Right Your Privacy Ship Before It Capsizes
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- Emma Woods
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1 NOT LICENSED FOR DISTRIBUTION by Fatemeh Khatibloo and Stephanie Liu Why Read This Report B2C marketers have gotten overzealous in their quest for hyperpersonalization with their collection and use of consumers data, and now it s costing them their customers trust. After years of retargeting and spam, individuals are turning to ad blockers and enabling their browsers do-not-track settings. Marketers should read this report to understand the opportunities and benefits of prioritizing customers privacy and the risks of maintaining the status quo. Key Takeaways Consumers Distrust Marketing And Advertising B2C marketers have been hoarding customers data for too long. As a result, people don t trust companies with their personal data and are taking action to avoid advertisers that track their web activity and serve retargeted ads. Marketers Can Win Back Trust By Creating Customer-Centric Policies Companies can differentiate on customers trust and privacy by creating transparent and understandable privacy policies and enabling preference centers where customers have a say in how companies contact them and with whom companies share their data. Privacy Must Be A Cross-Functional Priority Move privacy out of its legal silo and create a cross-functional working group that addresses all the ways in which data handling and privacy policies affect customers. From marketing to legal and the site development team, collaborate to ensure that you protect customer privacy at every touchpoint. forrester.com
2 by Fatemeh Khatibloo and Stephanie Liu with Mary Pilecki, Matthew Flug, and Kara Hartig Marketers, Your Customers Don t Trust You B2C marketers are playing with fire: They want to use data to understand customers and deliver more relevant messaging but rarely consider the privacy implications on their customers. Sixty-one percent of US online adults are concerned that companies could share their information or tracked behaviors with other companies, and marketers aren t helping themselves when they demonstrate a lack of the drivers of trust integrity, competence, and transparency in their data practices. 1 As a result: Marketers have set themselves up for failure. Marketers are their own worst enemy in terms of customer privacy. While 91% of global B2C marketers said that increasing their use of data and analytics is a priority, far fewer 71% prioritized data and privacy protection. Even worse, onethird said that preparing for the General Data Protection Regulation (GDPR) is a low priority or not even on the agenda! 2 The advertising ecosystem has eaten its own tail. Advertisers apathy toward consumers contexts, needs, and privacy concerns is shrinking the pool of quality advertising targets. 3 As US online adults turn against ads that seem to follow them around the internet, they are becoming more difficult targets: One-third of US online adults currently use an ad blocker, and one-quarter use their browser s do-not-track setting. Also, 49% worry that they could see too many ads when using internet-connected devices. 4 Consumers no longer trust businesses with their data. Don t think your customers aren t taking note of your bad privacy practices. Forrester gave European and US online adults a list of 19 company types, ranging from tech giants such as Apple and Google to utility providers, and asked them to select those they trust to keep personal information secure. Thirty-five percent of US online adults and 45% of European online adults said that they don t trust any. 5 Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA USA Fax: forrester.com 2018 Forrester Research, Inc. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Unauthorized copying or distributing is a violation of copyright law.
3 Companies Are Missing The Opportunity To Differentiate On Privacy We invited firms from a variety of industries and verticals to complete an online version of Forrester s privacy maturity assessment for marketers to see how companies approach privacy today. First, we asked marketers to complete the oversight, process, people, and GDPR readiness sections. Next, we assessed and scored their consumer-facing privacy experiences. Tellingly, multiple marketers told us that they don t know enough about their data practices to complete the assessment honestly and accurately. Of the 17 responses we did receive, we found massive room for improvement: Companies lack guardrails to prevent data use that falls beyond privacy policies. In today s era of digital marketing and its accompanying regulations, rare is finding a company whose website doesn t include a privacy policy in some shape or form. However, we found a sizable gap between the uses outlined in the privacy policy and procedural processes to ensure that the company adheres to its policy. Only eight of the 17 respondents said that they have technical and procedural controls in place to protect against the use of customers data in ways that fall outside their privacy policies. Similarly, only six respondents said that they have a best-in-class privacy framework in place. 6 Privacy teams and operations are incomplete and decentralized. Even when companies think that they have the right structures and processes in place to protect customer privacy, they re often following a pipe dream. For example, of the 11 respondents who said that they have a wellarticulated privacy strategy and well-documented data collection processes and rules, only four have a cross-functional privacy team that includes at least one marketer. Similarly, just six respondents have a dedicated privacy or data protection officer who has a seat at the business and marketing strategy planning table, and fewer still four respondents actively prevent data leakage. 