Customer data is necessary for small businesses. It helps them understand customer wants and needs and how they interact with brands. In a world where competition is high, companies can leverage data to stand out more and create impactful experiences for customers.

Customer experience has always been the go-to strategy for businesses, and for good reasons. In a study by PwC, researchers found that 42% of consumers are willing to pay more for a better experience. 

However, it’s not just the data that helps businesses enhance the customer experience. Customers want privacy, too. And to meet those expectations, companies need transparency to maintain loyalty and retention.

Customer Demand for Personalization and Privacy

There’s no denying that data can be a powerful customer experience tool. Think of how you shop on Amazon. Each time you visit the homepage, Amazon provides custom product recommendations based on your previous purchases and search history. 

Most customers expect some level of personalization when making purchases. And the data you collect was designed to help customers feel like they are working with a personal shopper.

Providing a concierge-like service has become the hallmark of a good customer experience. However, it goes beyond the product recommendation. Access to pertinent information like preferred communication channels and past interactions is also crucial.

Why? Because no one likes to repeat themselves. Therefore, knowing the how and why of a customer inquiry gives support agents more context — leading to better support.

The Issue With Companies Collecting Data

While collecting data helps companies provide a better customer experience, there has been some distrust around this. Consumers’ concerns around how companies are using the data are rising. 

Some customers now say they want companies to have as little information as possible. In addition, they don’t trust that companies are following the policies they have regarding data privacy.

Various companies know now that trust has become a significantly important element of customer relationships. Indeed, it’s becoming more challenging to build trust while a good customer experience is in high demand.

With consumers becoming more cautious about sharing their private information — you might wonder how it’s possible to provide a personalized experience without breaking consumers' trust.

Communication Instead of Small Print

Companies still wanting to deliver a personalized experience based on customer data can boost consumer confidence about sharing personal information. It’s all about transparency, which is critical to gaining consumer trust. 

However, it’s not good for companies to say they have measures to protect their data. They must demonstrate how their protection is a priority.

For example, private institutions use third-party financial aid solutions to process applications. However, schools can reassure families that their information is secure through automated verification once they apply.

Of course, you may have the fine print on your website that checks all regulatory boxes. Yet, that doesn’t always help your customers sleep soundly at night.

What companies need is honest and open communication with their customers.

Sharing Stories and New Updates

Today, savvy companies are sharing the news about their practices on data collection. They’re informing customers how sharing their data benefits them and telling it compellingly.

Companies also engage customers in conversations about what information they’re willing to share over preferred channels. This is a critical part of the process as it gives them control over the types of data they share and how companies may use it.

Organizations that prioritize data transparency show customers that they have nothing to hide.

Too often, consumers must research to understand the fine print. However, companies shouldn't have to expect them to understand the information behind the data collection on their own. 

You have to help them understand by making the information clear on what choices they have around accepting data collection. Once they better understand why companies need to collect data and how they’re protecting it, they’ll be more open to handing over their information.

As you build trust with your customers, the wealth of information you receive will help you provide better experiences. 

Putting Data Transparency Into Practice

Use these data-transparent practices to ensure you build trust with customers and provide personalized experiences.

1. Give Customers Control

The most important aspect that leads to data transparency is giving customers flexibility over how you collect and use their data. This involves providing opt-in and opt-out options for sharing personal data.

You can use a lead generation software tool to create a form for your website. However, you must be sure the pop-up cookie form clearly explains what you do with the data once it’s collected.

2. Be Transparent

Ensure you communicate with customers about how you collect data and use it. Customers need to know what actions you’re taking to make their information secure. And if you’re making any changes to safeguard their data, updating customers on this information is important. 

You can achieve this by using tools to coordinate messaging across multiple communication channels.

3. Offer Real Value In Exchange for Personal Information

In exchange for personal data, it’s only fair that you reward your customers. After all, rewards make sharing information more enticing to consumers.

Consider offering a tangible benefit, such as a free product or discount. 

4. Respond to Customer Concerns

You’ll eventually run into a customer who is hesitant to share their personal information. In response, you should acknowledge your customer’s concerns to help build trust. That’s the key to providing a better customer experience.

For example, a customer looking for support may feel anxious about sharing information over a chatbot. Instead, they may feel more comfortable giving you details over the phone. 

If you can accommodate them, you can build trust more quickly and efficiently.

5. Set High Standards

Consider creating company-wide guidelines that conform to the latest data privacy laws worldwide — not just for the ones in the customer’s home region.

Going above and beyond shows customers that you’re making efforts in their best interest. In turn, the work you deploy can go a long way toward building customer trust.

Exceed Your Customers’ Expectations

Data transparency is no longer an option when it comes to customer experience. Your customers have demands, and it’s imperative that you be open to them about data collection. 

Yet, you can drive better customer relationships once you inform customers about how you use and protect their data. In turn, they develop more trust with you, leading to better experiences and future business.