Personalization, Data and Trust: The Role of Brand in a Data-Driven, Personalized, Experience Economy

People experience the world differently. Authentic and differentiated experiences must be rooted in an understanding of this uniqueness, and should respond to an individual’s behaviors and the variability of life. Smartphones and smart connected products are making it easier for companies to offer tailored, personalized experiences that still embody the company’s brand values. The wide availability of many different types of personal data, coupled with the ability to store and analyze that data, allows firms to personalize consumer experience. With technologies such as smartphones, sensor networks and smart connected products, large global firms can interact with their consumers in personal ways not seen since we left behind the village store to enter the industrial age.

The shift to personalized experiences changes the relationship a brand has with its consumers. A consumer buying a smart connected product is no longer taking the last step in the journey that begins with awareness to consideration and ends with preference and selection, but is instead taking the first step in a relationship with a firm. Take something as simple as a thermostat; 10 years ago, a buyer would have done some research — perhaps by reading product reviews or talking to a sales associate at a hardware store — and then bought the product. Today, if you buy a smart connected thermostat, such as Google’s Nest or Honeywell’s Lyric, buying and installing the product is just the start of the relationship with the brand. The thermostat learns the preferences of a household, and the comings and goings of those in the house. Nest sends a monthly email, detailing the household energy consumption compared to others in the neighborhood. In this way, personalized experiences evolve the relationship between the brand and buyer from consumption to participation.

The Role of Personal Data in Brand Perception

Brands need to gather various types of personal data, from self-reported information to digital exhaust (the information that users generate as they go about their daily digital lives), to power these experiences.

Beyond the legal requirements to meet privacy regulations, how can firms gather these data streams in a way that builds consumer trust while meeting the business needs of the organization? What are the implications for brands?

Four important implications

In our work, helping brands large and small define experience strategies in a world of smart connected products; and in our research on people’s attitudes towards personal data, we find four important challenges for chief marketing officers (CMOs).

1. The value exchange — Are you giving consumers a compelling reason to share their data with you?
2. Designing a brand trust framework — Have you designed important trust-building moments — moments of trust — within the customer  journey?
3. Aligning privacy behavior with brand values — Do your brand actions around privacy align with the brand values?
4. Building trusted ecosystems — Are you thinking about ways to maintain consumer trust while increasingly sharing consumer data and digital exhaust with other firms?

The value exchange

Are you giving consumers a compelling reason to share their data with you?

Targeted advertising is not seen as a value exchange by most consumers. Witness the success of ad-blocking software on web browsers and smartphones; most consumers would rather avoid advertising messages if they can, even if the message is tailored to their interests. Moreover, targeted advertising is simply an expression of a brand through creative communications, rather than a move towards expressing a brand through experience. Which is not to say that cross-selling and up-selling services based on personal data are inherently a non-starter for a successful value exchange with consumers. Rather, firms need to ensure that they are giving consumers enough value for the exchange to be worthwhile.

There are many examples of firms successfully using consumer data to deliver on-brand experiences in the digital world, which result in greater consumer spending with a brand. Amazon tailors recommendations based on your search and purchase history, and has become so good at predicting what we might want that they patented ‘anticipatory’ shipping in 2014. Amazon’s promise is the wide selection and availability of goods, coupled with convenient and rapid shipping. Making use of consumers’ data and analytics to better deliver on that promise encapsulates their brand promise in the experience of the service.

Moving from pure digital to blended physical and digital experiences, the Vail Resorts Management Company has launched the EpicMix app for smartphones, linked to skiers’ season pass or ticket. Skiers have their pass scanned each time they ride a chair-lift, leaving a trail of digital exhaust as they make their way through a ski resort. The app makes this information interesting and useful to skiers by calculating vertical feet descended each day, the number of ski days for the season, and so on. EpicMix adds some interest and fun to the skiing experience with challenges, contests and awards. The resorts employ professional photographers who take pictures of skiers and snowboarders, and these images are linked to a skier’s profile and app. The Vail Resorts Company’s stated mission is to provide ‘the experience of a lifetime’. More practically, their value to skiers is to enhance the enjoyment of the great outdoors and skiing, something the EpicMix app does well.

