The False Choice Facing Retailers: Data Privacy Compliance Doesn’t Mean Lack of Personalization

With data collection and privacy becoming central issues on a global scale, retailers and advertisers have come under increased scrutiny from other businesses, customers, and regulators alike. Apple's decision to weaken the unique identifier among its devices as well as landmark privacy laws such as GDPR and CCPA is a harbinger of things to come.

The patchwork of privacy laws is making it harder for retail brands to reach current and potential customers using traditional data and tactics, while at the same time failing to actually address the underlying concerns that brought the legislation about in the first place. There's a crucial need for brands to find compliant and ethical alternatives.

The pandemic drove retailers to increasingly shift their focus to e-commerce. This made the need to gather better audience data and provide personalized customer experiences even more critical for survival. For brands such as Moët Hennessy and Church and Dwight, zero-party data (ZPD) has been an ideal tool to navigate these hurdles.

Forrester Research defines ZPD as "data that a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her." Unlike third- and first-party data, ZPD is consent-based personal context data that customers knowingly and intentionally share with a retailer in order to improve their experience — e.g., personal needs, preferences, interests, goals and favorites.

For one major dermocosmetics leader, ZPD provided the answer to a looming question: How can we provide an improved customer experience in the form of better recommendations for their skincare routines? Each individual’s skincare needs are vastly different and highly personal; using data customers choose to share inevitably makes the experience better all around.

The brand collects ZPD using a variety of “microexperiences” across its digital channels, from email opt-in campaigns and voucher claim forms to sampling programs and diagnostic quizzes. It’s all explicitly communicated that this data is only being collected to provide a better experience. This way, customers feel an increased sense of trust with the brand while simultaneously having a more efficient, customized shopping experience.

While each type of microexperience plays a role in the customer journey, in this particular use case, diagnostic quizzes were designed to help customers find and ultimately purchase the skincare products best suited to their personal needs. When engaging with a diagnostic quiz, consumers proactively share their personal context (e.g., facial skin type, primary facial skin concern, other characteristics) so that the brand can recommend a specific routine involving multiple products to address each concern. The quizzes are very inviting and visual, and the products that make up the recommendations are shoppable at the conclusion of the quiz.

As a result of implementing these quizzes built on ZPD, the brand saw impressive results: a 21 percent increase in conversion rate and a 134 percent increase in average order value. In addition to driving e-commerce sales, the quizzes also provided a level of education to customers, sharing informative content about different skin types and conditions, such as symptoms that might indicate sensitive skin, or dryness and dehydration.

Prior to displaying a recommended routine, each quiz gives users the option of submitting a form to subscribe to email communications from the brand. The form clearly explains what types of communications the customer is opting into, how their data will be used, and links to the privacy policy, ensuring consent meets the GDPR criteria of freely given, specific, informed, and unambiguous.

While customers can skip the form and go straight to their recommended routine, those who opt in benefit from getting their recommended routine delivered to their inbox, and enjoy future emails personalized according to the personal context data they shared with the brand via the quiz. This particular use of ZPD demonstrates how retailers can gather better consumer data while providing customers with a superior experience built on value and trust.

Retailers today don’t have to choose between maintaining data privacy and providing a personalized experience. By introducing a consent-based and engaging approach with ZPD, brands can provide a wholly better experience for every customer that will keep them returning to their site.

Wendell Lansford is the co-founder of privacy-first marketing firm Wyng.