What Is The Impact Of Data Privacy Regulation On Loyalty Marketing?

DSM Digital School of Marketing- loyalty

The appetite for consumer data privacy, as well as delivering effective digital marketing tactics, can seem at odds with one another. Digital marketers are highly dependent on tools which collect behavioural data from customers in order to craft marketing efforts. Individuals do not always understand, or provide direct permission, for their data to be gathered and utilised in undisclosed ways.

Except for the popular social media sites like Facebook, Twitter, and LinkedIn – where terms of service outline data use – data privacy (as well as data privacy regulations) are still a changing process. Consumers and digital marketers need to come to aa agreement while factoring in the pace as well as the effect of technology advancements on the shopping experience. Marketing strategies are just one small piece of the buyer’s journey evolution.

Digital marketers are increasingly turning their attention to the significance of safeguarding consumer data. Thus, data privacy regulations are becoming a great focus area. With research indicating that data breaches can cost an organisation the loyalty of its customers, any company-wide customer strategy should include provisions both for the protection of customer data as well as for rebuilding customer faith in the event of a breach. Loyalty and data security our now are connected – and businesses ignore that linkage at their peril.

How Do Customers Define Loyalty To A Brand?

Customer loyalty is alive and well however digital disruption – in addition to new generational influences – show that the nature of loyalty is shifting. Overall, only 37% of customers identify points and rewards as one of the most effective means to secure their brand loyalty.

In virtually every country, points and rewards are less likely to earn loyalty as opposed to corporate transparency and honesty. Customer loyalty is too vital to be left to a customer loyalty programme.

What happens when a customer is loyal to a brand or company?

  • 86% will recommend a business to friends and family
  • 66% are likely to write a positive review online after a good experience
  • 46% will remain loyal even after a negative experience

In terms of what inspires loyalty, 74% of consumers said product quality inspires loyalty while 66% say that value for money inspires loyalty. A further 56% say that customer service inspires customer loyalty.

You Can No Longer Just Rely On Consent In Your Loyalty Programmes

Organisations require a lawful basis to process personal data. Most organisations use consent in their loyalty programmes, but data privacy regulations discourage this practice by reinforcing the conditions necessary for lawful consent. It should thus only be sought where none of the other bases applies.

The most appropriate lawful basis when collecting personal information for customer loyalty programmes is contractual obligation but even with this lawful foundation, there are restrictions on how freely personal data can be handled. It is stated that information must be collected for a specific purpose, used only for that objective and kept for only as long as necessary. If an organisation would like to use the information for something else – such as a digital marketing email – it will need a separate lawful basis.

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