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Why Should Consumers Share their Data with You?

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Podcast July 24, 2019
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Why Should Consumers Share their Data with You?

Every retail brand on the planet is talking about consumer data and it’s being pitched as the magical key to personalization, which in turn promises greater loyalty and repeat purchases. Having Amazon prompt you to repurchase an item like toilet paper might seem innocuous and maybe even helpful. However, the line between personalized and downright creepy is one that brands need to pay closer attention to, especially as laws in Europe and Canada are beginning to protect consumer data. In this episode, we speak to Jeff Hirsch, founder and president of The Right Brain Studio, and professor at the University of Southern California. Instead of waiting for legislation, Jeff believes there are some really big reasons that brands should be thinking more critically about this issue right now.

Transcript

Melinda: Every retail brand on the planet is talking about consumer data and it’s been pitched as the magical key to personalization, which in turn promises greater loyalty and repeat purchases. Having Amazon prompt you to repurchase an item like toilet paper might seem innocuous and maybe even helpful. However, the line between personalized and downright creepy is one that brands need to pay closer attention to, especially as laws in Europe and Canada are beginning to protect consumer data. Today, we speak to Jeff Hirsch, founder, and president of The Right Brain Studio and professor at the University of Southern California. Instead of waiting for legislation, Jeff believes there are some really big reasons that brands should be thinking more critically about this issue right now.

Welcome, Jeff. Thank you for being with us. Can you start off by telling us a little bit about yourself and about The Right Brain Studio?

Jeff: Well, I live in Los Angeles. I grew up in New York. I went off to college to first study acting and then when I realized I had absolutely no proclivity for it, I switched into the film department and I studied film criticism history, which sparked a great interest for me in popular culture. And it kind of led me to a graduate program, still at Northwestern, in advertising. And I went back home after finishing my graduate studies and started a job in a New York ad agency and I’ve been in the marketing business ever since.

After leaving the ad agency industry, I started my own business. I was working in brand management and account management. I worked on the clients’ side, as well, for a little while early in my career. But I always saw myself as a creative person, but I didn’t necessarily want to be a copywriter. I believe that the creativity should be present earlier in the process. And that’s when I started what became The Right Brain Studio, my business now, where we tried to apply that creativity to strategic issues very, very early on in the pipeline. So, what we do is marketing insights and strategy focused really only on qualitative research, the touchy-feely stuff that I really love, which is highly appropriate because we’re talking about data today, right?

So, we actually don’t really deal with data a lot. We deal with talking to people either in groups or individually. So we do that in research settings, we do that in people’s homes, we shop with them, we do all the typical kinds of qualitative research. But I like to say what we really do is offer something more consultative. We really get more into the strategy and innovation kind of aspects of marketing through talking to consumers. And what I’d like to say is our real job is to uncover consumer emotions that help connect our consumers, our customers to brands and help our clients shape stories that they should be telling people through their communications.

Melinda: That’s quite an interesting career path to go from acting to where you are today. So, if it’s all about the consumer connection and emotions and really it sounds like a lot of really one-on-one or at least face-to-face interaction with consumers. Tell me, what got you thinking about data collection and geo-fencing and personalization in this sort of automated way of relating to consumers?

Jeff: It’s an interesting question, and because I probably did start thinking about this more as a consumer than a marketer. And it’s kind of just interesting about what we do because I know we’re not supposed to personalize these experiences because it’s not about us, it’s about our consumers who are very different from us. But I think a lot of the times in our business, these insights start with something that happens to you personally.

I just remember years ago, when I practiced yoga and I needed a new yoga mat and I went online and I found one that I liked and I ordered it. And for the next several months, I kept seeing yoga ads pop up on my browser. And, you know, this is really early on. This is before I was really thinking about retargeting and all those kinds of issues I wasn’t that aware of them. I said, “This is interesting. I’m like an older white male who is probably not the target for a product like that and gee they know a lot about me, don’t they?” Just because I searched and I made a purchase. And of course that’s prevalent now.

