Data today has become the foundation on which businesses are built on. From international unicorns to family-run businesses – and in almost every industry imaginable – data flows through businesses.
It’s used to understand customers, to improve operational efficiencies, and to unify previously disparate processes or entire departments. Ultimately, its impact on business growth has become universally accepted.
However, access to and use of data comes with many important considerations, chief amongst them is privacy – especially when it comes to customer data. As privacy breaches increase in regularity and severity, and the Government rolls out amendments to The Privacy Act 1988, greater scrutiny is being placed on data. Ultimately, any move designed to increase the security of data is important. When data is treated with the utmost security, brands can build trust with their customers and both businesses and customers alike can benefit. Here are some considerations in the context of Australia’s retail industry.
Start with trust
For retailers in 2024, data has become as important as their inventory. Through data, retailers can build essential insights into the habits and needs of their shoppers; insights they can use to guide inventory and purchasing decisions, drive operational efficiencies, create personalised marketing campaigns and enhance overall customer experience. However, to reap those benefits, data protection must be prioritised above all else.
As data breaches increase in regularity and profile, trust dwindles and scrutiny increases. Against that backdrop, trust and transparency are critical. When trust is built and transparency is provided, retail businesses are better positioned to boost customer loyalty and retention. The opposite is the case when trust and transparency aren’t prioritised. Indeed, over one in four (27%) shoppers in APAC say ‘being contacted in a creepy way’ was the fastest way to diminish trust.
Proactively avoid privacy pitfalls
Evidently, it’s critical that retailers find the right balance between using data for good – for them and their shoppers – and respecting privacy. Not every loss of trust is based on ill intention. Often, businesses simply trip up by not understanding best practices, and not communicating openly.
Start with transparency. A common mistake some retailers make is not communicating clearly and proactively about what data they’re collecting and why. Just as transparency builds trust, a lack of it undermines trust. So if retailers are not upfront about their data collection policies, it could make their shoppers uneasy and even encourage them to request their data be deleted.
Because of the value of data, many third parties are eager to purchase it. Retailers should never share customer data with third parties without following applicable laws. In addition, to boost transparency, they should seek consent from their customers, in addition to any legal requirements.
Growing from a foundation of trust
To start or scale a business, a strong foundation is essential. Customer trust is a key element of this foundation, and once earned can help retailers seize opportunities and navigate any challenge today’s economic pressures present. When a shopper trusts a brand, their loyalty to it increases. They then become an advocate for that business, which aids in customer acquisition. Collectively, that helps a retailer build a more sustainable business in both the short- and long-term
When retailers build trust, and prioritise security and transparency, their shoppers will be more inclined to share their data. At that point, both customer and retailer benefit. For example, if retailers successfully combine approved customer data with the sales data they collect through a point of sale (POS) like Lightspeed, they can segment them based on shared characteristics like high spenders, frequent visitors or even those who haven’t purchased recently.
Based on that, retailers can create timely personalised marketing designed to appeal to their specific preferences or habits. By doing so they can foster a loyal relationship and encourage repeat spending. Or, if a retailer identifies through their data that they have a high level of cart abandonment, they could streamline the payment process to improve conversions and the overall customer experience.
Ultimately, consumers are being cautious in their spending and will prioritise brands who build trust and develop that they understand and value them. Data enables that and can be a huge competitive advantage for retailers today. So by utilising data and establishing trust, retailers can build the customer experiences and loyal relationships that are essential to success.
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