Sales

Do you want your customers’ trust? Stop spying on them

- February 20, 2024 3 MIN READ

 

Today, the value of data in and for businesses is no doubt. Data allows retailers – from independent to franchise to national behemoth – to better understand their customers, and improve the experience they offer them, explains Andrew Fraser, Managing Director, APAC at Lightspeed.

Because of the value they can derive from it and then pass on to their customers, businesses collect it in vast quantities today.

However, it comes with many concerns. Not least privacy. The line between personalisation and surveillance is a fine one, and as privacy breaches increase in regularity and severity, it blurs further. What’s more, the Government is set to introduce amendments to The Privacy Act 1988, which will see many previously exempt retail businesses susceptible to fines and penalties for failure to comply.

How, then, can retailers tap into the power of data, without damaging trust amongst their customers?


The potential and pitfalls of data

For contemporary retailers, data has become as important, arguably, as their inventory. Through it, retailers can glean insights into shopper behaviour and preferences, then use that to do everything from managing inventory and improving operational efficiencies to creating marketing strategies, delivering personalised campaigns, and enhancing the customer experience. However, personal data is our most sacred asset, and with great power comes great responsibility.

As data breaches become more prominent in Australia, consumer scepticism and trust are dwindling. To feel the benefit of it, retailers must prioritise trust and transparency. It’s a fine line to balance; get it right, and retailers can boost customer loyalty and retention. Get it wrong, and customer trust wanes. In fact, according to Statista, 27 per cent of APAC consumers say ‘being contacted in a creepy way’ is the top way to lose trust, while 24 per cent said it was receiving irrelevant ads or offers.

Common privacy mistakes and how to avoid them


It’s essential that retailers carefully navigate the tightrope between utilising customer data for business growth and customer experience and respecting privacy. Sometimes even well-intentioned data collection can inadvertently lead to an erosion of trust, so it’s important to identify potential mistakes and create proactive strategies to avoid them.

Take transparency, for example. A common mistake many businesses make is failing to communicate clearly about their data collection practices and policies. A lack of transparency undermines customer trust. If retailers are not forthright about how and why customer data is collected, used and stored, it’s going to make their customers uneasy and more likely to opt out or request for their data to be deleted. Retailers should never share customer data with third parties without following applicable laws. Trust is breached when customer data is sold or shared without consent, and can have severely detrimental impacts, including the loss of brand trust and long-term customer relationships.

From trust to personalisation, to growth

Once earned, trust is incredibly powerful for businesses; especially today, as economic pressures continue to impact customer spending. Trust aids both customer acquisition and loyalty, both of which contribute to the short- and long-term health of a business. So retailers should be clear and honest in what data they collect, why they collect it, how they store it and how consumers can opt out, at any point and always be in compliance with applicable law. They should take proactive measures to demonstrate a commitment to data security, rather than hoping issues don’t arise.

When retailers can do that, their shoppers will be more inclined to allow retailers to access their data. And that is where the collective benefits can be so impactful. For example, if retailers can collate their approved customer data with the sales data they collect through a POS, like Lightspeed, they can understand things like, for example, their most lucrative customers, understand purchasing habits and create different customer segments – from high spenders to loyal regulars.

With this information, they can create highly personalised, targeted and timely marketing content to delight your customers, foster a loyal relationship and encourage repeat spending. For example, if a retailer identifies through their data that they have excess inventory of a particular item. They can then use customer data to segment customers who have bought the same or a similar product in the past. By promoting that, they’re providing a highly personalised experience that recognises them as individuals.

After all, when competition is high and economic pressures continue to impact consumer spending, shoppers will feel a greater affinity to those who understand them rather than target them with one-size-fits-all marketing and experiences.

For businesses today, data and trust go hand in hand. Utilising one and establishing the other is a necessity, not a nice to have. If retailers can do so, they’ll be well-placed to build the deep, meaningful and loyal customer relationships that help them overcome slow periods and capitalise on peak season.


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