The personalisation conundrum: using website personalisation without alienating customers

Personalisation is one of the most polarising aspects of e-commerce today: while many website operators love the potential benefits to their bottom line, users often consider it a breach of privacy and a corruption of the levelling effect the internet has on markets around the globe.

The basic idea is that websites can use available information about a given user to customise the page presented to that user.

A non-personalised website would present every user with exactly the same webpage. A personalised e-commerce site may, for example, change the items presented for sale on its frontpage to match a search term the user has previously searched for on that site. Or, a restaurant review website may use geolocation data to display ads for eateries near the user’s physical location.

The data used to personalise a webpage is divided into two categories: explicit information provided by the user, such as their age, gender, interests, and so on; and behind the scenes, implicit information about a user and their online behaviour, gleaned from browser cookies, the history of a user’s account on that website and things like geolocation data.

The idea is loved by many website operators, who consider personalisation as a way to drive sales and provide a smoother experience for the user. This smoother experience may also prove more lucrative for the website.

If you run a sporting goods website and you know that a particular user has a penchant for a specific brand of runners, it makes sense to place them in front of the user wherever possible. Some websites consider personalisation a necessity - if everyone else is doing it, I have to do it too, to stay competitive.

But many users dislike the concept, for a few reasons.

Some simply don’t like the feeling that someone is watching them and tracking their behaviour - they find it creepy. Who knows what these companies will do with all this data, these users argue.

It’s hard to argue with this. There are several recent stories of how data-hoarding companies have exposed the secrets of their customers to unauthorised parties. For example, retailer Target found out that a teenage girl was secretly pregnant and inadvertently started a chain of events that led to her secret being revealed to her parents. For more on that story, and others similar, see this opinion piece.

This worry is particularly pertinent given the frequency and severity of data breaches - even if a data-hoarding company has the best of intentions, it only takes one hack for all that personal information to be spread around the globe.

These concerns have led to the creation of a growing number of online privacy tools that allow users to stop or limit the tracking devices that many websites use.

Beyond general privacy concerns, there’s also the matter of geotargeted pricing.

Many users celebrate the flattening effect that the internet has on pricing - until recently, e-commerce sites tended to sell items for the same price to every user. This is in contrast to traditional physical retail, which sees consumers in different areas of the globe - or even different areas of the same country, state or city - paying wildly different prices for the same product.

But now, many e-commerce sites are using geolocation data to offer different prices to users based on their current physical location. If a user is located in a wealthier area, they can afford to pay more, the argument goes.

Users are obviously upset about this.

There are even reports of websites charging Apple users more than they do other users, presumably because they believe Apple users are generally willing to pay more for goods than others.

The problem

So this leaves website operators with a conundrum: how to make the most of personalisation concepts and technologies without alienating customers.

The University of Canberra’s Centre for Internet Safety tackles this problem in a new paper called ‘Personalisation: Managing Consumer Choice and Privacy’ (PDF).

The paper’s authors, Alastair MacGibbon and Nigel Phair, argue that a consumer’s decision to participate in an online transaction is a cost/benefit analysis: does the personalised service I’m getting justify the privacy I’m giving up?

Therefore, “Product personalisation experiences must be clear to consumers allowing them to measure the vendor’s reputation and allowing them to value a more personalised service whilst contrasting privacy concerns,” the authors say.

As such, MacGibbon and Phair say businesses must ask themselves if the customer:

• knows what data is being collected,
• knows what it will be used for,
• knows who will have access to it,
• has given informed consent for its collection,
• has the ability to opt out of such data collection, while still being able to use the service.

The authors reckon that internet companies will eventually see the value of building such trust with consumers, who themselves will see the benefits services like personalisation offer.

“If done right, personalisation will be the ‘Customer service’ of the 21st century,” they say.

The paper is available here (PDF) and is well worth reading in its entirety.