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The Price of Personalization
The real coalition of the willing, though, tends to comprise the youngest customers.
Posted Jul 28, 2004
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Give consumers something of value, and most of them are willing to pay for it--with their own personal information. That's the conclusion of a new study by technology vendor ChoiceStream, which shows that more than half of online shoppers surveyed would provide demographic data in exchange for personalized content. The real coalition of the willing, though, tends to comprise the youngest customers. The ChoiceStream Personalization Survey found that more than 80 percent of online consumers claimed to be interested in receiving personalized online material that dynamically alters to match the presumed or stated interests of the consumer. Not surprisingly, this marketing strategy has recently gained momentum. The most well known example of its use has been Amazon.com's contextual presentation of products purchased by customers who bought similar items. According to ChoiceStream CEO Steve Johnson, the survey reflects the growing pervasiveness of the technique. "The results show that people not only are beginning to understand what personalization is, they recognize when they've seen it. They're beginning to appreciate that when it's done right, it brings value," he says. Results also show a clear pattern in online behavior according to age: While 63 percent of respondents age 18-34 said they would be willingly to share demographic data about themselves, only 49 percent of people 35 and over said the same. And 71 percent of the 18-34 age group was prepared to provide preference information, compared to 57 percent of the older segment. Although a majority of shoppers--regardless of age--expressed a willingness to enter their own data into the system, decidedly less appealing was allowing site operators to silently monitor their behavior. Just 40 percent of respondents said they were willing to let a Web site track their clicks and transactions in exchange for personalized content, a figure far lower than Johnson says he expected. One possible explanation for the low figure is that participants weren't given the opportunity to make a distinction between all sites, and what the industry calls trusted partners: Sites with which the consumer has an established relationship. "If we'd included the word trusted and spelled out a few examples, that number would be north of 65 percent," Johnson says.
Johnson also says that consumers are becoming more tolerant of the practice, in the proper context. "If people see that the retailer is a trusted party, then they're OK with sharing implicit information--their transactions, their downloads, or their browsing habits, such as news reading," he says. "With Amazon, people understand that the personalization they see is based on transactions they've made. They see that Amazon's not sharing the information, and that it's being used [solely] to provide them more value." Amazon, he adds, "is showing people that when it's done well it can actually reduce clutter and make [online] experiences...more convenient. [Personalization] can help them get what they want, faster." There has been a great deal of debate assessing the value or accuracy of customer data based on how it's acquired. Transaction-based data has the benefit of explicitly capturing actual activity. Voluntarily contributed information, such as demographics or stated preferences, runs the risk of being inaccurate, either by accident or by design. Johnson says, "It's much harder to glean information from transactions." But when a consumer is posed seemingly arbitrary questions, he says, "there's no real motivation to tell the truth." The ChoiceStream survey, in Johnson's opinion, shows that the trade-off has to be worthwhile. "The whole key is the reciprocity," he says. "When the consumer volunteers his information or knows he's being watched, it provides incentives to provide value to him." Johnson says he expects that what once was a hard-fought battle to get consumers to opt in has become a generational slide into acceptance. "People now know personalization when they see it," Johnson says. "And they're more willing to click on it and answer a few questions [to get it]." Related articles: Effective Personalization What's in it For Me?
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