Retail e-commerce, by default, collects a lot of consumer data — whether personal, transactional, engagement or feedback — and uses it to power personalized experiences.
But managing all that data comes with its own vulnerabilities. While retailers need to balance data integrity with data activation, the sheer volume and velocity of that data makes this effort challenging and complex.
In this post, we explore retail best practices to deliver stand-out data-powered customer experience (CX) without violating any data privacy regulations.
- E-commerce’s strength can also be its weakness
Retail CX must-haves are powered by data at each step
E-commerce brands, by the nature of their products, need to collect and use personally identifiable information (PII) in order to deliver real-time, personalized experiences to shoppers. Shoppers expect no less, and to meet that expectation, retailers need smooth, free and safe data flow across their marketing, shopper, payment, and customer service systems.
Any list of retail CX must-haves will include:
- Personalized and timely communication: make the right offer at the right time on the right channel
- Multi-channel marketing: meet the customer where they are, on any platform, channel or device including shopping on social media channels, to offer flexible, easy, anytime and anywhere shopping
- Great digital user experience: make browsing, selection, payment and returns as smooth and hassle-free as possible
- Customer recognition: remember returning customers and their past selections, make sign-in easy and offer relevant product recommendations
- Optimized check-out process: along with fast and convenient payment options to minimize cart abandons
- Prompt, reliable and secure shipping and delivery
- Superior customer service and return handling
- Consistent experiences in-store and online
Sounds familiar, right? And no doubt all of these are very important. These are the elements that build brand preference, create loyal shoppers, and optimize lifetime value.
However, without the right consumer data, none of these would be possible. Shopper data powers an e-commerce retailer’s data-led personalization, and done well, can even be a real competitive advantage, driving in large part the repeat business and customer loyalty for the retailer.
E-commerce’s strength can also be its weakness
While collecting, handling and activating all that PII and consumer data enables superior experiences for customers, it also means the retailer is that much more vulnerable to consumer data non-compliance and even breaches. The more the data, apps, touchpoints, the more are the data management challenges and vulnerabilities.
Here are some of the elements that complicate data collection and processing for retailers:
The increased usage of third-party cloud vendors: no retail e-commerce platform can do without a complex ecosystem of third-party vendors for everything from email marketing to payment handling and delivery. At each stage, data is flowing across multiple internal and external systems, leaving the retailer vulnerable to inadvertently breaking some compliance regulation or to become party to a partner's malpractice.
More touch points across more channels: the omni-channel nature of consumer retail means shoppers want their favorite brands to be available in physical stores, on social shopping platforms, mobile apps and of course online. Perhaps soon even in the metaverse! The retailer needs to deliver a cohesive brand experience across all these diverse touchpoints, and that means more opt-ins and opt-outs to manage, more data transfers and flows to keep track of; and more data subject access requests (DSAR) to address.
Evolving data strategies: the inevitable third-party cookie deprecation means retailers need to be smarter and more careful than ever when it comes to using first-, second-, and third-party data to meet their marketing goals. For retailers building out their own retail media networks to monetize shoppers, there is a whole new set of secure data strategies for sharing first-party data to be considered, not to mention ensuring customer consent for these new data use-cases.
Evolving data regulations: with the ever-evolving regulatory landscape, retailers need to have a deep understanding of the fundamental aspects of their day-to-day data usage, storage and sharing practices, and keep one step ahead of global, national and state-level regulations.
Distributed people managing multiple systems: multiple point-of-sale endpoints managed by increasingly distributed teams; workforces with often unregulated endpoint devices; and data sharing over unregulated networks can lead to further complications on the data security front.
Customers themselves are evolving: as awareness about privacy rights and predatory data practices grows, retail customers only want to share data with brands they trust. They want advantages such as easy auto-fill forms and personalized offers, but not at the cost of their privacy or data security.
Expectation setting and awareness about their choices is key to avoid misunderstanding and potential dispute.
Five best practices to balance consumer data integrity with stand-out retail CX
When it comes to data, retailers are finding out there is such a thing as too much of a good thing.
While data is their big opportunity, it is also a double-edged sword. Don't let the volume, velocity and relative ease of gathering customer data in retail and ecommerce environments lull you into thinking that it has been collected the right way, is being managed the right way, or that you are free to use it in any way you need to.
Instead, consider these five best practices to approach data-powered marketing with an entirely fresh outlook. One that helps the company achieve both — compliance and customer experience goals.
1. Refresh your consumer data strategy
When was the last time you conducted a data collection and activation audit? How up-to-date is your consumer data strategy, in terms of the 5 key aspects: collection, storage, activation, sharing and disposal?
If you are not clear about this as a marketing leader, you are setting yourself up for trouble. It is necessary to invest time and effort to ensure your consumer data strategy is reflective of your current and planned marketing activities to keep you safe and compliant.
2. Protect not just your systems but your entire ecosystem
Don’t be misled into thinking that if your in-house systems are protected, your customer data is safe.
In modern marketing, data has to flow across multiple internal and external systems to be able to deliver the seamless experience customers expect. So it's crucial to:
Audit all your internal and external systems where data flows
Thoroughly vet all third-party vendors to ensure they have their data protection measures in place and the data is appropriately anonymized, encrypted and masked
Document clear data sharing and transfer protocols with financial, analytics, delivery or any partners who process your customer data, especially in the cloud
Cover all your bases when it comes to security: all online and physical point-of-dale endpoints should have the most updated security software
3. Keep your retail media network policies up-to-date
Since collecting first-party shopper data is intrinsic to retailing, monetizing that data seems like a natural next step.
If you are monetizing your zero- and first-party data with an internal or external retail media network, you will need to follow additional guidelines regarding data collection, sharing and anonymization. Not only is this important from a compliance point of view, but it also deeply impacts customer experience, trust and your credibility.
4. Shift from list management to a preference management approach
Many companies still use unsubscribe pages and end up losing customers who opt for a global unsubscribe.
Instead, empower customers by providing a preference center, which allows them to manage preferences on any channel, device and environment. This way, customers can make more granular choices about how they want to be contacted.
Not only will this improve retention and response rates, but also make your marketing more effective (return on marketing investment) by cutting down on wasteful customer contacts.
5. Track ‘consent rate’ as a core CX KPI
When consent is treated as part of the customer experience and not just as a part of legal compliance, it changes the dynamics of how you approach it.
A key aspect of that is including ‘consent rate’ as a CX metric, with the understanding that even small improvements in opt-in and opt-out rates on specific channels can impact e-commerce revenue.
With consent rate becoming key to revenue, and the consent gathering process key to customer experience, it's time to include it as a core performance metric for the business.
Consent and compliance help deliver customer experience with confidence
In e-commerce, where performance is everything, some marketers feel that stepping up consumer privacy efforts or making data collection and consent transparent will reduce their control over the levers that drive metrics and revenue, such as email marketing or retargeting.
But in fact, the opposite is true.
For instance, Pierre & Vacances Center Parcs Group, who have implemented a comprehensive preference management center across 7 countries and 5 brands, found that not only did it improve the quality of their data and elevate customer control and engagement, but that they are now able to drive a consistently higher return on marketing investment.
With a robust consent and preference platform to govern the data that drives personalization, you can run campaigns and deliver personalization across channels, touch points, geographies with complete confidence; as well as drive sustainable business advantages such as improved CX and revenue impact.
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