I talked to somebody the other day and I couldn’t believe what she was saying, so I went online to kind of investigate it a little more there. There are people out there that believe that our devices are listening to us. I don’t buy into this at all, not just the Alexa’s of the world who might pick up conversation around your house. So I know we’re going to get into talking about this a little later, but it’s like where is the line between something that really honestly helps me as a consumer, can help companies? I mean, we are capitalists, so we do want to help them sell things. But where’s the line where your privacy, your personal privacy starts to be invaded? And we see just a lot of, a lot of instances of this now.

Melinda: Yes, we do want companies to do well, we want our economy to be flourishing. So, what benefits do you see to collecting consumer data and then using it to create more relevant ads or to personalize an experience, or even just facilitate easy purchases like toilet paper that you need to make? Where do you see the benefit?

Jeff: Well, it seems to me, that the benefits are largely on the side of the people selling things, not so much for the consumers. And I know the holy grail in our businesses, the consumer is king and queen, right? And consumer is always right. And everything we do is for the consumer. And if we serve the consumer better then our sales will go up. That’s the ideal way that capitalism is supposed to flourish. But it just doesn’t seem to me, this is I think more of a personal view than based on data. But it just seems to me that the benefits to the companies really outweigh the benefits to the consumer.

For instance, I’m sure we’ll talk about this. McDonald’s just bought a big technology company out of Israel to offer what they’re calling customization at the consumer at the points where people can order digitally, whether that’s drive in or they now have digital kiosks in some of their units where you can order. I don’t really need somebody as a consumer to say, “Gee, it’s a hot day, why don’t you have an ice cream cone?” I think I know when I want an ice cream cone and when I don’t. I also know when I’m out of toilet paper, I mean, you really do know. Having some kind of device in my home that alerts someone that you’re running out other than just kind of looking, that’s a little scary to me. So, obviously there are huge benefits to this, and they could benefit the consumers, but they’re really there more to benefit the sellers, I believe.

Melinda: We’re having a bit of a controversy here in Canada right now as I’m sure you probably are seeing where you are about self-checkouts, where there are people who really hate them and there are people who really like them. And maybe in some types of industries that might work better, but there’s a big push for it in grocery stores, and if you’ve got maybe two things, maybe it’s okay, if you’ve got a big cart, or if you’re elderly, or you have some sort of more mobility issue, then it starts to become more challenging to see the benefit to the consumer, for sure.

We talked about this a little bit, where do you think consumers will draw that line? I mean, you have a very clear idea of what you think is creepy, “It knows that I’m out of toilet paper, that’s creepy.” But there are some people that I’ve spoken to, even personally, especially a lot of moms who are like, “You know, it’s great. The toilet paper just gets delivered every week. I don’t even have to think about it, I don’t even have to order it, I don’t even have to ask for it. It just shows up and it’s there.” Where do you think consumers maybe as a whole, in North America are drawing that line?

Jeff: I mean that’s a really great question, but before I answer that, I want to get back to what you were just talking about with the self-checkout, and I think this will form actually a lot of our discussions. It seems to me that a lot of those could be generational as well, right? So, you talked about the elderly, maybe not being able to, you know, unload their carts and put the watermelon on the self-checkout counter or whatever, bag their own groceries, things like that. It’s more than physical. It’s really attitudinal and an expectation of service when you go to retail. So, I’m not quite elderly, but I am in the boomer generation and I know for me, I would rather be taken care of when I go into a restaurant, even a fast food place. There’s a place that you’re probably aware of called Which Wich, I don’t know if they’re up in Canada, but they put one in Studio City where I live here in California, and my son wanted to go there, my son who’s in his twenties. And the format is, if you’re not familiar with it, you get a marker and a pad and you basically check off what you want in your sandwich and then you hand it to somebody and then you pick up your sandwich later. And I went in there once, exactly once, the food was okay, it was mediocre, kind of like subpar quality, subpar-Subway kind of stuff. And I don’t want to go into even a fast food place and fill out forms. I don’t want to do it. So, I never went again. This unit’s going out of business by the way.