Using consumer data to power tailored experiences is not simply restricted to the consumer realm. GE Energy provides software tools to its power generation customers to manage power plants. Power plants are very complex systems, with many thousands of parts that need to be maintained and must be replaced on different time scales. In some ways, power stations behave more like living organisms than machines, in that the state of the power station is not simply ‘on’ or ‘off’ but rather it exists in various degrees of health. It takes power to make power, so unplanned downtime caused by some component failing is very costly. GE’s MyFleet product offers a way to oversee and manage the health of a power station by tracking and monitoring many elements of the system, and using that data to minimize downtime and optimize the health of the power station. The experience of the MyFleet software system is a living instantiation of GE’s brand promise that the industrial Internet will bring together brilliant machines, advanced analytics and people at work to deliver ‘never-seen-before performance levels’. The experience is tailored to meet the specific needs of a customer’s power station and to various operator roles in maintaining that power station.

These examples seem to suggest that the only way to offer a brand experience is through product or service design. Is there any role for marketing to play? We firmly believe there is. For example, frog recently worked with a chain of fitness clubs that offer a wide variety of services, including personal training, fitness classes, spa sessions and expert content. Looking to create a deeper connection with current and prospective members, we created a recommendation algorithm that matches members with relevant services and content, strategically tailored to fit their fitness personality type. The tool generates a ‘type’ that members reference in conversation, similar to a Myers-Briggs personality type. From onboarding to post-workout meals, the algorithm cross-cuts all of the brand’s touch points, helping to shape hyper-relevant, memorable experiences.

Designing a brand trust framework

Have you designed important trust-building moments within the customer journey?

To deliver value in exchange for personal data, brand managers need to consider the entirety of a customer journey and design the touch points across that journey to reinforce trust for a brand. It is not sufficient to optimize the mobile experience, or physical experience, or customer service center experience in isolation; they all need to reinforce each other for the experience to be successful. CMOs need to build a framework that enhances overall trust for a brand and optimize experiences to build that trust.

We recommend augmenting moments of truth with moments of trust. Google introduced the notion of the Zero Moment of Truth (ZMOT), the moment where shoppers conduct research, look for coupons or comparison shop. The ZMOT can be designed to add trust — creating the Zero Moment of Truth and Trust (ZMOTT) — with confidence-building measures, such as offering online reviews from other customers popularized by services such as Amazon.com. A more dramatic example is Progressive Insurance, a firm that offers comparison shopping quotes from competitor insurers through their Progressive Direct web quoting system.

The First Moment of Truth (FMOT), the moment when consumers are confronted with a product or service, is also an opportunity for trust building to become the First Moment of Truth and Trust (FMOTT). U.S. telecom carriers AT&T, Sprint and Verizon have all recently redesigned their FMOT to add trust. Physical stores play an important role in the overall telecom customer journey, acting as the decision point to buy a new device or service plan. All three carriers designed their store experience to reinforce trust during this critical journey moment by creating face-to-face, semi-private conversation nooks or tables. When signing up for a new service plan, consumers share a great deal of personal information, including drivers’ license, credit score and payment terms. Moving away from over-the-counter transactions to a seated, semi-private conversation with visual access to all the information the carrier is collecting reinforces perceptions of brand trust.

Uber is an example of a firm that has successfully turned their Second Moment of Truth — the moment when a customer has bought a product and is using it — into a Second Moment of Truth and Trust (SMOTT). They do this in a number of ways. First, drivers and passengers know exactly who is on either side of the ride experience, building trust in a very human way. Second, Uber maintains GPS data tracking for every trip, so they always know where the car is at all times. More recently, Uber added a family tracking feature that allows account holders to track a family member’s trip in real time. Let us say you wanted to send an elderly parent to a medical center for a check-up. You can order an Uber for your parent and watch the trip unfold to ensure that the person got to the medical center as planned. Although significant incidents have occurred with Uber riders that raise questions around how fool-proof their system is, the company has structured a clear trust framework, reinforcing Uber’s brand promise of being ‘everyone’s private driver’.

