What is a FLoC? Personalization, Privacy and Customer Experience

Personalization can be a very powerful tool that your business can use to both acquire new users and better retain existing customers. According to Accenture, 91% of consumers are more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations.

But some people also find personalization quite….disturbing. Consumer awareness around data and privacy has grown in recent years. Apple has made moves to set themselves up as a privacy first company. And Google is doing this too. So where does that leave personalization? And why is it that customers value a personalized experience but they don’t want to be “followed around”?

We’ll take a look at some of the things going on around cookies, where that leaves personalization and how you can serve personalized experiences but not be seen as “creepy”.

What is a FLoC - image showing a single figure in a crowd.

What the FLoC! What is a FLoC?

FLoC stands for Federated Learning of Cohorts and it’s what Google is proposing as a replacement for third-party cookies in web advertising.

FLoC essentially breaks users into very large clusters based on “interests”. This will then “hide” individuals within a larger “crowd”. It would also use on-device processing to keep the user’s web history private on their browser.

Google has stated that their initial tests have concluded that “FLoC can provide an effective replacement signal for third-party cookies” and that “advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising.”

But what does this actually mean for personalization and customers?

A market, showing personalized customer service in action.
Photo by Chromatograph on Unsplash

What do customers want?

If 91% of consumers like brands to remember them and give them relevant offers, how can businesses actually do that with FLoC?

People want a targeted service experience that speaks directly to them. But the removal of cookies and the introduction of FLoC will take away that specificity and apply a layer of generalization, rather than personalization. This will mean people are likely to get irrelevant recommendations. Because the information that’s used to target them is broadly inferred based on large cohorts.

Consumers, especially in recent years, have flocked towards digital experiences that speak directly to what they want, when they want it. While consumers will undoubtedly have more privacy with something like FLoC, the loss of more personalized experiences may cause frustration. Which could possibly lead to lower returns for commerce brands.

So what can we do about it?

What is a FLoC - open sign that is personalized in tone.
Photo by Tim Mossholder on Unsplash

How can we keep giving customers personalized experiences?

While FLoCs are a good solution for web-based advertising, they are not suitable for creating personalized experiences. So how can companies give their customers what they want?

The most simple solution is asking customers for their details directly. Which is known as a “zero-party” data strategy.

But there are a few things to think about with this. One is legal. In Thailand you will need to strictly abide by PDPA legislation. If you’re an international business with customers in the E.U. you will also need to abide by GDPR legislation. Many SMEs don’t have the time or expertise to deal with this on their own.

For your business to even think about a zero-party data strategy, you have to be completely clear with your customers when you ask for details. When the request is made make sure you offer complete clarity on what you use the customer’s data for.

The other aspect to consider is why should the customer give you their details? While you can say that the customer will get a better, personalized, experience why should they believe you? 

You have to offer customers an incentive for them to give you their data. One sustainable way to do this is a voucher code discount. With this you can take the customer’s details, offer them a good deal that encourages them to convert and validate the data they have given you by sending out the voucher code as an SMS.

Incentivization is absolutely crucial. It can also help you to set up other initiatives to help with customer retention, like gamification and loyalty programs.

Contact us via hello@maqe.com.

Talk to MAQE

If you need help with the legal aspects of implementing a zero-party data strategy, or offering customers good incentives to give you their information, get in touch with us via [email protected]. We can help businesses of all sizes implement personalization strategies that can help you offer your customers amazing personalized experiences.