How Privacy Regulations Will Push Brands to Target Smaller, More Dedicated Groups of Consumers

The landscape is shifting quickly with regards to consumer data privacy.

GDPR led to fines being levied against British Airways and Marriott for data breaches. Google has also been hit with penalties under the new regulations. With a maximum penalty of 4% of a company’s global revenue, this could result in multi-billion-dollar penalties for large tech companies like Google and Facebook.

Yet some contend that this is not enough. The record-setting $5 billion fine on Facebook for its privacy violations pales in comparison to its $15 billion in quarterly revenue and $22 billion in profit. With the impending California Consumer Protection Act and the proposed New York Privacy Act, companies have been put on notice that there is increased scrutiny to the data they collect and use.

What lessons should companies take from this? Of course, the new regulations put organizations at financial risk should they be found to be in violation of the law. But the consequences of the new laws will also change how organizations engage in their marketing efforts. Collecting data without a clear course of action, while previously an inefficient approach, is now a liability. Marketers should become more deliberate in their data collection practices in the wake of these laws, weighing the benefits of what can be done with the acquired data against the potential costs.

While the changes forced upon marketers by new privacy regulations may initially pose a burden, there is a silver lining. Consumers have effectively been empowered to decide which companies they want to share data with. Assuming consumers are not complacent, marketers will likely have data on fewer consumers available to them. But these consumers have sent a clear signal to the marketers with which they elect to share their data. These consumers are open to engaging with the brand.

While marketers may have relied on a “spray and pray” approach to reaching consumers and maintaining relationships in the past, privacy regulations will push them to instead focus on building meaningful relationships with a smaller set of consumers. If that subset of consumers represents the brand’s core consumers, marketers should then focus on deepening those relationships and turning its consumers into brand advocates so that they can reach those consumers that have decided that they currently value their privacy more than what the brand has to offer.

How might organizations leverage these enhanced relationships? Enabling this group to weigh in on new products and services could aid in product development. Providing these consumers with opportunities to showcase their insider status for the brands they love will not only strengthen the relationships with this select group of consumers but also those with whom they maintain strong relationships. Those consumers with whom you maintain close ties will be the gatekeepers to social connections. If brands want to reach the masses, the key will be to treat their customers well. That is, being transparent with data use and delivering value to consumers in exchange for the data you’re requesting.

The increased reliance on word of mouth and social networks to reach consumers will increase the importance of influencer marketing. But it won’t be enough to look at influencers based on their social media followings. Again, it’s a matter of quality over quantity in the relationships. For marketers to persuade consumers to interact with them, they need to court those individuals that have the potential to shape the decisions and behaviors of others. That may mean a focus on individuals with smaller networks over individuals with large followings but shallow relationships.