The Walt Disney Company, which scored 12th on the Forbes 2015 most trusted brands rankings, is a good example of a firm that carefully calibrates each step on its customer journey to build and reinforce trust, making guests happy to share their personal data with the firm. Guests to Disney World are issued MagicBands, a passive radio frequency identification (RFID) wrist band that arrives at your home several weeks before your visit. This wrist band becomes your ticket into the park, your fast pass to rides that you can pre-book through the Disney website or mobile app, your hotel key for properties in the resort, your wallet for payments at kiosks throughout the parks and resort hotels, and your identity bracelet by which you can tag the professional photographs taken of you and your party by the park photographers. The current MagicBands have elements that make the experience of being in the park more magical than before. For example, while waiting in line for the Test Track ride in Epcot, guests can design their own car. During the ride, the guest’s design is scored on various car performance metrics, and after the ride is over, the guest can create a commercial for their car. In this way, the firm is using consumer data to enhance the user experience, reinforcing trust throughout the customer journey, and encapsulating the brand principles by making the guest experience magical.

It is this higher trust that allows firms to offer services and products that leverage personal data. In 2014, frog conducted a study in five countries to understand consumer attitudes towards sharing personal data with multiple brands. We found that consumers are most willing to share their self-reported data with companies, even if they only get small value in return. Demographic information, as well as taste and preferences, are readily shared by most consumers, especially if a company uses that information to enhance the experience of a service or product. For example, users of streaming music service Pandora readily share their favorite artists with the firm when they create playlists and stations. Consumers are slightly more sensitive about digital exhaust — the personal data we create through using smart connected products and digital services. Staying with the Pandora example, this is the personal data we create when we play some stations more than others, or skip specific songs. The company gets to know us better with each interaction and piece of personal data, but, again, if the information is used to enhance a service experience, most consumers consider it to be a fair exchange. What is more sensitive is if a firm uses personal data to market to consumers, or if they sell the data to third parties.

Aside from the data type and use is the question of whether consumers trust a brand with their personal data. frog’s 2014 study and subsequent studies from other organizations show that consumers have some understanding of whether they can trust a brand with their personal data. Social networks such as LinkedIn or Facebook in the United States, and Chinese equivalents such as Renren and Weibo, consistently garner lower trust from their users than mobile carriers and banks. Payments and credit card firms, as well as e-commerce firms, tend to score the highest on trust with personal data. Even if they cannot fully articulate data privacy policies and protections, consumers have internalized the fact that some brands and business models rely on sharing and selling personal data, whereas other firms only use personal data to enhance the experience of a service of the product. As we point out in a paper summarizing frog’s 2014 personal data study, Customer Data, Designing for Transparency and Trust, companies that are trusted have an advantage because they can design and launch personal data-intensive services with more speculative value and still expect consumers to adopt them, compared to less trustworthy brands.

Aligning privacy behavior with brand values

Do your brand actions around privacy align with the brand values?

Although direct marketers may have been working with consumer data for many decades, what is new is the availability and depth of data offered by smart connected products, and the powerful use cases for that data. As the field evolves, a line of business executives, IT teams, marketers, product and service designers, and corporate lawyers continue to grapple with new questions.

Lorrie Faith Cranor famously estimated in 2012 that it would take 244 hours to read the privacy policies of the websites and apps people typically visit in a year. Add in the end user licensing agreements (EULAs) and terms of service, and it is clear that very few people have the time to understand the implications of the digital exhaust they are creating, let alone manage it. Consumers cannot make an assessment of a firm’s data policies and its trustworthiness with personal data on a case-by-case basis, given the effort involved. In the absence of a rational assessment of a firm’s data policies, we need a short-cut — an emotional decision-making mechanism that stands for a firm’s data privacy policies.

