Business Management
3 min read

Data privacy vs personalization in a Covid-19 World

In an era where technology has facilitated access to data, consumers are increasingly aware of the trade-offs between personalized experiences and their privacy. Data gathering and predictive analysis have created a paradox between privacy and personalization. Yet, are we personalizing brand interactions at the cost of consumer privacy? This question will continue to gain traction in a post Covid-19 world.

The pandemic has accelerated the volume of digital bookings and purchases. Physical storefronts and travel agents have been severely impacted, with a "new normal" signifying digitalization over tradition. While the move online provides an opportunity to maximize personalized marketing efforts, it will also heighten consumer privacy concerns.

 

The value of personalization

The usage of advanced analytics to reach consumers with the right messages has been widely accepted in the industry. For the F&B sector, predictive analysis has provided opportunities to personalize product recommendations, while for travel it has enabled imagery to be specifically adjusted to different segments (Wiener, et al. 2020). To survive in the competitive online landscape, brands must learn to further leverage online channels, while safeguarding consumer data. Now more than ever, personalization will be essential to drive value and maximize visibility.

Showing users bespoke offers 'just in time'

One new consideration is the increasing prevalence of just-in-time personalization. Market share will belong to the companies that are able to adapt to the shifts in demand, based on "high-frequency leading indicators".

Data analytics provides real time data on consumer spending, coupled with the latest search trends and web traffic information. With the uncertainty of the recovery trajectory, this information provides valuable insight for businesses to identify key markets and aid with capacity planning. Access to consumer data will be a driver in managing digital spending and promotions towards the right markets (Wiener, et al, 2020).

Data-driven business decisions at speed

Likewise, there will be a need for "data driven decisions" and "digital speed" in reallocating capital, while being "ready to reinvent" by investing in technology (McKinsey, 2020). One stellar example is Starbucks' ability to utilize data across geographies to plan reopenings and understand demand patterns for their drive-through sales (Walton, 2020).

The consumer trade-off: risk vs reward

Yet, the success of these initiatives will depend on content delivery and the extent to which customers feel comfortable with the level of personalization. To add value, companies must employ these strategies overtly. When consumers consciously disclose information and receive sufficient justification and rewards, they are more accepting of data collection (Aguirre et al., 2016). The diminished risk perception allows businesses to ethically collect data in exchange for a privacy price, namely personalized offers and discounts.

On the other hand, covert strategies create negative consumer reactance due to skepticism about how their information was retrieved (Chen et al., 2018). By impeding customers from protecting sensitive information, such as locations, purchases and stream history, companies risk straining these relationships (Aguirre et al., 2016).

 

Personalization in a Covid-19 world

Thus, if implemented correctly, the shift online provides a valuable opportunity to leverage data. To tap into the benefits of personalization systems, while mitigating the risk perceptions, data collection strategies must be employed overtly. The effects of Covid-19 on digitalization are here to stay and adaptation will be vital to ensure the longevity of businesses and customer relationships.

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This article is part of the Young Hôtelières Insights (YHI), an initiative spearheaded by HotelierGuild’s LeadingHôtelières Chapter and EHL Women in Leadership in collaboration with IUBH University of Applied Sciences and Institut Paul Bocuse. YHI aims to develop the professional visibility of our young female talent in a network of established hoteliers and hôtelières. The current article has been first published in HotelierGuild’s Forum of Dialogue Vol. V and LOOKBOOK Spring/Summer 2021.
 
 

References

  • Aguirre, E. Roggeveen, A. & Wetzels, M. (2016). The personalization-privacy paradox: implications for new media. The Journal of Consumer Marketing; Santa Barbara, 33(2), 98-110. doi:10.1108/JCM-06-2015-1458
  • Chen, Q. Feng, Y. Liu, L. & Tian, X. (2018). Understanding consumers’ reactance of online personalized advertising: A new scheme of rational choice from a perspective of negative effects. International Journal of Information Management 44, 53–64. https://doi.org/10.1016/j.ijinfomgt.2018.09.001
  • McKinsey & Company (2020). How six companies are using technology and data to transform themselves. Retrieved from : https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-six-companies-are-using-technology-and-data-to-transform-themselves
  • Walton, C. (2020). 3 Ways Starbucks Will Emerge From COVID-19 Stronger Than Before. Retrieved from : https://www.forbes.com/sites/christopherwalton/2020/04/03/3-ways-starbucks-will-emerge-from-covid-19-stronger-than-before/?sh=216406191844
  • Wiener, L., Abraham, M., & Colgan, M. (2020) Three Personalization Imperatives During the Crisis. Retrieved from : www.bcg.com/en-br/publications/2020/three-personalization-imperatives-during-covid-crisis
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