almost completely based on the massive amounts of personal data collected. This data includes how consumers’ search, shop, and use social media, all of which are critical to social media business models. In addition, consumer awareness about how personal data is used continues to grow; 54% of consumers say the COVID pandemic increased their awareness of data privacy, and concern that social media can affect mental health also seems to be increasing.
OK, all of that could be viewed as bad news.
But is a CPG brand’s understanding of its consumer really a bad thing? Let’s remove the “digital” from the equation for a moment.
Many of us have a favorite restaurant, bar, or coffee shop we frequent (or at least we did pre-pandemic). Several years ago, work took me to Richmond, VA, on a consistent basis. A colleague and I tended to always go to dinner at the same restaurant, and he more or less always ordered the same thing. Before long, the staff had his beer ready for him before he even sat down at the table. That level of service drove intense loyalty.
Now take that example to the digital world. If used properly, data can provide value (and create loyalty) with your end consumers; it just has to be used “properly.”
So what do I mean by the proper use of data? Consumers want the data they share to be used to provide value back to them, not be monetized for the benefit of the company.
Going back to some of the events that changed consumers’ perception of the use of personal data, I think a key turning point was the “you are the product” debate about Facebook’s business model.
Consumers don’t want to feel like they are being used; their expectation is that if they share personal data they can have a better experience or be provided more relevant content. In fact, 64% of consumers are willing to share personal data if it means a more relevant, personalized, or efficient service.
Interestingly, for younger consumers, the proper use of data extends beyond just the value to themselves. A recent study by EY found that 50% of consumers are willing to share personal data if it will help combat COVID-19 or help with community wellness.
This willingness to share was skewed by generation: 26% of millennials and 22% of Generation Z say that helping to maintain or improve the life of someone they do not know is one of the three most important factors when they share data with an organization.
This compares with just 19% of Generation X and 14% of baby boomers. These statistics mirror the overall metrics that we see across generations. The same EY study found that 50% of millennials are willing to share their search history in exchange for more personalized search results and online experiences compared with just 23% of baby boomers.
So what does this all mean? I would argue that successful brands will be those that don’t view data privacy through the lens of compliance but rather view it as a means to increase consumer trust. Embrace it as a means to showcase the authenticity of your brand. You can differentiate yourself with this approach; only about 21% of consumers trust established global brands will keep their personal information secure—so clearly there is room to stand out from the crowd.
As you work on your data privacy policies as a component of your overall consumer engagement strategy, I think a scene from the movie “Clear and Present Danger” is appropriate as an example of an approach. In an early scene in the movie, a man with connections to the U.S. President is murdered during a drug deal that goes sideways. The president’s advisors recommend to the president that he distance himself as much as possible from this man to avoid any negative PR. However, Jack Ryan (played by Harrison Ford) believes that this is the wrong approach. His advice: “If they ask if you were friends, say, ‘No, he was a good friend.’ If they ask if he was a good friend, say ‘We were lifelong friends.’ It would give them no place to go. Nothing to report. No story.”
In a similar way, you should tackle the issue of data privacy head-on—don’t bury it in the fine print. Be clear on what data you collect, how it will be used, and provide this information in easy to read language. Leverage the transparency as another asset of your brand, and I believe the marketplace will reward you.
Keep up with the latest CPG industry news and trends. Join us here next week as we explore the topic of knowing your consumers in “To know me is to love me.” And checkout Episode 2 of CPG Bytes where we talk about Clorox preparing for sticky behavior shifts.