Privacy policies need to become part of an organization’s brand image. Brand curators, marketers and experienced designers need to wrest control of data and privacy policies from the lawyers. This is already happening. In 2014, Apple started to make strong declarations about consumer data and privacy. It launched ever more sophisticated encryption on iPhones and iPads. In early 2016, it resisted efforts by the U.S. Department of Justice to force the company to build a backdoor into the iPhone, which would allow police and security services access to phones of criminals and terrorists. Whatever you think of the politics of the stance, Apple is sending a clear message that it stands for privacy and protection of its customers’ data.

On the flip side, if a firm loses control of consumer data, it has a direct impact on the brand’s image. Although several major retailers have suffered data breaches, Target’s fall 2013 breach was one of the most public, impacting 70 mn individuals. According to their U.S. Securities and Exchange Commission (SEC) filings, as of January 2015 they had incurred US$252 million in data-breach-related expenses. Beyond the direct cost, however, is the reputational harm and brand damage caused by the loss of trust. Something as arcane as consumer data threatened to undo years of brand building. Given the data breaches at several other competitors, consumers may forgive Target, but it will take them longer to forget. With brand managers at the table, or better yet at the helm, firms are better able to align privacy policies with brand values.

Building trusted ecosystems

Are you thinking about ways to maintain consumer trust while increasingly sharing consumer data and digital exhaust across organization boundaries?

The earlier examples of successful brand experiences that are mediated by consumer data and digital exhaust predominate in controlled environments such as resorts, parks and campuses, where a single organization owns all of the touch points. The EpicMix app, for example, only works within a ski resort owned and operated by the Vail Resorts Company. As our cities, cars and homes become smarter and increasingly connected, however, we will see more tailored, designed experiences. We will see these experiences cross multiple brands, firms and organizations, arranged around specific customer journeys. This raises new challenges: How does a brand express itself within a wider customer journey when there are multiple brands involved? How can brands maintain consumer trust while increasingly sharing consumer data and digital exhaust across organizational boundaries?

Again, we see Uber as an example of this strategy in action. The service began as a way to call a car within a proprietary mobile application. Uber, however, evolved to offer its service as a capability within other companies’ applications. For example, within the United Airlines mobile app, after checking in for a flight there is a button to order an Uber to take you to the airport. As an experience, this flows nicely along a customer’s typical journey map. Similarly, it is possible to order an Uber from within Facebook Messenger without ever leaving Messenger. Consumers may be comfortable with information flowing between the two firms, given the convenience of ordering a car without opening a new app.

Car makers designing in-car experiences for connected cars or self-driving cars are in a similar situation. Most carmakers offer third-party experiences today, such as SiriusXM or Android Auto. Others are building their own proprietary experiences. We believe that blended experiences are more likely to succeed in the market, but CMOs need to thoughtfully curate a trusted ecosystem and partner with brands that enhance their trust. Low-trust brands become the weakest link in an ecosystem, dragging down the higher trust brands to the lowest common denominator.

The rise of smart connected products and services, powered by consumer data, is not something that can be left to engineering, IT and legal teams to figure out alone. CMOs and brand marketers need to be front and center in defining on-brand experiences for consumers. Marketing teams need to make sure that the firm is giving consumers a compelling value proposition in exchange for personal data.

As consumers are more willing to share personal data with firms they trust, CMOs need to push their organizations to add trust-building moments into customer journeys. And while legal teams have legitimate reasons to push privacy policies and licensing agreements that defend the firm, CMOs need to ensure that the policies and actions the firm takes with regard to consumer data reinforce the brand promise. Data breaches, and the resulting loss of trust, may begin as an IT operational failure but have dramatic consequences for brand perception and value. Personal data and consumer trust are the building blocks of the personalized experience economy. They must be earned by firms, and willingly given by consumers. It is the new face of brand building, and very much the domain of marketers.

Originally published in the Journal of Brand Strategy, Summer 2016