The ‘virtuous circle’: how to deliver personalisation and privacy

On the one hand, it’s clear that today’s consumers embrace, if not expect, some level of personalisation from the brands and retailers they interact with.

Three-quarters (74%) say that personalised offers are now an expectation, for example. In fact, almost two-thirds (63%) discard non-targeted offers such as promotional codes or store-wide sales.

That makes it a powerful differentiator. “Personalisation has become a core strategy in UK grocery retail – in the battle to add value beyond price, retailers are increasingly leveraging AI-driven recommendations and offers to also create more relevant, tailored experiences,” agrees Heidi Stephens, strategy partner at creative agency RAPP, which has worked with the likes of wine seller Laithwaites.

Major grocery retailers, including Sainsbury’s and Tesco, have all expanded personalised pricing models in recent years, she points out, offering exclusive discounts based on past purchases. “Meanwhile Ocado uses AI to generate consumers’ next shopping list from historical shopper data and predict products they might like based on other customers with similar shopping habits.”

Only last month [February], Tesco began trialling a new hyper-personalised Clubcard Prices scheme. Participating customers will receive lower prices on selected preferred products, based on their previous purchase history. They’ll receive the personalised prices every Wednesday via the Tesco app, with the discounts valid for seven days.

It isn’t only supermarkets leveraging the trend, either. Though customer data is less readily available, many brands are also now taking advantage of retail media to customise marketing content or gathering further first-party data via their own direct-to-consumer (d2c) platforms. Cadbury, for example, allows shoppers on its d2c site to personalise products as gifts or for branded corporate giveaways, as well as create customised chocolate bundles. This provides shoppers with a unique purchase while equipping the brand with insight on their preferences and annual milestones.

At recipe box provider Gousto, its ‘Recommender Algorithm’ curates individual menus to ensure customers only see recipes best suited to their preferences. “Known as the ‘Spotify of Food’, it enhances the customer experience by making it effortless to navigate the unrivalled weekly recipe selection,” says a spokesman.

But prolific though personalisation might now be in UK food and drink, customers remain sceptical about how their data is being used.

Three-quarters (73%) say companies collect too much personal data, according to a 2024 poll by data security provider Cohesity, 82% want better safeguards on how information is obtained, and 74% of consumers want to be asked for permission before their personal or financial data is fed into AI models.

“While many shoppers appreciate the convenience and savings, they are rightly asking questions about how much information is being collected, how it’s used, and whether it’s being shared with third parties,” says Stephens. “Inevitably, high-profile data breaches and increasing awareness of online tracking have made some customers more cautious about opting into personalised experiences.”

To navigate this, there are three steps that brands and retailers should adopt when harnessing personalisation as part of their customer service offer.

“Start with getting the basics right,” advises Susannah Spencer, insight lead at KPMG UK. “Robust, accurate and secure customer data is the foundation of any relationship a consumer has with a brand or retailer and should underpin any type of personalisation.” That means “making sure consent is obtained, there’s transparency on how data is used, and that data is secure and safe.”

This is echoed by Sarah Duchazeaubeneix, commercial leader in Western Europe for Retail Collaborative Projects at NIQ. “Personalisation can be powerful, but it needs to be used sparingly and in the right way.”

Second, ensure any personalisation is underpinned by a clear value exchange, says Spencer. “There’s a virtuous circle and a vicious cycle,” she explains. “In the virtuous circle I provide you information as a customer and you, as the brand or retailer, personalise your output to me in a way that feels valuable. As a result, I trust what you’ve done with my information and I give you more, which allows you to increase personalisation – and on it goes.

“In the vicious cycle, however, I feel that a brand or retailer has crossed the line,” she says. “I’m bombarded with a level of personalisation that feels intrusive or even offensive, and the trust is broken.

“That element of trust and reinforcement is critical to striking the right balance with personalisation and privacy.”

This is a priority for Sainsbury’s Nectar scheme, says Amir Raskeh, managing director at Nectar360. “We focus on using insights to provide tangible benefits to our customers,” he says. “By leveraging these insights to deliver relevant offers and personalised experiences, we aim to enhance customer satisfaction and loyalty without ever compromising privacy.

“Our insights are based on real-world, granular data, not models or probabilities,” Raskeh adds. “This ensures that the offers customers see are genuinely relevant to them, making their shopping experience more enjoyable and valuable.”

Effective personalisation can’t simply be about pushing ads that may even feel irrelevant, out-of-date or downright offensive, agrees Duchazeaubeneix. “That isn’t focusing on the longer-term shopper experience,” she says. “In order for customers to willingly part with their data, it’s got to be about what’s in it for me? The challenge is making them part of the win.”

The third step is the creation of a feedback loop, she adds. “At some point you need to check in with customers and ask, ‘Is this OK? Is this working for you?’"

This feedback stage helps complete that virtuous circle that all brands and retailers should be aiming for, agrees Spencer. “It provides an early sign that things are going adrift or that tweaks need to be made to optimise the impact on customer experience,” she says.

“With this strategic framework in place, there doesn’t need to be a discomfort between personalisation and privacy,” she adds. “If the customer sees they are receiving a benefit and they’re also being periodically told how the data is being used, then brands and retailers can lean into all the possibilities that personalisation provides when it comes to elevating customer experience.”