7 Brands treat customers data cavalierly. Companies are used to ingesting all of customers data: Four survey respondents admit that they don t limit data collection on their apps and websites to what s needed to deliver products or services. This haphazardness puts them on a collision course with regulators, media, and ultimately consumers. For example, only five respondents treat pseudonymous data as personally identifiable information (PII), which directly contradicts several articles of the GDPR. These marketers are risking multimillion-euro fines from European regulators, not to mention terrible press and consumer backlash when those violations are publicized. 8 Prioritizing Privacy Is A Win-Win Marketers face increasingly skeptical customers and prospects, but they can assuage some of the biggest concerns by empowering individuals. Customers will turn against companies they think are using personal data improperly and reward those that give them meaningful options for controlling their own data. Companies can strike a winning balance by: 2
4 Posting clear and transparent privacy and data policies. We reviewed the external-facing privacy policies of all companies that took our survey and found that some are so heavily steeped in legal language that they are inaccessible to laypeople (i.e., your typical consumer). Others struggled to communicate myriad uses of customers data simply and concisely. IBM balances being accessible and thorough by providing a privacy highlights page (see Figure 1). The upfront summary gives consumers an easily digestible review of the policy, while the full-length policy allows more detail-oriented consumers to drill down into specific uses and limitations. Giving some control back to customers. Digital marketing s mantra should be, Don t assume; ask. Letting customers share their communication preferences ensures marketers are on point with their contact strategy and gives consumers a voice by letting them decide how and when to be contacted. The Home Depot s preference center allows customers to tailor not only the newsletters they receive but also the actual content of those newsletters (see Figure 2). It asks customers to share the topics or projects they re interested in (from home improvement to gardening), their skill level in those interests, and the newsletters they d like to receive via each medium (i.e., , direct mail, or mobile). 3
5 FIGURE 1 IBM Provides A Digestible Summary Of Its Privacy Policy In Addition To Its Full Policy Source: IBM website 4
6 FIGURE 2 The Home Depot s Contact Preference Center Offers Meaningful Choices, Without Being Overwhelming Source: Home Depot website Recommendations Create Customer-Centric Privacy Experiences In a landscape where consumers are burdened with news about data breaches and mobile apps that can eavesdrop on them, it s no wonder that they worry and want to restrict their data flows. 9 B2C marketers can stem the tide of this panic by delivering positive customer experiences and demonstrating respect for customers data and privacy. To achieve this, organizations must: 5
7 Make privacy a global business priority. Customers trust is precious, so earning and retaining it must be an overarching organizational priority. 10 Too many firms create privacy policies to protect the company but that amount to nothing of value for the customer. Put the customer at the center of privacy and data discussions, and prioritize around their concerns. 11 Seek cross-team funding and executive support, remembering that the chief legal officer s main concerns will differ from those of the CMO. Create a cross-functional working group to actively protect customers privacy. One-off teams to tackle ad hoc privacy problems aren t enough: You need a cross-functional working group to meet regularly and discuss decisions that affect the customer or her data. While legal leads the way in drafting and managing privacy policies, marketing must be at the table to ensure that the policy accurately depicts data use cases and that the broader marketing team is well versed in the policy s guardrails. Similarly, business technology and procurement teams should understand the privacy program enough to assess vendors against not only the business need but also its privacy practices. Give customers a voice. Faced with an onslaught of breach notifications and companies recommending that they change their passwords as a precaution, consumers are learning sometimes the hard way how to protect themselves. For example, recognize that every customer who downloads your app and agrees to share location data is consciously choosing to trust your company to use that data appropriately. Do not violate this trust, and better still, give customers meaningful choices about how much data they want to share and when. 12 6
