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

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