What is the Difference Between Consent and Preference Management and How it Affects Your Business

How can consent and preference affect your business?

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Consent and preference management are closely related to each other, but this doesn’t mean they are the absolute same. They both provide different solutions and have their own benefits that they bring to your business. 

If you want to build a reputable brand that consumers can trust in the long term, it’s important to understand the difference between the two. They are both essential for providing good data privacy practices. 

Therefore, in this article, we’ll dive deeper into learning more about the two, their differences, how they affect your business, and what else you need to know about them. 

The definition of consent management

Consent management asks users for permission when collecting, processing, and storing their information. Users give consent whenever they accept an offer, email, and accept to receive notifications. 

Consent management requires all websites that collect personal information to show users how their information will be processed on their domain and get consent from them before they enable cookies for storing and processing it. Data privacy laws require all websites to regularly renew their consent. 

All websites should collect and store personal information, granting users options to withdraw consent when required. If you don’t follow these requirements, you can pay large fines of up to $20 million that will be given out by the General Data Protection Regulation (GDPR). All fines and penalties are clearly stated on their website, which you can read more about. 

The definition of preference management

Preference management allows users to decide on how you can communicate with them. This helps businesses since it grants users full control and allows them to decide how often they can communicate. Users can choose what type of updates and content they want to consume regarding your products and services. 

With preference management, your consumers are in charge of your brand’s communication and they get to dictate how often you can send them updates. After all, 59% of marketers experience a better return on investment (ROI) after they personalize their online stores. 

The purposes of consent and preference management

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Let’s make an in-depth comparison of the two, and what purposes they serve. 

  • Consent Management’s purposes: With GDPR penalties and fines increasing, many companies that are failing to comply are using consent management to reduce their financial burdens. Opt-in options are used to make sure that you improve customer loyalty and reduce fines. These fines might not directly hurt your business, but trying to get back your reputation to where it was might not be the same after you deal with hefty fines. Therefore, giving a good brand impression is essential and what you can do to avoid GDPR fines and penalties is going to impact your brand’s reputation
  • Preference management’s purposes: Preference management improves customer trust and increases sales. It’s how businesses maintain privacy and customization when they encourage consumer interaction. The whole purpose here is to allow customers to choose the channel of communication through preference management. 

While both are similar in the purposes they serve, you are now aware of what they help with when using them. 

The reason businesses need consent and preference management

Third-party cookies were once a trend, but are now starting to be phased out and being replaced by either first-party or zero-party cookies. Unlike before, customers are now demanding full control of how their information is being processed and how they engage with companies. 

Collecting data doesn’t end when you stop using third-party cookies. The only thing to consider here is that you need better ways of collecting data, and the decision to use first-party cookies or ask customers for their approval for using their information. 

Not having to rely on third-party data is an excellent choice for customers and companies. Receiving consent from users will always result in more secure and high quality data that increases revenue and decreases legal risk. This not only builds long-term relations, but when combining consent and preference management, you have a much better data management approach. 

Preference management tools

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Similar to how you collect, store, and share a customer’s consent preferences regarding their sensitive information, a preference management tool collects, processes, and shares customers’ preference-related data. Preference management handles information that they want businesses to have, while consent management handles how they can handle the data they’re given. 

A preference management tool simplifies the data collection process by collecting and managing user choices. For instance, this includes if a customer would like to receive emails weekly instead of daily, if they would like to communicate with third-party partners or not, if they like to learn about a certain topic or not, and more.  

By using preference management tools, businesses can use this information to modify their existing personal information and set up a well-balanced user profile with suitable user-focused preferences. The richer data you collect allows you to understand more about segmentation and targeting marketing operations across a range of channels. This not only helps drive higher engagement but offers a much better experience for customers. 

The impact consent and preference management have on businesses

Both have different effects on your business, they are helping all organizations comply with global data privacy regulations and empowering customers. Consent management focuses on ethically collecting and tracking users’ cookies. This makes sure that users who give you consent trust you with their personal data. 

Preference management, on the other hand, finds it challenging to focus on customers’ preferences. Users can manage preferences via preference management which allows organizations to know when and where user consent is given. 

Moreover, preference management aims to give customers full control by offering them the ability to unsubscribe from emails, offer op-in decisions, and provide a way for them to sign up for newsletters. 

The impact they have on customer relationships

Customers will always provide consent based on the trust level they have for your organization. Customers’ loyalty increases with their degree of trust. Once trust is established, the process repeats itself and eventually this contributes to the growth of your client base. 

Preference management, on the other hand, targets customers’ communications based on their expectations and needs. Serving customers based on their interests will always result in a better user experience. 

Personalization improves the user experience and creates a stronger bond between target audiences and businesses. In fact, a recent study claims that 71% of consumers expect companies to deliver personalized experiences. 

The industries affected by preference and consent management

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Any industry that collects consumer data has to use preference and consent management strategies and is affected by them. Publishers, for instance, collect and use readers’ sensitive information for ad revenue purposes. 

Businesses can collect purchase and search history– sensitive information that customers may not want to share. This is where many issues arise and where businesses in different industries fail to comply with data privacy regulators. 

User experience trends regarding consent and preference management

All users expect businesses to be transparent and provide them with complete control when it comes to deleting and allowing them to modify their consent when they want to. This trend shows that we are living in an era where users want to have full control over how their data is being used, and how organizations are using it for creating marketing campaigns. 

For this reason, worldwide data privacy regulators like the GDPR and CCPA have modified and passed laws that entirely protect users from any manipulations. Customers have the right to choose who they share their data with, and which part of it they want to share. Also, they have every right to govern what happens to their personal information. 

A recent study showed that roughly 71% of customers want to have complete control over their data, and the same percentage will share their information if given full control over data usage and tracking. 

Consent and preference management have changed the data privacy game

The way organizations are approaching customer marketing has changed over the years. They are encouraged to change their marketing strategies based on customer consent and preference due to the modifications made to privacy regulations now and then. 

Now, all organizations that collect data need to get consent and manage preferences; they are all important measures that need to be taken. It’s an important part of your marketing strategy and requires you to comply with it if you want to succeed in the long-term. 

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