Personalization in E-Commerce: How to Build Great CX in a Privacy-Centric World

In recent years, the e-commerce industry has experienced an unprecedented surge, propelling it far into the future. With the industry hurdling projection after projection, the only thing that seemed capable of slowing momentum was merchants’ ability to get products into their customers’ hands fast enough. Today, things are a bit more complicated. A new backdrop of complexities has emerged in the form of persistent supply chain challenges, the inevitable death of third-party cookies, and a consumer that’s becoming more discerning with how they spend their money.

As a result, merchants of all sizes are developing new playbooks to adapt to the rapid shifts taking place. Key to this playbook is personalization. It’s no secret that personalization is more important than ever before. But the truth is, it’s also harder to achieve than ever before. This is because merchants today face a privacy-personalization paradox with the inherent tension between brands' needs for sensitive consumer information to deliver personalization and consumers’ needs for privacy.

In this article, I’ll delve into the intricate interplay between personalization and privacy, revealing the challenges that e-commerce brands face in this privacy-centric world and how they can overcome them.

Zeroing in on Customer Data

From privacy regulations, such as the General Data Protection Regulation (GDPR) to Apple making changes to its platforms in the name of privacy, and Google announcing its intention to retire third-party cookie tracking, collecting data that allows for personalization has become much more challenging. However, the need to extract personal information from consumers still exists for brands wanting to scale the customer experiences they offer.

As a result, it’s more important than ever for brands to collect and leverage zero-party data (ZPD) — i.e., data that's shared directly and proactively by consumers with permission to use for future marketing purposes. ZPD has been called "the new oil" — and for good reason. With its huge potential for new kinds of personalization as well as meeting consumers’ increasing need for privacy, this voluntarily supplied information enables brands to interact with their customers as who they really are — individuals with unique attributes, needs and preferences.

Indeed, e-commerce brands utilizing zero-party data collected through channels such as reviews and micro surveys can fuel more personalized and effective campaigns that build stronger customer connections and scale their business. ZPD enables brands to understand their customers on a deeper level, leading to the creation of highly personalized experiences that resonate with their target audience.

However, in order to harness the fuel that ZPD provides, brands must have something that's getting harder and harder to come by: trust.

The New E-Commerce Currency: Trust

The rise of e-commerce has given consumers more buying power and options than ever before. As a result, their expectations of the brands they do business with have increased, while simultaneously their trust has fallen. A recent survey by PwC found a glaring gap between the trust consumers have in companies (30 percent) and the trust business leaders think consumers have in their organizations (87 percent).

The reality is, though, that there’s a strong ripple effect for brands that struggle to garner trust. Not only will sales suffer, but they’ll do so because they can’t deliver the quality of customer experiences their shoppers have come to expect. And the reason why their CX is failing is because they don’t have access to the ZPD they need to level up their standards.

In fact, Okendo research on loyalty and retention recently found that when consumers were asked, “What would you feel comfortable sharing with a brand that you're doing business with for the first time in order to receive a more personalized experience?” 34 percent said they would be comfortable sharing their “contact information, i.e., phone number, email address.” However, that jumped to 45 percent when asked what they would be willing to give a brand they already trust.

This further illustrates the power of trust in fueling data collection strategies. Simply put, without trust, you won’t collect vital customer insights to propel your brand forward. This is where transparency and authenticity also comes into play.

Setting the Table for Transparent Relationships

In this privacy-centric world, transparency is crucial. E-commerce brands must adopt transparent data collection policies, clearly communicate them to customers, and demonstrate a commitment to privacy. This includes stating what information is collected, how it's used, and providing opt-out options. Implementing robust security measures is also imperative, as is adhering to industry best practices and utilizing privacy-focused technologies like encryption to enhance trust.

Furthermore, in an environment where more customers are seeking privacy and rejecting technologies that haphazardly track third-party cookies under the guise of personalization, more and more are opting out of these relationships. Why? Because these methods feel like an inauthentic way to “be their friend.” To put it simply, if you can’t enter into a relationship on the basis of authenticity, all of the other ingredients of trust are rendered moot. So how do you get consumers to opt in through authentic engagement?

Well, you don’t. The community of engaged customers who already trust you do. This is why referral marketing is also a huge piece of the privacy-trust equation. Let’s face it, consumers are always going to trust their peers more than they trust your brand. This is because when a customer refers a product or service to others, they're essentially vouching for its quality and value. This personal endorsement carries significant weight, as it fosters trust between the referred individual and the brand — something that can also contribute to building personalization.

How? When customers refer others, they're essentially signaling that the product aligns with their preferences and needs. This shared affinity establishes a foundation for personalization efforts, as it indicates that individuals with similar characteristics or interests may also find value in the brand's offerings. By understanding the profiles and preferences of both referrers and referred customers, businesses can gather valuable data to create more personalized experiences and tailor their marketing efforts to specific segments.

In conclusion, personalization in a privacy-centric world requires a delicate balance between meeting customer expectations and respecting their privacy. It's essential for businesses to adopt a two-way street approach, where customer input and consent are valued alongside data-driven insights. By embracing transparent and ethical data collection practices, brands can gain zero-party data directly from customers through channels like reviews, surveys and quizzes. This, in turn, enables brands to create tailored experiences that resonate with individual preferences, fostering stronger connections and customer loyalty.

Rachel Tyers is the senior vice president of partnerships and marketing at Okendo, the customer marketing platform for Shopify brands.