Exploiting the Facebook Paradox

Analyzing the Social Network's Success Helps Hotels Find the Balance between Intimate and Invasive

By Carolyn Murphy, Marketing Specialist, Revinate

It's clear that today's consumers expect relevancy in their interactions with brands, and hotel guests are no exception. In fact, a lack of relevancy in communications can hurt the relationship between a brand and its customers. According to a 2014 Gigya report, after receiving irrelevant information or products from a company, 43% of consumers ignored all future communications from the brand. Twenty percent stopped buying products from the company altogether.

At the same time, there's an increase in consumer concerns about the security of their personal data, and this complicates the issue. TRUSTe recently found that 42% of consumers are more concerned about data privacy than they were one year ago.

The question is, how can hoteliers collect the data they need to deliver relevancy and develop personal relationships with their guests without being invasive?

Consumer Trust as a Cost-Benefit Analysis

Fortunately, there appears to be a way to navigate the consumer trust minefield. One clue lies in the use of social media, specifically, in Facebook's history of privacy policy updates, and in its users' resulting behavior.

According to a study published by Naveen Awad and M.S. Krishnan in MIS Quarterly, "Few [consumers] actually take note of the [privacy] policy when visiting a site." This becomes clear every time Facebook updates its privacy policy. If you're on Facebook, you've probably seen more than one or two of your friends complain that Facebook is getting too big, that the company is taking their content and data and using it for its own profit. Some of them threaten to close their Facebook accounts.

These consumers are not wrong. Facebook has come under fire in the past for privacy concerns, including a 2013 incident with the Federal Trade Commission for sharing users' likes in "Sponsored Stories" without permission. It has made an effort in recent years to improve transparency and user control over what data gets shared by implementing customizable privacy control settings. But in general, many users are still wary of the implications of Facebook's data collection and use.

Nevertheless, Facebook is more popular than ever. As of April 2015, it had 1.44 billion active users , which accounts for almost half of the world's internet users.

What could be the explanation for this? Awad and Krishnan have an answer for this phenomenon. In their study, they performed a cost-benefit analysis, "where benefit is derived through the degree of personalization received, and cost is a function of consumer privacy concerns, previous privacy invasion experience, and consumer-rated importance of information transparency and privacy policies."

Their findings? "The perceived benefit of an outcome, such as useful personalization, can motivate consumers to partake in online profiling despite privacy concerns," Awad and Krishnan write.

In other words? Facebook continues to be popular because, for the vast majority of consumers, the benefits of using the social network outweigh the risks. Overall, consumers find that the ability to stay in touch with friends in a convenient, personalized way is worth the price of their data.

Another clue is the rising popularity of social login features on web apps. Social login gives consumers a faster way to log in to an increasing number of websites. In exchange, they give those websites the power to access the data points in their social media profiles.

According to the 2014 Gigya survey mentioned above, "Seventy seven percent of US consumers claim to have logged into websites and mobile apps using their existing social media accounts." Additionally, usage of social login has increased by 45% since Gigya's 2012 survey.

Convenience is the clear reason for this increase in social login popularity. Over 60% of US and UK respondents say they are likely to choose social login when using mobile devices, where traditional login is particularly cumbersome.

There are risks associated with putting personal information on Facebook and then sharing that information with other websites via social login. For example, if consumers aren't careful, employers, law firms, and identity thieves can take advantage of any information that is public on the network. People have been fired, sued, and more in their real lives because of what they chose to make public on the internet.

But the human desire to stay connected and sharing life events is as old as cave paintings and letter writing. It's a huge part of communication and living in a globally connected world. Facebook has enabled people to do this faster and more easily than ever before. And, the content available there is increasingly personalized, based on users' actions on the social network. The fact that 1.44 billion people continue to use Facebook tells us that when consumers weigh the costs and benefits of Facebook use and social login, the benefits outweigh the costs.

The same principle applies to trading data for personalization. Consumers know they can't have it all. They understand that it is impossible for total data privacy and total personalization to exist at the same time. These consumer behaviors provide insight into how hoteliers can navigate this personalization/privacy paradox. But it's important for hoteliers to understand that consumers won't give up their data without brand trust and without understanding the benefits of doing so.

Five Ways to Establish Trust

Your guests have expectations with regard to personalized experiences and data privacy. To deliver on the personalization they expect, there are a few things you can do to make them more comfortable with sharing their information.

1. Let them opt in.

You should be sure that any guest you email has agreed to receive communications from you. You should be transparent about what you intend to offer. You should also reassure your guests that you won't sell their data to third parties.

2. Establish a clear privacy policy.

Taking the time to craft a thorough privacy policy is one way to reassure your guests that data privacy is a priority for your hotel. Awad and Krishnan found that consumers rated privacy policies as highly important. But they also noted, "It is possible that consumers have no interest in knowing the details of what information is being stored and how it is used; rather, they may only be interested in knowing that the company has a privacy policy."

The lesson here is even though the majority of your guests won't actually read it, you should create a privacy policy that is clear, easy to read and easy to understand. Some guests may be interested in knowing the details. But, most will just be content that you have a privacy policy, and that you're taking their data privacy seriously.

3. Emphasize the value to guests.

If we learned anything from the Facebook example, it's that your guests need to see the value of opting in to your services before they share data with you. So why not emphasize the value? Let them know that by opting in to your email communications, you will start to personalize their stays and show them services and activities that are relevant to their specific interests.

4. Use progressive profiling.

One way to assuage any concerns your guests might have about sharing their data is to collect information gradually. Don't ask for too much information up front. Request only the necessary data points at registration. Then, collect more information over time, as your guests interact with your hotel, and you start to build trust. For example, when a guest signs up to receive email communications, offer him or her the opportunity to provide a zip code or check off special interests.

5. Take advantage of the data you already own.

Chances are you already have a good amount of data on each of the guests who books with your hotel. You should absolutely use a CRM system to take advantage of this data to deliver more personalized service and targeted marketing.

For example, say you have a segment of guests in your database who live within a few hours' drive of your hotel and booked with your spa the last time they stayed at with you. When your spa has openings for the upcoming weekend, you could invite those guests back and offer a massage discount. With the right CRM solution, you can specifically target guests who are more likely to be interested in your offer, ultimately delivering more effective marketing campaigns.

It's important to note that you won't convince every guest to opt in to communications and share data with you. Awad and Krishnan conclude, "We speculate that these results reveal that there is a segment of consumers, the privacy fundamentalists, that are unwilling to participate in online personalization regardless of the privacy features implemented by the firm." In this situation, you should concentrate on those who do see the value in what you have to offer. Others will come around over time.

Value is the Key

Overall, this study of the personalization-privacy paradox highlights one overarching theme: To develop intimate relationships with your guests, your hotel needs to earn their trust by proving its value. If your communications are generic or irrelevant to your guests, that relationship is likely to deteriorate. But, if you can deliver communications and experiences that are personally relevant to each guest, you will be happily surprised by the value you get in return.