Guest Blog By: Suran Min, MPS Student at Cornell University

Which will be the next generation to lead global consumption? Which group of consumers we should target as a commerce platform?” Liesl Smith, Senior Vice President of Marketing and Sales Enablement at FreedomPay ponders during our first research conference. With absolute certainty, Liesl tells us, “Generation Z.” As GenZers, our group members sit up a little straighter, sensing the relevance and enormity of the research we were embarking on..

Generation Z, which comprises nearly 40% of total consumption in the U.S., displayed their concerns about data privacy through the secondary research and our data analysis. Gen Z are more reluctant to share personal data with third parties than Millennials are, making it harder for merchants to collect their consumer data.

Our data analysis confirmed our hypothesis: to incentivize data sharing, monetary rewards need to be offered. These might take different formats, such as cash discounts or loyalty points. This inspired us to study how Generation Z’s willingness to share data is impacted by monetary incentives, the type of private data this most strongly influences, and which format of monetary rewards Generation Z prefers. 

We designed a survey to evaluate fellow Cornell students’ willingness to share different types of data. We used a Likert scale from 1 (very unlikely to share data) to 6 (very likely to share data), both with and without offering monetary rewards. 

Participants’ data was categorized into three levels: low-privacy, including. name, Birthday, and age); medium-privacy, such as shopping preferences and social media account handles; and high-privacy, concerning medical records, and their Social Security Number. Finally, participants compared cash discounts with loyalty points as an incentive for data sharing.

Data analysis showed that Generation Z is considerably more cautious of sharing data than other generations. However, the overall willingness to share is positively impacted by financial incentives.

The categorization of data privacy levels facilitated a more comprehensive analysis. We found that the exchange of medium-privacy level data was the most susceptible to monetary incentives. The impact of monetary rewards on low- and high-privacy level data is not as prominent.

Medium-privacy level signifies that the data has limited confidentiality, containing more personally identifiable characteristics than low-privacy level data such as name and age. Nevertheless, unlike high-privacy level data, medium-privacy level data does not contain sufficient information to precisely identify a unique individual.

GenZers are reluctant to disclose high-privacy level information, somewhat willing to exchange medium privacy level information for monetary rewards, and are most open to disclosing low-privacy level information. TAs such, companies should focus their efforts on generating value from more obtainable medium-privacy level information.

Finally, 69% of GenZers prefer cash discounts over loyalty points (31%). GenZers who chose loyalty points were most interested in redeeming points in the Food & Beverage industry. Most participants who chose cash discounts stated that they would accept loyalty points if their value were as equivalent to a cash discount. However, existing loyalty schemes using points may not offer the value exchange that consumers demand.

As Generation Z highly values data privacy but shows a willingness to exchange data containing limited personal information for monetary rewards, this presents an opportunity for companies like FreedomPay to generate value from data to better serve both merchants and consumers.

Download Effects of Monetary Rewards and Data Privacy Levels on Generation Z’s Willingness to Share Personal Data here.

By: Peter Georgopulos, VP of Sales, Omni-Channel Payments at FreedomPay

For as long as there have been store fronts, retailers have been trying to improve customer satisfaction rates, grow brand loyalty, and increase revenues. In fact, most retail companies will tell you that they are “focused on their customer” as a means to improve their business. So given this priority, why is it so hard to have meaningful interactions with your customers in the digital era?

According to McKinsey’s article “Personalizing the customer experience: Driving differentiation in retail” (dated April 28, 2020) 67% of retailers admitted that they did not have the correct tools in place to execute personalized marketing strategies at scale (i.e. personal interactions with all or a large segment of their customers).   It also cited a study that found 80% of U.S. adults want personalization from retailers.  When you consider these facts and McKinsey’s belief that “personalization at scale often delivers a 1 to 2 percent lift in total sales for grocery companies and an even higher lift for other retailers, it’s time to get moving! 

Today’s market leaders are personalizing their omni-channel sales interactions.  They are taking advantage of Artificial Intelligence, Business Intelligence tools and Data Warehouses to understand their consumers and communicate in far more meaningful ways.  As a result, the bar of consumer expectation has been raised. 

Consumers receiving incentives/rewards that are generated for “all customers like them” (i.e. Men over the age of 50, Parents with children in school, people living in a certain area code, etc.) are far less appealing than an incentive specifically personalized based on your shopping history.     

