Research from across the globe indicates that the post-COVID-19 landscape for consumer brands – and especially for luxury goods and services brands – is a potential minefield due to rapidly escalating consumer concerns for personal data privacy. Consumers are becoming activists on many social issues, data privacy included, with all surveys conducted in 2019-2020 by credible institutions – from Pew and Ipsos to Microsoft – clearly identify privacy as an hot issue across all demographics, thereby, making it unignorable for consumer-facing brands.
Looking beyond Micosoft and Pew, the New York-based Luxury Institute’s 2020 global research shows that affluent and wealthy consumers share deep concerns for personal data issues. At the same time, in the most recent survey conducted by San Francisco-based data privacy infrastructure company Transcend, a whopping 98 percent of the 1,000 American consumers surveyed agree that data privacy is important in their lives. The results were similar across all demographics (98 percent males, 98 percent females, 95 percent Gen Z and Millennials, 99 percent Gen X, 99 percent Boomers). Income figures had a similar dispersion, dispelling the persistent myth that only older, wealthier people care about privacy.
In the same survey, Transcend also found that all of the surveyed segments of consumers – 94 percent of the total pool – agree that data privacy will be even more critical in the next five years, and the pandemic has only accelerated those concerns.
Most Brands Are Missing Opportunities
Most luxury consumer brands, and many mass brands, are trying to be good citizens by approaching data privacy with a deliberate approach to implementation. However, that is wholly insufficient. Currently, legal privacy compliance has been delegated to lawyers and IT executives. While these are well-intentioned domain experts, they are not consumer experience or brand equity experts. They are also not the brand stewards responsible for financial performance.
Many lawyers and IT executives currently exhibit a pattern of playing the data privacy game in a crouching posture; they only play defense. With privacy, they are playing not to lose, instead of playing to win. By advising that companies play the short-term, privacy fortress game, they fail to serve the best interests of the company.
In the Transcend survey, three in five (59 percent) of American consumers admit they do not understand a great deal about the ins and outs of privacy. Nine out of 10 (88 percent) are frustrated that they have no control over their personal data online. When some consumers have tried to get legal access to their data from companies, they have found the process outdated (73 percent), time-consuming and difficult. These are massive goodwill and brand reputation-building opportunities. They are not problems, or opportunities to deceive customers.
Since 88 percent of Americans feel they own the data they give to companies, the lack of transparency in privacy policies, and the lack of access to their own data, makes them distrust the brands that are creating the obstacles. This perceived disingenuous brand approach has consequences: Transcend found that Americans describe brands that frustrate the process as untrustworthy (59 percent) and unethical (44 percent).
With that in mind, when brands stop playing defense on privacy, they will dramatically enhance their reputation and increase sales. Case in point: American consumers state unequivocally (93 percent) that they will switch to a company that prioritizes data privacy. They prefer to buy from companies that always provide them easy access to their data (91 percent). And 39 percent say that they will spend more (yes, more) with companies that allow instant access to control their personal data.
Americans may want transparency and control over their personal data, but they are not naive or obstructionist. This is a grave misperception of consumer attitudes. Consumers have experienced enough to know that data sharing can lead to major value creation opportunities for both parties when there is mutual trust. While 65 percent of all consumers want transparency and want to choose what they will share with companies, 40 percent would even be willing to update the information.
Of the 43 percent of all consumers who want companies to delete their information, Boomers outnumber Millennials and Gen Z (47 percent to 38 percent) in large part because they have no clear visibility and have zero trust in how their data is being secured and used. That trend can be easily reversed. In fact, Boomers lead all generations in stating that brands that provide instant access to, and control of, personal data to a consumer are trustworthy (67 percent), care about consumers (68 percent), and are worthy of spending more (34 percent).
What Brands Can Do Now
Next, create personal data pods for consumers on their own devices, so they can download and control their data easily in a usable, structured format instantly. Ask consumers if the brand can use non-invasive Edge AI tools to provide them with learnings and key insights into themselves that improve their lives without violating their desires or values. Use those insights to generate predictions and recommendations that enhance the consumer’s life, that serve their best interests, and are delivered with emotionally intelligent humanity. Continuously seek, and embrace, candid consumer feedback on the actual value being created.
Then, as real value is generated for the consumer using their available data, and the consumer’s trust increases, open up an honest and fiduciary dialogue about what additional data is needed in order to create even more personalized value.
As more and more data is accumulated from the more trusting consumers, such as location, browsing, and other real-time data, reach out to the hesitant consumers and share use cases. Get real-life testimonials, when possible, about how the brand is building value with privacy and security for other consumers through ethical data sharing. In this case, rinse and repeat is a good thing. This is an iterative learning and trust-building process that never ends. It builds mutually beneficial long-term relationships and referrals.
The cost-efficient technology and Edge AI exist today to execute these rich relationship building processes. Luxury Institute is the first to recommend that brands master Edge AI (on-device AI) in order to optimize the elegant process that is required to build strong, mutually beneficial and thriving client relationships. The goodwill exists within most brand management teams and cultures to do the right thing, and now they have the tools to do the thing right.
Luxury Institute is the world’s most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry.