Last week my week began with a very provocative theory put out by a vendor. The theory goes like this: the NSA and Edward Snowden have made consumers hyper-aware that nearly everyone is collecting data about them in some form or another. And the Target breach has made them both angry and somewhat resigned to the idea that their data is also going to be stolen and used for malicious purposes. So, this vendor concluded, if “everyone ” is going to have their personal data, and there’s nothing consumers can do about it, then consumers should at least receive some benefits from it.

Basically what it comes down to is that consumers’ anger over being tracked is now getting aimed at retailers, with consumers raising their expectations significantly over how and when retailers use consumer data to deliver personalized experiences. It is a consumer privacy paradox: I, the shopper, resent your collection of my data, but if you’re going to have it, then you better use it for my direct benefit.

I brought this concept up to another vendor, who said they weren’t exactly seeing an NSA-Snowden connection to consumer expectations for how retailers engage with them, but they did say (this particular vendor specializes in creating personalized promotional offers) that they had completely ended the practice of making brand-switching offers because consumers now react so negatively to the offers that it is harmful to both the brand making the offer and the retailer delivering the offer.

But I most especially want to explore the concept embodied in the last half of the paradox: “for my direct benefit “.

There is a warning implicit in this aspect of the consumer privacy paradox. We encountered it with RFID as well. Here’s how it worked for RFID:

Retailer: Hey, shoppers! I have this new technology and you’re gonna love it! It lets me track every item in my store, so now I can make sure that I have all the items that you want to buy actually in stock! It’ll cost more, because (at the time) RFID is expensive and of course I’ll have to pass the costs on to you, but trust me – this is really going to help you out!

Consumer: Uh, what do you mean you’re going to track every item in your store – what does that mean for when I buy the item? (There was a whole lot of hysteria around this because retailers didn’t do a good job AT ALL of explaining to consumers how the technology worked and why it wasn’t really that much of a threat to consumer privacy) And hang one – having the items I want in stock isn’t a benefit for me! It’s a basic expectation that I have when I shop you. If you don’t have the items I want in stock, I just go to another retailer. So explain again how this is going to make my life better?

Retailer: Oh. I didn’t think you’d see it that way at all.

For personalization (I’ll use that term because everyone is, but if you really want my take, I recommend that you read this article and this one), retailers, perhaps burned by RFID and perhaps just more naturally cautious, have been more careful. They know that consumers aren’t going to be happy to be greeted by name as they walk into a store by a store associate that is a total stranger. Some of them have learned the hard way that past purchase history doesn’t give you carte blanche to make offers based off of that purchase history. Sometimes the purchases are information that the consumer would prefer to keep private, like if this purchase is for the wife, but that one is for the mistress. Or if a member of the household is pregnant but doesn’t want anyone else in the household to know about it.

As these gaffes are now picked up in the media and the social sphere where they can spread like wildfire and live far beyond the normal lifespan of a news article, retailers are naturally worried about how to bring personalization more firmly into customer engagement. Aside from making the wrong assumptions, what retailers really need to worry about is how to use personalization to drive personal benefit. They either need to be so subtle about it that consumers don’t even realize that they’re benefiting, or they need to be so great and so valuable that consumers welcome them and give the retailer credit for knowing about them and caring about them enough to be highly relevant.

And the hardest part about all of this is the flip side of direct benefit. While consumers love their discounts and offers, these things won’t be enough to demonstrate direct benefit – with all the deal sites out there, consumers can pretty much find a deal on almost anything they want. It will be that little added extra “I know you and I care about you ” that will make the real difference in solving the customer privacy paradox. And that caring part – that’s not so easy to systematize.