Retailers must make concerted efforts to broaden their understanding of individual customer behavior and then tailor their marketing incentives across all of today’s retail sales channels. Doing so will improve customer satisfaction rates, grow brand loyalty, and increase revenues!  

If your current payment solution isn’t enabling personalization at scale, then perhaps it’s time to revisit your omnichannel strategy.  I can help.   Let’s connect and discuss how to improve your customer experience at the point of purchase.  

By: Paul Snelling, Director of Platform Solutions at FreedomPay

“Be yourself; everyone else is already taken.” Or so the old saying goes when it comes to personal reflection and fulfilment. Today, however, we sit at a precipice of self-realization in the way retailers view us as human commodities. The vast majority of consumers are blissfully unaware that the power paradigm will shift very much in their favour. The era of “self” concerning everything retail has begun in earnest. We now enter a realm where providing a hyper-personalization experience has become a real do or die for merchants.

The view of the individual as an entity has become the primary objective of engagement where consumers are concerned. As a result, merchants must now reconnect with their customer base in a way they had not done for 50 years when the corner store was a local Mom and Pop affair that knew all their customers by name.

To reach that “Next Level”, businesses must be prepared to adopt and adapt to a rapidly evolving commerce landscape in which you don’t see customers as a whole entity but very much an individual in his or her own right. The individual customer has become a target which is fickle and fast-moving. And so today, merchants must focus on driving more of an experience for customers, thus beginning data-driven conversations.

Without a segmentation bias, each customer now has a specific need and expectation in the products and services they wish to purchase. Put simply, they want their demands met efficiently and effectively and are quite prepared to look elsewhere when this proves not to be the case. The days when blind habitual loyalty and convenience brought retailers return custom are over.

By understanding consumer data around behaviour, and analytics, businesses can be presented with opportunities that, if utilized in the right way, provide a quality hyper-personalized experience and all the benefits that brings.

Hypermarkets have been at the forefront of this trend for over a decade, with loyalty cards that provide valuable data insights that enable the markets offer rewards and bonuses to customers ahead of the weekly grocery purchase. But what if you wanted to track customer spending across different verticals? What if we tried to analyze the customer as a walking loyalty offering, not just providing data through a piece of plastic but spending behaviour? This is where the power shift comes front and centre, with the consumer saying, “I have the cash to spend now. Who out there knows me well enough to offer me incentives to spend with them?”

However, future consumer conversations and the broader interaction between a consumer and a merchant will become heavily scrutinized because of some converging trends on the horizon. The first will see customers wanting control of their behavioural information and to be recognized for providing that data. Ultimately, they understand there is value to their personal information. Secondly, merchants will want to recognize the value of the consumer and their data in a way that doesn’t increase their liability or compliance requirements around that data. So ultimately, the future, especially for a technology company like FreedomPay, involves creating the solutions where the merchant and customer are having a data conversation without stepping on each other’s toes and overstepping the mark when it comes to personal privacy.

These conversations can occur in the context of self-sovereign identity for the consumer. Privacy norms and regulations are likely to shift, creating challenges and opportunities around how businesses target and grow their customer bases while remaining privacy compliant. The way merchants communicate with customers may also become more difficult in the future as the age profile and dynamic of the consumer shifts, with merchants having to work that bit harder to engage customers.

New research from FreedomPay, conducted in partnership with Cornell University, explores Gen Zer’s’ attitudes towards data privacy and their willingness to share their personal information.

The research – which surveyed 200 Cornell students, defined as those born in 1995 or later – found that the perceived privacy level of a piece of information significantly impacts participants’ willingness to share with third parties, such as banks and retailers.

Gen Zers are less willing to share personal details than other generations – re-emphasizing that this generation does place a high priority on privacy issues.
The findings suggest that those sampled are more inclined to give out personal information if there is a monetary reward involved, and participants were clear about how much – and what data – they would be more willing to share.

Ignoring such seismic shifts in technology and behaviour will lead to many businesses losing their foothold because of a lack of connection and relevance to their customer base. In turn, this will ultimately be their downfall. But for those companies who interact with the customer personally, harnessing data and driving conversations around the individual means a contented customer that is happy to interact and engage but, more importantly, spend and spend repeatedly.

Looking to the next decade and the success of ‘Personalization’ as a tool, relies on the ability of brands and merchants to gather and interpret personal data around their customers. This will require continued investment and innovation, but those who find themselves able to adapt to this change, they will ultimately be the winners.