Are retailers ready for a ‘seismic shift’ in consumer trust?￼
Aussie consumers have low levels of trust for advertising, but will pay more to purchase from a trusted brand, a new report from Cheetah Digital reveals.
So what can retailers do to keep up with this seismic shift in consumer expectations where hyper-personalised relationships with brands are the only way forward? This question – and more – was unpacked in a recent Cheetah Digital-hosted webinar I was a part of, alongside an expert panel of guests, including Teresa Sperti, the founder and director of Arktic Fox and Adam Posner, the CEO and founder of The Point of Loyalty.
Social media’s erosion of trust
According to Cheetah Digital’s new Digital Consumer Trends Index, 67 per cent of consumers in Australia do not trust the advertising they see on social media platforms. And more than half (63 per cent) don’t trust social media platforms with their data.
Teresa Sperti doesn’t find the results surprising at all. “Over time, there has been an erosion in the level of trust for social platforms,” she points out. “As a whole, this has led consumers to be increasingly wary about the information they provide on these platforms and how their data is being used.”
She credits this erosion of trust to a couple of things. First, consumers are concerned about the social impact these platforms have on society; and secondly, consumers are worried about the approach that’s taken to harvest their data.
A recent Washington Post poll finds that, of all the large tech companies, social platforms like Facebook and Tiktok have the lowest level of consumer trust. In fact, 72 per cent of internet users rated their level of trust in Facebook as “not much” or “not at all” to responsibly handle their personal information and data on their Internet activity. And roughly six in 10 distrust TikTok and Instagram, while slight majorities distrust WhatsApp and YouTube. This decline in trust mirrors Cheetah Digital’s findings to a T.
“From a data privacy point of view, consumers’ expectations are changing broadly,” Sperti adds. “Consumers are less trusting of brands when it comes to providing data. They don’t believe brands can be trusted to protect personal data or utilise it effectively. As a result, we’re seeing a wave of greater scepticism from consumers as a whole.”
Adam Posner agrees, pointing out the disruptive aspect of social ads. “The ads interrupt and are, oftentimes, irrelevant. But even more, they’re invasive. That aspect of social ads feels creepy, which works to erode consumer trust as well,” he says.
It’s ironic when you consider that social platforms emerged as a way to drive engagement with the audience. Since it’s moved into a sphere of profit over people, they’ve moved further from their reason for existence.
“These days, it’s all about monetisation of the platforms. As they’ve increased the amount of advertising, consumers have become bombarded with all kinds of messages,” Sperti says. “It’s become hard for consumers to decipher what’s ‘fake news’ if a product is quality or if they’re potentially being taken for a ride.”
Posner brings up the idea that, on these platforms, the consumer is essentially the product. “It’s a real awakening,” he says. “Consumers are realising that if they’re the product through their data, then that means they’re valuable. So, naturally, they’ve become even more protective over their data.”
It seems what that’s creating is a data economy as a consumer. We’re going to see a shift to a value exchange where the platform says give me your data, and I’ll give you something to make it worth your while. That’s when social platforms will start regaining consumer trust.
Sperti adds: “Customer expectation is changing. The brands that are going to win moving ahead are those that have earned the right to effectively communicate, earned the right to be entrusted with data and are able to retain the right to utilise that data. And a lot of that comes back to control and consent.”
Email reigns supreme
Meanwhile, Cheetah Digital’s report also shows that email still reigns supreme when it comes to driving sales, beating paid social and display advertising by up to 228 per cent. “The statistics don’t lie. We’ve gone back to the future of marketing, in a sense. In light of all the creepy advertising, marketers are going back to the basics of building a brand. And that’s putting the spotlight back on email.”
Email continues to be a trusted channel. At least 90 per cent of consumer brands have emails and it’s widely accepted. So it’s a great foundation and super effective for marketers.
Consumer trust, the value exchange and ‘relationship marketing’
In a world that’s increasingly focused on automation, it can be challenging to bring in the human touch. But it’s essential because that’s what consumers demand. In fact, according to Cheetah Digital’s report, 52 per cent of Australian consumers are willing to share personal data to feel like they are part of a community. And more than half (56 per cent) of Australian consumers feel frustrated when they receive irrelevant content or offers.
