Retailers miss out on data over distrust

A collapse in consumers’ willingness to trust retailers with personal data is stalling marketers’ drive for more targeted and relevant messages.

Data has become a talking-point for most brands in terms of how to use it effectively and in a responsible and ethical way, but new research shows that the efforts of retailers have not changed consumers’ opinions with regard to trust and targeting. 

Research seen exclusively by Marketing Week shows that people’s trust in how retailers handle their data has significantly decreased and that some feel they are being marketed to inappropriately.   

The Data Agency surveyed 1,000 consumers in the UK. People trust retailers significantly less with their personal information than they did in 2011 when the first study took place, according to figures from The Data Agency. 

High street chains have seen a decrease of 11 per cent in consumer trust since 2011 and two-thirds of consumers feel the marketing they receive from retailers today is not appropriate or relevant. 

“Trust levels are falling and that’s clear to see – as a whole, people are saying they trust retailers less today than they did two years ago,” says Mark Roy, chief executive of The Data Agency and chair of The DMA Data Council. “As an industry we have to ask ourselves – what the hell are we doing to make consumers feel that way about us? One would think that companies are trying hard with consumers at the moment but maybe it’s not paying dividends.”  

High-profile cases of data breaches in other industries may have contributed to this lack of trust, including the hacking of Sony’s PlayStation Network in 2011. It compromised the personal data of millions of customers including names, addresses, email addresses, dates of birth and account passwords, and last month Sony was fined £250,000 by The Information Commissioner’s Officer as a result. 

NHS Surrey was also fined £200,000 last month after sensitive information about patients was found on an NHS computer that had been auctioned on eBay. EU law could see data protection guidelines tighten in the UK with harsher penalties than those that currently exist, although this is still in debate.  

The research also breaks down which sectors consumers trust most and least. Supermarkets are most trusted, with over a third of consumers agreeing that they feel their information is kept safe, followed by high street chains at 28 per cent, independent retailers and superstores at 27 per cent. Some 23 per cent trust online retailers. 

In 2011 consumers ranked John Lewis/Waitrose and Tesco in joint second place when it came to the quality of the buying experience they offered their customers. In 2013, with an increase of 2 per cent on the 2011 figures, 11 per cent of consumers now rank the John Lewis/Waitrose as the second best retailers for customer buying experience.

At the other end of the scale, mail order companies score 18 per cent while voucher or discount sites score 14 per cent, the least trusted by consumers. 

The study also finds that 18-24 year-olds are the most trusting across all business types and are more ready to part with information to get what they want including vouchers, promotions and offers, and women are marginally more trusting than men.

Trust levels have had an effect on how happy consumers are for retailers to use their data to make marketing more targeted and relevant to them. 

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John Lewis and Waitrose have been ranked as the second best retailers in 2013 after Amazon in first place. In 2011, Tesco (top right) was joint second on the quality of the buying experience offered to customers

The study reveals that 38 per cent of people are not happy for retailers to use their data, 41 per cent say they are happy for retailers to use the data they already hold and 21 per cent say they would part with additional information to ensure that retailers’ marketing communications had greater relevance to them. 

This also differs by age group, with two thirds of 25-34 year-olds wanting retailers to use their data to target them with relevant marketing more effectively and just under half (48 per cent) of those aged between 55 and 64 not being happy for retailers to use their data to increase the relevance of the marketing they receive. 

Roy says: “From an industry context the recession has had an impact on organisations’ commitment to their processes around data security and we have not been investing the same levels of cash in having really effective consumer relationships as we might have been prior to 2011.”  

There is also a balancing act in terms of how data is used and what data is provided because consumers simultaneously complain about lack of relevance and appropriateness of marketing communications while most are unwilling to share data or give more information than already available.   

“The issue of consumers trusting the companies with whom they deal with is critical to business,” says Roy. “There’s a battle that goes on between people who are trying to deliver effective targeting to consumers and consumers saying they want to give as little information as they can, although I think they are happy to do this around a transactional process. 

“The dichotomy comes when we as a data organisation are saying ‘I can only deliver information to this level of accuracy with the information I’ve got’. There is a balance to be struck.”    

