Shopify Ecosystem

The Value Exchange: What Are You Giving Customers in Exchange for Their Data?

the-value-exchange:-what-are-you-giving-customers-in-exchange-for-their-data?

Among the many shifts we saw last year, the monumental increase in data collection is perhaps the most remarkable with long-ranging impact. Brands saw more new customers than ever before, lending even more value to first-party data and even zero-party data, vital resources that enable 1:1 interactions and personalized journeys for each customer.

75% of consumers are more likely to buy from a retailer that recognizes them by name, recommends options based on past purchases, or knows their purchase history.

Yet fewer than one out of three brands and other data professionals are actively testing or investing in new data solutions.

So what do marketers need to focus on most now to maximize the value of customer data?

More Data Collected in 2020

Emarsys research has revealed that 79% of the businesses collected more data on new customers in 2020 than ever before, and analyzing all that new information will give you insights into what customers prefer or feel about your brand.

Matt Nolan, Senior Director of Product Marketing for Marketing, AI, and Decision Sciences at Pega, sees the importance of insightful, behavioral data: “Where the market is now is empathy; trying to really understand the customer, put yourself in their shoes. What’s changed is the availability and velocity of data. There’s a constant stream of information from the customer to the brand that gives them signals that can be interpreted to figure out if there’s a way they can help you, support you, or market to you. It’s not perfect, but it’s the best that we can do right now.”

The influx of data is monumental — marketers who use customer data in marketing outperform peers by 85% in sales growth and more than 25% in gross margin.

The most important area for advances in data capabilities is customer identification. Brands spent billions on data last year, with more than 20% investing in identity solutions. Now with the impending death of cookies, identification just became the most important strategic tool for marketers.

Emarketer Table

Oncoming Radical Changes in Data Permission

Collecting data is not a one-way deal anymore. Customers have a right to view the information a brand collects on them, and if they revoke their permission for you to use their data, you have no way to personalize, gather new insightful data, and ultimately engage shoppers.

All of this coincides with massive changes in data privacy from Apple and Google which will significantly impact channels like Facebook and mobile apps.

“About a year or so ago, Apple, Google, and Firefox also announced that they won’t be supporting the use of third-party cookies on their browsers anymore. And as part of Apple’s announcement in 2020 [for] iOS 14, the IDFA (Identifier for Advertisers) will also no longer be relevant or widely used for a customer identifier on mobile for any kind of advertising and marketing purposes. And with regards to those third-party cookies, Safari and Mozilla, they’ve already blocked the use of third-party cookies, and they now require explicit consent and opt-in per channel from the customer to be able to use that data… Right now, it’s not something that we’ve seen a lot of brands prioritize, but it does need to be a strategy that they build on because the impact is that marketers will actually have no way to get those insights from mobile and online customer behavior unless a customer provides them with the explicit permission to track and use their first-party data.”

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— Payal Hindocha

Vertical Product Marketing Manager, Emarsys

As Apple’s App Tracking Transparency (ATT) Framework gets rolled out, customers will now have to give explicit permission to every brand’s website and app. In 2020, when previous iOS versions allowed users to opt-out with “limit ad tracking,” 30% opted-out. In 2021, with an opt-in for each app, some estimate the number of customers who will share data may drop 10%-15% below today’s 70% opt-in rate.

Losing cookies and Facebook’s IDFA makes life a lot harder for marketers — at least in the short run — but with the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) already in place, changes in data collection should not be a surprise. However, the changes in tracking and evolving tech stacks are creating headaches. Google claims they have a solution to replace cookies, predicting that Federated Learning of Cohorts (FLoC) will be up to 95% as effective as third-party cookies, and there will doubtless be other tech solutions popping up in the near future.

The Value Exchange

While the way brands handle data must change radically, the core challenge is securing customer permission to collect and leverage data. Data privacy (and security, too) is a necessary part of  business going forward, but it doesn’t change a marketer’s job. Brands essentially have the same work ahead of them: Drawing customers based on value. Data handling is now another part of the value that brands extend to customers.

Every brand’s immediate mission is to clearly demonstrate the value exchange: a personalized shopping experience at every touchpoint. The really good news is that tailor-made journeys are exactly what consumers want.  

“This has become pretty [much] table stakes in most e-commerce stores now, since 64% of consumers do ask for personalized offers from retailers and brands. And even in a world of heightened privacy, 90% of consumers are willing to share behavioral data if it benefits them and provides them with an easier shopping experience.”

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— Fatima Yusuf

Director of Partnerships, ShopifyPlus

When your brand delivers value in the form of highly relevant personalization, customers will willingly give you data you couldn’t have captured anywhere else. Customers want to see only relevant ads, recommendations, incentives, and other content, and zero-party data, in particular, is powerful because it’s data (usually purchasing preferences) customers share directly with your brand that will allow you to deliver relevant content faster.

Beat the Competition with a Superior Data-Driven CX

The way you handle data will build (or erode) trust with your customers, and trust is incredibly important to success today. If you do not collect and use data in a responsible way, customers are more likely to churn — just one bad experience could send them (and all their data) to the competition.

Your data policy will become a differentiator between your brand and the rest, especially when you clearly demonstrate the improved personalized shopping experience your customers get in return for the data.

For example, you can easily identify product trends and then deploy programs like “Back In Stock” and “Price Drop” for quick wins in sales and revenue. You can readily spot buying patterns, and then run campaigns to win back customers, inspire the next purchase, and move them further in the customer lifecycle — targeting a customer with the right incentive, at the right time, and on the right channel to drive first-time to repeat purchases, and ultimately, create more loyal customers.

These are golden opportunities that your competitors won’t have, because they won’t be working with the same data.

Overall, changes in data collection will serve both the brand and the customer going forward. Apple CEO Tim Cook describes his vision:

“In terms of privacy — I think it is one of the top issues of the century. We’ve got climate change — that is huge. We’ve got privacy — that is huge. . . . And they should be weighted like that, and we should put our deep thinking into that and to decide how can we make these things better, and how do we leave something for the next generation that is a lot better than the current situation… I think GDPR has been a great foundational regulation, and I think it should be the law around the world. And then I think we have to build on that — we have to stand on the shoulders of GDPR and go to the next level.”

Final Thoughts

Data management should clearly be every brand’s primary focus — how you collect, store, access, drawing insights from, and ultimately use data to tailor every shopping experience to the individual customer.

There will be innovation to replace cookie-based tracking, but in the meantime, something you can control is your brand’s value exchange. What do customers get in return for permitting a brand to collect and use their data? And how does your value exchange compare to your competitors?

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Special thanks to our friends at Emarsys for their insights on this topic.
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