Personalized Customer Experiences Are Important—But Not At The Cost Of Data Privacy


Today’s retail brands are continuously searching for tools and solutions that will enable them to excel ahead of others. One key factor that has quickly become a key determiner in helping retailers achieve this differentiation is customer experience—more specifically, the ability to deliver streamlined, personalized customer service.

In order to create these tailored experiences, retailers must be able to use two key factors: customer data and technology. First, they need to be able to accurately gather desired customer information, but they must also be able to leverage technology that can keep the consumer data secure and present it in a way that allows them to make meaningful recommendations, customize their approaches to shoppers and ultimately deliver a high-quality, highly personalized experience.

Understanding The Threat Of Personalization

In an ideal world, the process of gathering consumer information and using it to create high-quality customer experiences works flawlessly. However, we don’t live in an ideal world.

In reality, this highly sensitive customer data is extremely valuable. In the wrong hands, it can be used to extort companies—and, sometimes, even the consumers whose information has been stolen. External hackers are capable of breaching technology systems and gaining access to this data, and they will if it’s not protected carefully.

Since the introduction of security legislation such as the General Data Protection Regulation (GDPR) in 2018 and the California Consumer Privacy Act (CCPA) in 2020, consumers have become much more data-conscious than ever before. However, cybercrime continues to rise.

According to research undertaken by Check Point, there was a 38% increase in global attacks in 2022 compared to 2021, with the global volume of cyberattacks reaching an all-time high in Q4 2022. What’s more, with the introduction of breakthrough technologies such as generative AI, the number of attacks is predicted to only grow.

In an industry where an abundance of valuable customer data such as delivery addresses, contact information and financial information is processed on a daily basis, the retail sector is a profitable target for hackers. In fact, IBM finds that the average cost of a data breach within retail currently sits at approximately $3.28 million.

With the increasing threat of cyberattacks and a higher focus online on consensual data collection, consumers have become much more aware of what information they’re giving away. Retailers need to keep in mind that while a personalized service is important for creating high-quality experiences, it should never come at the expense of security.

Finding Reliability And The Role Of Tokenization

As mentioned, the key to personalization lies in the consensual and secure collection of consumer data as well as properly processing and presenting this information so that retailers can easily tailor their approach to in-store visitors.

A secure customer relationship management (CRM) system can help retailers to achieve both of these objectives. From a security perspective, I believe retailers should, at the very least, work with partners that are accredited to safeguard customer data.

Providers with security credentials such as System and Organization Controls (SOC) have had their company’s policies, procedures and safeguards in relation to data security, availability and confidentiality comprehensively evaluated and tested. This isn’t to say that any business without these credentials does not provide a secure solution, but in the case of customer data, I believe it’s better to be safe than sorry.

Whatever technology is being deployed, if it’s handling sensitive data, look to ensure that tokenization is helping to secure it. Tokenization replaces a sensitive data element with a non-sensitive element with no exploitable value. Instead, the token acts as a reference that maps back to the original data through a tokenization system. If intercepted, the data will hold no value to any external threat.

From here, with customer data located centrally, retailers can ensure their data security remains simple, easy and compliant. Stored securely in a separate repository and referenced as needed by in-store associates, devices or integrations, customer data is never revealed or imported into a local system.

Don’t Forget The Human Aspect

A retailer can deploy the most secure technology available, but a business is only as safe as its weakest link. In many instances, the weakest link is the employee. According to research undertaken by Fortra, there were more phishing attacks in the first quarter of 2023 than in any other period in history.

Phishing has become a significant threat vector for cybercriminals, as they target untrained or undiligent employees and deceive them into giving up sensitive data. This can happen in any organization, not just retail. Retail businesses (from headquarters to shop stores to warehouses) must provide adequate cybersecurity training to their staff in order for their technology deployments to remain effective.

From organizing cybersecurity best practices sessions to teaching basic skills to help spot and deal with phishing attempts, retailers must continue to empower their staff in addition to deploying any advanced technology.

Reaping The Benefits Of Security

A secure foundation not only protects retailers from the threat of ransom attacks and hefty fines from the Information Commissioner’s Office (ICO), but it also instills trust in customers. According to Statista, 39% of customers globally believe that “providing clear information on how consumer data is used would help the company build trust.”

If a customer trusts a retailer, they’re more likely to willingly give up their data. From that point, a virtuous cycle begins. The data is leveraged to personalize experiences—making recommendations based on previous purchases, providing perks from loyalty programs and altogether tailoring each retail touchpoint to the customer’s benefit. This only creates more trust, more loyalty and, ultimately, better long-term customer relationships.

Investing in secure customer data in retail might seem like a tall order. However, it can set up retailers for huge, long-term success based on high-quality experiences and loyal customers.

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