Firm’s Consent Elicitation and Consumer Segmentation under Privacy Regulations: Strategies for Digital Laggards

Zherui Yang, Aaron Zhi Cheng, Ting Li

Research output: Working paperAcademic

Abstract

The enhanced consent requirements of privacy regulations have caused many business challenges. In particular, firms are now required to obtain informed consent from customers before migrating them from offline to online communication (i.e., digital migration). Yet, customers may respond negatively to consent elicitation for various reasons (e.g., a chilling effect). The situation is worse for firms lagging in digitalization (aka. digital laggards) as they often lack appropriate channels or strategies for effective consent elicitation. In this context, we study the relative effect of proactive (vs. passive) consent elicitation strategies on customers’ opt-in to grant consent for digital migration. We further consider novel approaches to customer segmentation and propose two moderating factors for better consent elicitation based on customers’ digital and information preferences contingent on their consent behavior—digital activeness (i.e., the degree of actively engaging in digital activities) and information proactiveness (i.e., the degree of proactively requesting information)—that can be captured from easily accessible but often underrated firms’ archival data, such as customer profiling surveys and contact logs. Using a series of field experiments at a major insurer in Europe, we find that, in contrast to the feared negative effect of enhanced consent requirements, customers’ opt-in surges when the firm proactively elicits consent. In addition, customers with higher digital activeness are more likely to opt-in; and those with varying information proactiveness respond divergently, contingent on the informativeness of campaign designs. Interestingly, no evidence suggests that opt-in rates differ across age groups, contrary to the common industry belief that digital natives (e.g., millennials) respond more positively to digital activities. Our research suggests that firms, especially digital laggards, segment customers based on their digital and informational preferences to strategize consent elicitation under privacy regulations.
Original languageEnglish
Publication statusPublished - 2022

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