The California Consumer Privacy Act, which went into effect on Jan. 1, is quickly changing the approach many companies take with their data. This piece of legislation puts the power back into the hands of consumers and aims to cut down on corporate negligence and misuse of private information.
Coupled with the introduction of GDPR in 2018, we are firmly entering the era of data privacy. These changes have severely impacted the retail sector, particularly e-commerce merchants and how they interact with their customers.
But for online retailers, all hope is not lost with these new privacy measures. The aim of the CCPA is not to restrict merchants and their marketing capabilities, but rather target businesses who profit from selling customer data to third parties.
For the majority of retailers, this will trigger a stark change in how they collect data and their procedures for storing and securing it. Sure, this can cause a few extra hoops to jump through and further attention to detail from an IT standpoint, but new legislation does not signal an end to e-commerce success.
Impacts of Privacy Laws
At its core, the CCPA will affect the approach many e-commerce merchants make in their go-to-market strategy. This will require further oversight from both the IT and legal teams or the consulting of a privacy expert. Retailers will be more accountable for tracking shopper data, which will change the tools and strategies they leverage on a day-to-day basis. Brands will need to pay further attention to first-party data and will need processes in place to manage the deletion of customer data upon request.
A key differentiator between the CCPA and GDPR is that the CCPA does not afford the consumer the right to entirely opt-out of data collection. While retailers will need to do a significantly better job of securing and maintaining data, they are still allowed to capture information in a similar manner as before. As long as consent is granted and retailers are transparent about the data they collect, it should be business as usual.
This puts the onus on the consumer while granting them more power. While shoppers have the right to data deletion, most will not use it. Rather, the goal is to instill trust between brand and shoppers by keeping intentions clear and the availability of their data transparent. Fifty-nine percent of U.S. adults have little understanding of what companies do with the data they collect on consumers.
Increase Revenue and the Customer Experience
With first-party data at their disposal, merchants can ensure seamless customer experiences, while guaranteeing all private information is secure. It is no longer one or the other, but rather a system built on transparency. Shoppers know when opting in and granting consent to retailers to gather data via cookies or pop-ups, they will receive certain benefits.
One example could be a loyalty program incentivizing shoppers to share certain information in exchange for discounts. Another is shoppers receiving custom ads and promotions based on their browsing history. This saves marketing dollars and gives consumers a more personalized message.
This strategy can even get granular to the point of a makeup brand sending discounts on certain color palettes based on previous purchases, or an e-mail when your razor blades are running thin. Eighty-eight percent of shoppers claim they don’t receive “tailored assistance” in their customer journey, which is why personalization is so crucial. It is a win-win for both consumers and brands; retailers can target more effectively, and shoppers will only receive messages relevant to their needs and interests.
However, retailers can still offer a seamless customer experience without tracking personally identifiable information. With the utilization of AI, retailers can offer shoppers live prompts to check-out relevant items during a certain site session.
This custom content personalizes the customer journey without tracking PII. The user experience is enhanced in real-time as opposed to leveraging insights from past purchases.
The CCPA is the first law of its kind enacted in the United States and other states are close behind. This makes knowing your data infrastructure crucial as the nuances of upcoming bills will likely further impact your market strategies. But the aim of future legislation will be aligned with the CCPA, to curb predatory data practices.
Retailers who remain in compliance and are transparent with their consumers about data usage will be in the clear. This organization of data will be critical in offering a best-in-class customer experience which as all retailers know, is synonymous with driving value to the bottom line.
David Campanella is digital analytics manager at PFS.