But I think that younger people want to–or are more open to doing things without another human being present. They grew up on apps, and they grew up with their phones, and are used to clicking on things. And I know I did a big study, a qualitative project for a company in the business of filling prescriptions. And we were talking about prescriptions, people picking up in the stores versus getting the mail order, and the company, obviously for efficiency purposes, just wanted more people to sign up for mail delivery of their regular prescriptions. And we talked to kind of two segments of consumers where like all old people and very, very old people. And the old people being 45 to 60, and then people 60 to 80. And it was interesting, the older people did not want to order by computer, they did not want to even pick up the phone. They want to go to the pharmacy. It’s something for them to do. There’s trust involved, they talk to a person, they can ask the pharmacist about any problems with the medications or cross-reactions. They have a relationship with a pharmacist, the younger people, and the younger people here being over 40, couldn’t care less. They just want to click, they want to click and order. So, I think a lot of this could have to do with how we grew up.

Melinda: And yet, on the other hand, there is a huge insurgence of young people, and by young people mean very young people, who really want to actually engage with other people. Just maybe not in the same way. So, I mean, there hasn’t been, at least not in America, there hasn’t been a huge insurgence, “We don’t want you collecting our data,” that hasn’t quite happened yet. It hasn’t really happened in Canada either. There are people talking about it, people are a little concerned about it. There are maybe some laws being passed about it, but companies are still collecting a lot of data. What do you think it’s going to take for consumers to start saying, “Hey, wait a minute, I don’t think I want you having this information about me.”

Jeff: Well, I don’t know. I mean, not very long ago we saw in this country, in the United States, we saw Facebook was selling our information to kind of an unauthorized third party, who then used that to try to influence our election. And maybe they did influence our election. We’ll never know. But Facebook got busted for it. It was very, very controversial. They’ve reacted, Mark Zuckerberg has come out saying, “We’re now going to focus on more private types of communication, whatever that is.” So, this kind of had an effect. But from the consumer end, that’s probably more reactions to potential government regulation than anything else because I took a look yesterday on subscription information for Facebook and we have not seen, this is what I suspected and it was true, we have not seen mass deletions of Facebook because consumers were afraid that their data was being used for terrible purposes, or their privacy was invaded. In fact, worldwide, there are 2.32 billion monthly active users as of December 31, 2018. That was a 9 percent increase over Facebook users the year before. That’s all over the world.

So, I don’t know what’s going to have to happen for people to be concerned. I was thinking about this yesterday in anticipation of talking to you and I was thinking that we realize on one level or another, as consumers, we all realize that everybody knows everything about us. I don’t think there’s any way around that, it’s just out there. Going back to my example of the yoga mat, they know what I’m clicking on and this is supposed to be metadata, we can’t get down to the individual. We just kind of know the data patterns that we know to send out the message. But they don’t know they’re sending it to Jeff, they know it’s based on some kind of algorithm supposedly. And they don’t really know what all of us as individuals are doing. But that can’t be true, and maybe that’s my own paranoia, but it would seem to me that everybody knows that everything is out there. And maybe that’s just something that we accept. But the thing of it is, it’s kind of abstract, it’s not really in our face, right? We kind of know that someone out there knows all these things about us. But again, it’s not really direct. It’s not in your face. It’s not, you know, walking into a store and somebody saying, “Oh, hello, Mr. Hirsch. We understand your credit score is 797 which qualifies you for this much credit with us, and we know that you like blue. So let me show you the blue items over here.” That would be a little scary because that’s not abstract, that’s right in your face and that could be scary.

Melinda: If you’ve got a client that comes into The Right Brain Studio and says, like your pharmacist company, that they’re thinking about how to use consumer data, how to collect it, how to use it, how to store it. If you’re trying to get them to think from a customer-centric perspective, what tactic would you take with them? What journey would you take them on to explore that as a possibility, and make sure that it actually helps the consumer as opposed to just helping the company?

