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Don’t Wear Trust Out

Why wearables demand more consumer trust to succeed.

 

As newspapers fall over themselves to hail the ‘Christmas of the wearable’, the report that many of them are quoting says something much more important, explains Chris Middleton: privacy is a greater concern to every age group than many firms realise.

TECHNOLOGY SHORTOctober 2014 figures released by the UK government (via yougov) reveal that ownership of wearable computers, such as smart watches, smart glasses, and activity monitors, will massively increase this Christmas, from 2.8 million people to 4.7 million. By September 2015, the figure will have shot up again to 6.1 million, with a further spike inevitable in the festive season next year.

Microsoft Band

The news comes as Microsoft announced its entry into the wearables market on 30 October, with Microsoft Band (pictured), its cross-platform health tracker – a move that not only encourages people into the great outdoors, but also suggests that Microsoft itself is venturing outside: of its longstanding proprietary lock-in. So with numerous smart watches and trackers in the shops, with Google Glass available, and with Apple Watch due in its maker’s Q2 next year, 2015 is, say the headlines, shaping up to be the Year of the Wearable.

Those headlines are missing the real point. Most newspapers have mistakenly credited the yougov statistics to a detailed report published by a communications agency, Zeno, and to cleverly worded press statements from Samsung and others that quote that document’s findings. But the report itself says something rather different, and of longer-term importance than the seasonal rush to publicise products. At the heart of the document is the strained relationship between organisations and citizens, and between companies and their increasingly disloyal customers.

It suggests that a key aspect of the wearable revolution is being overlooked: privacy. The company pooled the detailed results of a number of research programmes, from Accenture, Deloitte, and many others, and carried out primary consumer research of its own in partnership with a reputable institution, Imperial College Business School. So there is no reason to doubt the research findings themselves – even if the ultimate aim is improving the marketing strategies of Zeno’s own clients.

The report finds that there is a distinct trade-off between personal privacy and wearable technology’s benefits to the end user, and it urges all organisations – especially technology vendors and companies that deploy wearable devices – to take steps to recognise that and understand their users’ behaviour. “[Organisations] should also use insight and instinct to better understand their audiences as people, and what their emotional drivers and barriers are. Wearables bring a new layer of data and the communications potential of that information is rapidly becoming clearer,” it says.

The transparency gap

The research programme found that while 72 per cent of buyers are aware that data is collected from wearable devices, 59 per cent of all buyers are unaware that the data can be shared with third parties. Nearly all of those unaware buyers (55 per cent of the survey base) do not want their data shared with external agencies, while 51 per cent of all consumers want to be actively informed of how their data will be used.

These findings suggest that there is a ‘transparency gap’ from a user perspective: a perception that important information about how their data will be used is not being shared with them. This chimes with comments made by Sir Tim Berners-Lee in October 2014, in which he urged people to take control of their private data and demand information about how companies plan to use it. [Read our in-depth Strategist report and conversation with Sir Tim here].

There are solid commercial reasons for organisations being more transparent: more than 50 per cent of consumers would be happy to share data if they were rewarded for doing so, according to the report, while 26 per cent of respondents actively consider privacy implications when purchasing a wearable device.

The report’s preferred definition of privacy is “the right to control the collection and use of information about oneself”, and so the implication is clear: a majority of consumers fear the loss of control over sensitive private information that may result from wearing a computer, and are demanding active reassurance and clarity.

This is no minor concern for proponents of wearable device strategies: en masse, wearable devices are designed to make people feel more in control of their lives, not less, so it represents a strategic barrier to adoption – or at least to active usage.

TimBL

Sir Tim Berners-Lee, prime mover of the World Wide Web.

Failing to consider consumers’ fears “adversely impacts the customer-centric mindset and erodes customer/brand relationships,” says the report, adding that there is a “disproportionate relationship where one-way transactions have allowed organisations to collect large amounts of private information with limited gains for the customer. The trend today is towards consumers realising the value of their personal data as an asset.” Words that, again, echo Sir Tim Berners-Lee’s advice.

Significant figures

The report reinforces its primary research with a number of statistics from external, clearly referenced sources. It quotes a number of Accenture findings, including: 82 per cent of consumers believe that total privacy no longer exists; 68 per cent believe there is a lack of transparency about how their information is used; and 87 per cent believe that there are insufficient regulatory safeguards to protect them.

It also quotes figures from privacy advocates TRUSTe, saying that 89 per cent of people worry about their privacy online; that consumer trust in companies’ use of private data is falling (55 per cent trust in 2014 compared with 63 per cent in 2012); and that 89 per cent of consumers actively avoid companies that do not protect their privacy. More than 60 per cent of people are more worried about their privacy online than they were a year ago, says the report.

So it seems likely that the combined effects of the Snowden revelations, and the constant drip-feed of stories about high-profile institutional hacks and data breaches are having a powerful effect on consumer confidence in the digital economy. In this regard, UK government plans to increase the surveillance state, not minimise its intervention, are flying in the face of public feeling. Ramping up fear is counter-productive, not least from a commercial standpoint.

Millennial tension

The findings also suggest that any belief that ‘millennials’ or ‘digital natives’ (people born during the internet and mobile revolutions) don’t care about privacy may be misplaced.

In standard communications agency style, the report divides users of wearable devices into four demographic groups: The Sceptic, The Rational, The Curious, and The Performer. While it acknowledges that there is a generational divide to some degree – most sceptics about wearables are “baby boomers belonging to the digital migrants population” – it says that Rationals, people who are willing to provide some data in return for functional benefits, are found across multiple age groups. Rationals don’t like to divulge their locations, as they know that wearables can function locally, it adds.

The Curious segment of the population are more open, but still demand functional and social benefits in any information exchange, while Performers are socially motivated and focused on fashion, trends, and peer pressure rather than functional benefits. This group is largely under 18, but common sense suggests that many of its teen behaviour patterns are likely to change. Even so, ‘Performers’ want personalised offers in return for their data.

The one-way commercial land-grab for data may be over. Customers want to be rewarded, not just with special offers, but also with control over their private information.

• Recommendations

The report makes a number of recommendations to any company – vendor or user – that wants to build a wearable device strategy or presence. It says that organisations should:

• Focus on building relationships on trust. “Building a solid foundation on trust can only be achieved by empowering the customer base with control over the data exchange process.”

• Improve their communication strategies.

• Strive for leadership in the wearable technology space via big data, cognitive analytics, and contextual insights – focused on benefits to the end-user in a relationship of mutual trust.

• Think like consumers/end users.

• Educate, educate, educate. TS

SIR TIM BERNERS-LEE: STRATEGIST PROFILE >
THE POPUP GENERATION >
STUCK INSIDE OF MOBILE >
THE DIGITALLY EXCLUDED >

The Strategist says

An unusually detailed and transparent market report from a communications agency has generated headlines for the wrong reasons in the run-up to the festive season. But these facts in themselves demonstrate that personal privacy and trust are becoming more important strategically, not less, and that perceptions of a simple age-based attitudinal divide between millennials and their parents or grandparents are an over-simplication. Millennials may use technology in a more collaborative and social fashion, but the core issues of trust and transparency remain even for them. They, and everyone else, want something in return for the use of their personal data. The public is demanding control, and companies – and the government – would be well advised to listen as wearable technology, the Internet of Things, and more, become central to our lives and work.
Chris Middleton is founder and editor in chief of Strategist magazine and iamtheStrategist.com. A version of this article was first published on UCInsight.com – edited by Chris Middleton and Gary Eastwood, owners of the Strategist.

 

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