Meanwhile, 63 per cent of consumers are willing to pay more to purchase from a trusted brand. Almost half (40 per cent) of consumers in Australia are more likely to take part in loyalty programs compared to last year. And 24 per cent of consumers left their favourite brand because they didn’t feel valued as a customer.
“There are many layers to relationship marketing,” Adam adds. “And a lot of it is contextual. Some customers might want a transactional relationship with one brand and a more personalised relationship with another. But all customers want acknowledgement and appreciation.”
In today’s competitive landscape, brands are finding it increasingly challenging to maintain loyalty and build strong relationships, Sperti says. Even more, many marketing teams are pushed to do more with the same resources. It’s the perfect storm, keeping their relationship marketing strategies stagnant and transactional.
“Many are still very transactional and predominantly focused on delivering business outcomes rather than providing real value to the customer,” she points out.
“Value exchange is so important. Yet it still feels like much of the activity that brands are driving to market is about what they want the customer to do and what outcomes they’re looking to achieve as opposed to truly understanding what it is that the customer wants.
“You have to go out and talk to them. As brands, we’re still not very good at listening to our customers. It’s really hard to do relationship marketing when we don’t understand our customers intimately.”
A brand that is hitting it out of the park when it comes to relationship marketing, Sperti says, is Starbucks. “Starbucks invested early in understanding the customer and driving loyalty. It knows that in an ever-changing landscape, its customers want convenience and frictionless experiences. The experiences that Starbucks has developed deliver true value to its customers.”
The double-edged sword of privacy in a cookie-less world
The death of the third-party cookie is imminent. And for consumers, it won’t get here a moment too soon. According to Cheetah Digital’s report, a staggering 69 per cent of Australian consumers think product recommendations from cookie tracking or similar is creepy, not cool. And while only around one in 10 (13 per cent) of Aussie consumers will miss cookies and think they make for a better experience; the number of marketers who will miss them is likely a lot more.
“I don’t think Aussie brands are ready for a cookie-less future,” Sperti insists. “We recently surveyed over 200 senior digital marketing leaders from brands, big and small, for our 2022 Marketing State of Play report. We found that only 12 per cent of brands feel like they have a clear path forward, and almost half admitted they have yet to start planning for the change that’s coming.”
Despite all the buzz about third-party cookies, Sperti believes brands haven’t fully grasped what it truly means. And a significant part of the issue is data literacy. “Our report reveals that there are very low levels of data literacy within marketing teams in this country. Only one in three feel that their teams have strong data literacy,” she explains. “That’s part of what’s driving this. It’s very hard to know how to adapt when you don’t have strong data literacy or knowledge about concepts like cookies.”
At the other end of the spectrum, Sperti shares how Aussie brands are typically slow to adapt without a catalyst. Take Covid, for instance. Brands should’ve been working on their digital transformation long before March 2020. But it took this unprecedented event just to get them started. She says the same is likely to happen with cookies. Brands will scramble to change the day third-party cookies die.
Their first line of defence will have to be a first-party data strategy in the form of a loyalty program. However, it’s vital that brands recognise that loyalty is only one piece of the puzzle.
Loyalty programs are a great tool to get first-party data, preferences and all the things that help a brand understand its customers. At Cheetah Digital, we’ve launched a number of successful loyalty programs. But there’s still a long way for brands to go. They need to figure out how to go to market with their limited budgets, all the information we provide and with some tech behind it to make it happen.
Sperti adds: “The loyalty program is like the starting point because it provides you with a mechanism and value exchange to capture the data. However, if you don’t have the internal capability to really leverage that asset you’re building, then it’s probably not going to solve your problem.”
Access the webinar free and on-demand here.
About Cheetah Digital
Cheetah Digital is a cross-channel customer engagement solution provider for the modern marketer. The Cheetah Digital Customer Engagement Suite enables marketers to create personalised experiences, cross-channel messaging, and loyalty strategies, underpinned by an engagement data platform that can scale to meet the changing demands of today’s consumer. Many of the world’s best brands, including Starbucks, Hilton, Neiman Marcus, Levi’s, and Williams-Sonoma trust Cheetah Digital to help them drive revenue, build lasting customer relationships, and deliver a unique value exchange throughout the customer lifecycle. To learn more, visit www.cheetahdigital.com.