What is Preference Management? Customers Have a Choice
A Preference Management Center is a tool or system that companies can use to manage and store their customers' preferences and settings. Such centers allow customers to specify their communication preferences, including the way they would like to be contacted (e.g., via email, SMS, or phone), as well as the topics they want to receive information about.
Fig.: Example of a Preference Management Center
The goal of a Preference Management Center is to improve customer satisfaction by ensuring personalized and relevant communication. This promotes transparency and trust, as customers have control over what information they receive and how they get it.
By managing customer preferences, companies can optimize their marketing efforts, ensure compliance with data protection regulations, and reduce the risk of communication overload. A well-implemented Preference Management Center can help to increase engagement, add value for the customer, and ultimately achieve better customer retention.
A New Era of Marketing: Control and Transparency Through Preference Management
In an era where consumers are regularly exposed to a flood of advertising measures, Preference Management provides customers with the opportunity to decide for themselves how and to what extent they receive advertising. By actively selecting their modes of interaction and the type of content they wish to receive from a brand, they gain tailored options and exert direct influence on the communication. This affords them meaningful control over the marketing messages that are customized for them.
Fig.: Impersonal Advertising vs. Personalized Advertising
Such a tailored approach communicates to customers the value of their data and motivates them to share more information for customized marketing initiatives.
Through Preference Management, customers are allowed to decide for themselves how often and on what topics they want to be notified by email. They can decide whether they want to receive information about new products, useful tips on product use, or updates on price changes. They can also choose whether to receive offers from partner companies or explicitly exclude certain content. Such a tailored approach communicates to customers the value of their data and motivates them to share more information for customized marketing initiatives.
This process also allows for more accurate customer segmentation since the selected preferences are incorporated into the database and enable finer targeting of all marketing activities. The content thus designed becomes even more individual and transforms for the customer into unique, personalized content, the "Unique Content". This promotes a more intense interaction with the brand and enriches the customer experience along the entire Customer Journey. The result is a measurable positive effect on Key Performance Indicators (KPIs) such as conversion rate or Return on Investment (ROI).
Preference Management also offers advantages for the customer, since they hold control over the contents displayed. The offered transparency and personalization increase the customer's interest in interacting with your brand, and they are more willing to share information when they know it will be effectively used for personalized communication. Thus, the customer receives exactly the offers and information that match their interests.
Fig.: Benefits of Preference Management for Businesses and Customers
Why is Preference Management Relevant?
At a time when customers often feel overwhelmed by an inundation of advertising and can only process a small amount of advertising messages, an increasing awareness of data privacy also leads to heightened concerns. Consumers have become more cautious about which information they share and to what extent it might be passed on to third parties—especially because many have already had experiences with fraudulent schemes. Therefore, a rethinking is required by businesses: moving away from impersonal and inappropriate ads, towards personalized communication and targeted advertising. Are you familiar with the situation where you provide your email address to download a useful eBook, only to receive daily emails about products that don't match your interests at all? Nowadays, information is considered currency that you "pay" for valuable content with.
The well-known saying "The customer is king" should still apply in the digital age, especially in terms of handling personal data. Therefore, the customer, with their individual preferences and needs, must be at the center of all efforts, and the content should be precisely tailored to them. A survey by Actico with 2,046 participants found that 42% of German consumers prefer personalized offers.
Fig.: 42 percent of German consumers prefer personalized offers.
Source: Adapted from Actico
Ultimately, a customer who doesn't buy, doesn't open emails, and probably unsubscribes from the newsletter due to unpersonalized content, is of no benefit to a company. Merely hoping that a small percentage will purchase out of the mass is not a sustainable strategy. Focus on the customers who are genuinely interested in your company and get to know them better, to tailor your products and services to meet their needs more accurately, and this is exactly the opportunity that Preference Management creates.
Enhanced Data Protection through New Legislation
Data protection laws like the EU General Data Protection Regulation (GDPR) aim to protect users' privacy online. They require businesses to regularly adjust their processes to meet new standards. Innovative regulations such as the Digital Services Act (DSA) and the Digital Markets Act (DMA) compel providers like Google to update their services, contributing to safety on the internet. Google Consent Mode V2 is Google's response to the latest data protection requirements, obliging website and app operators to implement it to meet data collection guidelines.
Now ensure you meet the deadline by March 2024 and learn more about Google Consent Mode V2 ->
Who is Preference Management Relevant For?
Preference Management is worthwhile if at least one of the following points applies:
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For businesses with a multitude of digital touchpoints: e.g., e-commerce platforms, B2B and B2C portals, subscription services, or SaaS applications. Users may need to log in across various websites or apps, necessitating central coordination to ensure consistent user experiences
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When different preferences are processed by different systems: e.g., newsletter preferences from Sendgrid, marketing preferences from HubSpot, and preferred currency from shopping systems
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When the preferences of a large number of users need to be analyzed
The Symbiosis of Data Protection and Personalized Advertising
Preference Management, in combination with Consent Management, offers the possibility to collect cookies in compliance with data protection laws and allows customers to choose their marketing consent. Thus, the integration of management solutions regulates on one hand how preference-related data is collected, stored, and managed, and what information from the company is passed on to the customer, and on the other hand, Consent Management regulates how the company can use personal data. This way, you can collect data following data protection laws while simultaneously strengthening user trust.
An example of the combination of Consent and Preference Management software is offered by Usercentrics.
Fig.: Preference Manager by Usercentrics
Source: Usercentrics Preference Manager
Usercentrics offers the advantage that you can obtain both a Consent and Preference Management tool in one, or if you already own a Consent Management Platform (CMP), you can complement it with the Preference Center from Usercentrics. The Usercentrics user interface can be easily configured to fit individual circumstances. This way, you can add and configure your Preference Center according to the specific preferences that are relevant to your customers.
We Implement Preference Management for You: A Successful Strategy
Fig.: Our Preference Management Strategy
Needs Assessment and Inventory:
In the course of our cooperation, we start with a careful analysis of needs and inventory taking. We take the time to discuss with you which user preferences you would like to manage. During this process, we also examine existing data and determine whether preference settings already exist in one of your databases or related systems. We need to check whether a unique user identifier exists or needs to be created, and we identify which systems should use the preference information in the future. At the end of this initial step, we develop a detailed concept paper that records the results of our analysis and serves as a basis for your decision-making, so you can determine how and which preferences should be designed.
Configuration:
Based on this foundation, we focus on configuring the needed tools and elements. We develop forms and fields based on the results of the inventory that provide your administrators with the necessary flexibility to effectively manage the preference management platform. For this, we provide you with a user-friendly admin interface and, if necessary, create special forms for collecting or modifying user preferences.
Installation and Integration:
The practical implementation is realized through the installation and integration of the preference forms into your digital infrastructure. This includes websites, mobile applications, and requires individual adjustments to various systems such as Content Management Systems (CMS), frontend designs, or frameworks to ensure a seamless user experience.
Building a Data Pipeline:
Equally important is the construction of a robust data pipeline. We establish the connection of your customer systems with the preference management platform via a secure API and ensure that data can be exchanged securely and without complications between the various systems and the platform.
Data Migration:
Lastly, we turn our attention to data migration. We plan the transfer of your existing preference data into the newly designed system. This can be done with the development of a special script or the use of already available tools to ensure a smooth transition and the integrity of your data. Our goal is to enable a smooth transition at a central point that enhances both management and the user experience.
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