Despite this, some brands perform well and many are working harder on their relationships with customers in terms of better targeting. In the study, Amazon is ranked as the most popular with the consumers surveyed, with 78 per cent of consumers saying they had bought from them in the past 12 months. 

In addition, just under half of Amazon customers receive email newsletters before they make a purchase, 23 per cent visit the website to research their next purchase, while 7 per cent receive personally addressed direct mail. 

Amazon also achieved an increase of 4 per cent on the 2011 figure. Amazon and iTunes are the only brands to experience a growth in popularity, with purchases from all other retailers declining between 2011 and 2013. 

Ebay uses data to improve the in-store experience for its customers and launched the Retail Associate Platform this month. It will allow its PayPal customers to check in to stores via smartphones which then serve as store assistants, with data on the shopper’s previous purchases and product preferences via an app.

According to an eBay white paper, 85 per cent of retailers cannot customise a store visit due to lack of information about the customer. Among the retailers surveyed by eBay 76 per cent did not know when a specific customer was in their store.

The advertising arm of the brand also uses data to serve appropriate adverts to its consumers by offering brands a targeting model from anonymous consumer data based on demographic, real-time (context), short-term and long-term behavioural targeting, but emphasises doing this in a responsible way. 

“Relevance is the future of online advertising,” says Phuong Nguyen, head of eBay Advertising in the UK. “At the same time, retailers and publishers need to have stringent policies in place to reassure consumers that they manage their data responsibly. We work hard to build trust with consumers through the global standards we adhere to, which include ensuring that all data is anonymous, is not personally identifiable and is never sold to or shared with third parties.” 

Roy believes that digital channels have boosted irrelevance due to cost.

“You haven’t got the cost-benefit around email and SMS that you have around direct mail, TV and radio, so frankly to deliver bad and irrelevant marketing to consumers has become cheaper and because of the pressures of the recession the reality is that irrelevance may well have climbed.” 

In fact, the research shows that email achieves the highest consumer preference rating, at 45 per cent. This figure is 28 per cent for websites and a quarter for postal direct marketing, with TV advertising getting the lowest score – 22 per cent. 

However, the preference for those who wanted to hear from brands they do not have a relationship with, website and TV adverts are on a par, with 23 per cent of consumers preferring to hear from brands they do not buy from through these channels. 

Just 3 per cent of consumers now say they want to hear from retailers they don’t buy from using SMS compared with 5 per cent in 2011. Postal direct mail remains popular, with 16 per cent of British adults still preferring to hear from retailers they don’t buy from via this channel.  

Roy concludes: “It’s clear that some of the sectors are wasting their time in the digital space and they are not making a proper contribution to real sales.”

For the full research report from The Data Agency click here 

Marketers’ response

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Phuong Nguyen
Head of eBay edvertising, UK
eBay 

Understanding consumers’ interests and shopping behaviours is a significant opportunity for brands. After all, no two shoppers are the same and, by understanding the motivations of each, brands can create tailored campaigns that reach the right people with the right message at the right time.  

This means more relevant advertising that not only enriches the shopping experience for the consumer but also has the potential to help reduce wastage and increase their return on investment. 

Insight enables us to deliver a personalised shopping experience, connecting people to the things they want and need. Importantly, it also allows us to serve targeted, timely adverts that are both relevant and inspirational.

Relevance is the future of online advertising but at the same time retailers and publishers need to have stringent policies in place to reassure consumers that they manage their data responsibly.

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Peter Briffett
Managing director UK & Ireland
LivingSocial

Without a doubt, relevancy is of paramount importance. Today, there is 24/7 access to information via mobile and social media from anywhere in the world and people can see instantaneous recommendations.

As a web business we take out data every day and localise content. We’re personalising communications depending on preferences and giving people what they want depending on purchase behaviour and what they have told us.

Consumers value straightforward interactions with retailers. From a business perspective, the key to winning in this arena is to marry this consumer experience-centred thinking with the capability to drive data back into the business, giving purchasers more personalised experiences.

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