Today’s shoppers are savvy, switched on, strapped for time and supremely discerning with their selections. In the current cost-of-living crisis, consumers are now more open to product and retailer switching and they’re more likely to shop around for the best deals before making a purchase.

They are spending less and delaying purchases and are increasingly turning to cashback programs as well as Buy Now Pay Later solutions, in an effort to maximise their return for purchasing particular goods.

There is a groundswell of Australians recognising the benefits available to them through leveraging loyalty programs, and utilising app platforms to find the best deals on offer from top brands and retailers across Australia and to garner a more personalised shopping experience.

However, there is still some skepticism around the intentions of retailers when it comes to loyalty programs and concerns that customer data gathered will somehow be weaponised. Here we lift the lid on how data is extracted, what types of data can be pulled and, the most important question, how the data is used by retailers in the real world. Spoiler alert – you’ll need to put away your tin foil hats as the conspiracy theories simply aren’t true.

Retailers have negative intentions

On the contrary. The main reason retailers want to better understand consumer buying behaviour is so they can deliver personalised information to their customers to give them a more enhanced overall experience. Our recent research uncovered 76 percent of retailers understand personalisation to be the most effective relationship-building strategy with consumers, while just 30 percent of shoppers are satisfied by retailers’ current personalisation strategies.

Sure, retailers are ultimately trying to make more sales, but rather than spamming those who’ve opted to receive their marketing with irrelevant material, whether through email or on social media, having information on previous shopping habits means they’re able to simply share information that they know will be of interest and relevant to the individual’s likes and preferences.

They’re tracking my every move

Retailers have no interest in who you’re dating and where you work. They’re most interested in how you engage with their brand – whether in their bricks and mortar stores or navigating their website. A retailer’s number one goal is to learn as much as possible about your behaviour simply so they can improve what they do to ultimately provide you with an optimal buying journey.

By combining geo-located tracking data with the retailer’s loyalty card, marketers can review previous purchase history to offer customers personalised promotions when the time is right. This means customers are rewarded for their loyalty and treated as individuals.

For example, when an individual enters a store, retailers can analyse where they walk around, their stopping points and purchases – all in real-time and anonymously. If a retailer clocks that a customer is hesitating at the hair clips and buys them on a regular basis, it enables them to notify the customer when the hair clips are on sale or when a new range comes in store. Who doesn’t want to be notified in real time of exclusive discounts on the products they’re most interested in when they are browsing their favourite store?

They withhold where my information is going

The Privacy Act 1998 (Cth) (Act) sets out how businesses can use the data they attain through loyalty programs. Loyalty programs are centered around consumer data and it is important for retailers to be transparent about the ways they intend to use this data and consumer information.

This usage information must be prominently displayed and easy to understand and those signing up need to consent to it. In some cases, customer data is shared with other brands that sit within the retailer’s umbrella of businesses, again this is to ensure more relevant marketing tactics to drive a meaningful customer experience across the board.

Today’s time poor customers are engaged, value conscious and expect a personalised experience to help them easily find the right product at the right price. Our research found that while 76 percent of shoppers expect such programs to be customised to their interests, only 37 per cent feel that they actually are.

Loyalty programs help enable retailers to analyse customer data in real-time across various purchasing points both online and offline, meaning retailers are then able to provide a customer-first service across the entire purchase journey to foster genuine connections and build lasting loyalty.

Tyler W. Condon is head of partner success and commercial at Klarna Australia & New Zealand.