Jeff: Well, that’s the thing. It always has to be from the consumers perspective. I always talk about how empathy is the most important quality of a marketer. And everything that we’re talking about here doesn’t really feel empathetic. In fact, when you talk about data, it doesn’t sound very empathetic, right? Because it’s about numbers and statistics, and it’s not really about feelings. So, as I said earlier, we get involved in all the touchy-feely stuff. What I do professionally has nothing to do with data collection or quantitative big data, statistical kinds of issues. But your question was from a consumer perspective, and I would really question whether I’d encourage them to look at the trade-off between the data they can collect, which is certainly beneficial, like take McDonald’s, they’re going to collect a lot of data through this new company they acquired. But what happens on the consumer end? Is this going to alienate consumers that they now have to order on a touch screen instead of the person saying, “Would you like fries with that?” They’re going to have a machine saying, “Would you like fries with that?” That’s really the issue. When does it start? When does the benefit of the accrued data start really hurting both the purchase and the short term? It doesn’t alienate me in the short term. And what does that do to my brand in the long term?

Because, especially a retail–which I know you guys focus on a lot–there is a retail experience. And that retail experience I think ideally should be an experience. It should be sensory, and it should be tactile. And that’s the point, or else why bother going to the store? So, once you cross that line and it’s like, why would I ever go to McDonald’s? Just in my lifetime, McDonald’s was originally, I don’t think they had any drive-throughs when they started out. You drove up and you sat in the parking lot in your car and maybe they had a table or two, but I doubt it. It was usually just kind of a drive-up kind of place. You went in, you ordered, and you sat in your car. Then they went to drive-throughs. I mean with pizza places, Pizza Hut, I’ve worked on this with Shikatani Lacroix actually with Pizza Hut. We’ve done dine-in revitalization projects, but there’s very little dine-in left with Pizza Hut. It’s just all delivery and takeout now. So, will it get to a point in all retail, including food where there are automated cars or there are Ubers, driverless Ubers, and why should I go to the McDonald’s? I can call Uber or whoever, and they can just deliver it. So, we do away with that experience. I’m exaggerating obviously, but if we do away with that experience entirely, I mean, what’s left? What is there?

Melinda: Well, thanks so much for being with us and for sharing your thoughts on this. It’s been really, really interesting.

Jeff: My pleasure. Thank you.

Melinda: I think Jeff’s right that there is a generational aspect to this issue, but there’s another more important thing he said that’s an overriding truth for any demographic, that empathy is the most important quality of a marketer. How can brands be empathetic when it comes to consumer data? Here are our tips:

First, brands need to evaluate what it means to be consumer-centric in their entire customer journey. Mapping out the journey using precise consumer personas is a good way to get inside the customer’s mind and find out what matters to them. If you don’t offer a better experience, one that matters to the consumer, why should they share their information with you? Another key tip is to ensure that you’re offering consumers benefits in return for their data. The easiest way to do this is to link data to a rewards program, and the rewards need to be meaningful enough to the consumer that they will be happy to share their information. A third important factor is to be careful about how you use their data. Thinking through a future-proofing lens. Consumers are becoming more concerned about privacy breaches and with good reason. Be transparent and be careful. The lasting effects of improperly secured data can be potentially devastating. A short-term benefit is tempting, but if it’s not in the consumer’s best interest, you may pay big later on. Another issue that will come into play is greater regulation. If you’re going to make a big investment in the collection of consumer data, make sure you understand the potential future requirements to ensure you don’t end up with a system that’s difficult to use later on.

Let us know how you’re handling this contentious new issue and whether or not you lie when you’re asked for your information. I do.

About

Jeff Hirsch is the founder and president of The Right Brain Studio, and a professor at the University of Southern California. His work fuels business growth by building deep connections between brands and their customers.

Think Retail is a podcast where top designers, strategists, thought leaders and business people discuss what’s coming next. For more information, email info@sld.com.

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