8 Engage With An Analyst Gain greater confidence in your decisions by working with Forrester thought leaders to apply our research to your specific business and technology initiatives. Analyst Inquiry To help you put research into practice, connect with an analyst to discuss your questions in a 30-minute phone session or opt for a response via . Learn more. Analyst Advisory Translate research into action by working with an analyst on a specific engagement in the form of custom strategy sessions, workshops, or speeches. Learn more. Webinar Join our online sessions on the latest research affecting your business. Each call includes analyst Q&A and slides and is available on-demand. Learn more. Forrester s research apps for ios and Android. Stay ahead of your competition no matter where you are. Supplemental Material Methodology Forrester s Q US Privacy Maturity Assessment For Marketers Online Survey was fielded to 17 Forrester contacts. For quality assurance, we screened respondents to ensure they met minimum standards in terms of knowledge of their organizations privacy practices. For the customer experience section of the assessment, Forrester evaluated companies mobile apps (if applicable) and customers preference centers. Forrester fielded the survey from October to December Respondent incentives included a private webinar summarizing the survey results and a complimentary copy of this report. Exact sample sizes are provided in this report on a question-by-question basis. 7
9 This survey used a self-selected group of Forrester contacts and is therefore not random. This data is not guaranteed to be representative of the population, and unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes. While nonrandom, the survey is still a valuable tool for understanding where users are today and where the industry is headed. The Forrester Data Consumer Technographics North American Online Benchmark Survey (Part 2), 2017, was fielded from March to May This online survey included 33,489 respondents in the US and 3,038 respondents in Canada between the ages of 18 and 88. For results based on a randomly chosen sample of this size, there is 95% confidence that the results have a statistical precision of plus or minus 0.5% of what they would be if the entire population of US online adults (defined as those online weekly or more often) had been surveyed and plus or minus 1.8% of what they would be if the entire population of Canadian online adults had been surveyed. Forrester weighted the data by age, gender, income, region, and broadband adoption to demographically represent the US and Canadian online adult populations. The survey sample size, when weighted, was 33,471 in the US and 3,037 in Canada. (Note: Weighted sample sizes can be different from the actual number of respondents to account for individuals generally underrepresented in online panels.) Ipsos Observer fielded this survey on behalf of Forrester. Survey respondent incentives include points redeemable for gift certificates. Endnotes 1 See the Forrester report The Mechanics Of Trust. Source: Forrester Data Consumer Technographics North American Online Benchmark Survey (Part 2), Source: Forrester Data Global Business Technographics Marketing Survey, See the Forrester report How To Advertise To Consumers Who Hate Ads. 4 Source: Forrester Data Consumer Technographics North American Online Benchmark Survey (Part 2), Source: Forrester Data Consumer Technographics European Online Benchmark Survey (Part 2), 2017, and Forrester Data Consumer Technographics North American Online Benchmark Survey (Part 2), Source: Forrester s Q US Privacy Maturity Assessment For Marketers Online Survey. 7 In this instance, preventing data leakage entails actively managing advertising technology (adtech), marketing technology (martech), ecommerce, and marketing services vendor relationships to ensure outdated or replaced vendors do not continue to receive any data. 8 GDPR makes it clear that it applies to pseudonymous data because it isn t fully anonymous. Therefore, marketers must use this data very carefully to remain compliant and avoid potential fines up to 4% of global revenue or 20 million, whichever is greater. To learn more about the GDPR, see the Forrester report Q&A: What Global Marketers Need To Know About European Privacy Laws. 9 Source: Sapna Maheshwari, That Game on Your Phone May Be Tracking What You re Watching on TV, The New York Times, December 28, 2017 ( 8
10 10 In Forrester s brand emotion research, we have found that trust doesn t necessarily drive behavior but that it is table stakes for a consumer to engage with a brand. 11 Forrester s consumer privacy segmentation can help you understand the unique privacy attitudes and behaviors of your customers. See the Forrester report Use Forrester s Consumer Privacy Segmentation To Understand Your Customers And Build Trust. 12 For example, a customer should be able to choose not to share her location at all times without losing any key app functionalities. For more on this idea of contextual privacy, see the Forrester report Empowered Customers Demand Contextual Privacy. 9
11 We work with business and technology leaders to develop customer-obsessed strategies that drive growth. Products and Services Core research and tools Data and analytics Peer collaboration Analyst engagement Consulting Events Forrester s research and insights are tailored to your role and critical business initiatives. Roles We Serve Marketing & Strategy Professionals CMO B2B Marketing B2C Marketing Customer Experience Customer Insights ebusiness & Channel Strategy Technology Management Professionals CIO Application Development & Delivery Enterprise Architecture Infrastructure & Operations Security & Risk Sourcing & Vendor Management Technology Industry Professionals Analyst Relations Client support For information on hard-copy or electronic reprints, please contact Client Support at , , or clientsupport@forrester.com. We offer quantity discounts and special pricing for academic and nonprofit institutions. Forrester Research (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We work with business and technology leaders to develop customer-obsessed strategies that drive growth. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of our clients to help them lead change in their organizations. For more information, visit forrester.com
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