FIRMS' CONSENT ELICITATION AND CUSTOMER SEGMENTATION UNDER PRIVACY REGULATION: EVIDENCE FROM FIELD EXPERIMENTS

55 Pages Posted: 31 Jan 2022 Last revised: 30 Nov 2023

See all articles by Zherui Yang

Zherui Yang

IE Business School - IE University; Rotterdam School of Management, Erasmus University

Aaron Cheng

London School of Economics - Department of Management

Ting Li

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Date Written: November 27, 2023

Abstract

Privacy regulations, such as GDPR, require firms to obtain customers' informed consent before migrating them to digital communication (i.e., digital migration). Against this backdrop, the industry is often concerned that the potentially negative responses from customers, coupled with firms' data collection constraints under privacy regulations, might lead to ineffective consent acquisition and unsatisfactory digital migration. In this study, we evaluate different strategies (proactive vs. passive) for firms to obtain customer consent for digital migration. To improve consent acquisition, we propose novel customer segmentations based on their digital engagement preferences-digital activeness (the extent of engagement in digital activities) and information proactiveness (the extent of proactive information-seeking). Through a series of offline and online field experiments, we find consistent evidence that proactive consent elicitation campaigns are effective, challenging the industry belief that proactive approaches under GDPR's enhanced requirements hinder consent acquisition. Moreover, customers with higher digital activeness are more likely to consent to digital migration, and customers respond more favorably when the campaign's informative design is tailored to their level of information proactiveness. Our analysis further reveals that digital engagement preferences moderate the effect of consent elicitation campaigns on customers' decisions to opt out of digital migration. These findings suggest that firms should proactively elicit consent and segment customers based on digital engagement preferences to enhance consent acquisition under privacy regulations.

Keywords: Consent elicitation, customer segmentation, digital activeness, field experiment, GDPR, information proactiveness, privacy regulation

Suggested Citation

Yang, Zherui and Cheng, Zhi (Aaron) and Li, Ting, FIRMS' CONSENT ELICITATION AND CUSTOMER SEGMENTATION UNDER PRIVACY REGULATION: EVIDENCE FROM FIELD EXPERIMENTS (November 27, 2023). Available at SSRN: https://ssrn.com/abstract=3966138 or http://dx.doi.org/10.2139/ssrn.3966138

Zherui Yang

IE Business School - IE University ( email )

Calle Maria de Molina 12
Madrid, Madrid 28006
Spain

Rotterdam School of Management, Erasmus University ( email )

RSM Erasmus University
PO Box 1738
Rotterdam, 3062 PA
Netherlands

Zhi (Aaron) Cheng

London School of Economics - Department of Management ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Ting Li (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

Burgemeester Oudlaan 50
3062PA Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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