Last Updated on March 30, 2023 by James Ewen
With more and more customers doing online shopping and sharing personal data, whether through ecommerce stores, banking applications, games apps, Facebook, Instagram, or just browsing, consent and preference management are two highlighters that organizations worldwide cannot ignore.
Today, content and preference management are at the heart of modern privacy compliance. As international privacy laws get stricter, consumers are taking control of their data. For this reason, organizations must take consumer consent and preference seriously.
With customers being wary about their digital and online footprints, it has become even more important to focus on consent and preference management.
While customers might use these two terms interchangeably, these are a world apart and have different meanings and implications for data privacy.
In this article, we outline the difference between consent and preference management.
What is the Difference Between Consent and Preference Management?
Before understanding the difference between consent and preference management, knowing what these two terms mean is beneficial:
What is consent management?
Consent management asks customers or website visitors permission to collect, process, and store data for marketing-related activities. Customers provide consent when they agree to receive emails or notifications, newsletters, and offers.
To ensure website owners and organizations take customers’ consent for everything, the European Union introduced GDPR consent management.
Under this consent management, website owners must provide their users with personal data processing on their domain and seek customer consent for activating cookies that store and process personal data. The law directs websites to renew consent regularly.
Websites must deploy easy and practical ways to withdraw opt-in for processing and storing personal data.
Ensuring compliance with GDPR law is essential as the average cost of non-compliance is $14.82 million, while the cost of compliance is $5.47 million.
What is preference management?
Preference management is the process that empowers customers to choose how companies might communicate with them. This management keeps customers in control and determines the frequency of communication, which helps an organization remain compliant with rules and regulations.
Often, consent management includes preferences about the type of content. Customers choose the content type and updates they want to receive about new products and services.
Preference management flips your brand’s communication and puts customers in control. Customers decide when and how an organization might send updates and not the other way around.
With 77% of customers choosing, recommending, and paying more for a brand that provides personalized service or experience, preference management is the key to winning customers’ trust.
Consent Management vs. preference management
Here are a few differences between consent and preference management:
Initially, consent management might seem like a big hustle and increase additional work if the company ignores the consent management process. With GDPR fines skyrocketing in the previous years and companies like Facebook and Google being fined for non-compliance, consent management is essential to reduce the financial burden on companies.
The primary purpose of ensuring opt-in is to reduce fines and increase customer loyalty.
Though companies might not feel the impact of these imposed fines, the cleanup process is likely to hurt organizations.
Apart from rectifying their mistake, an organization might find it challenging to earn back customers’ trust who see the brand in a negative light.
On the other hand, the primary purpose of preference management is to boost sales and increase customer trust. It’s a way organization manages and balances personalization and privacy and fosters communication between customers. With preference management, customers decide to receive communication in their preferred channel.
Impact on business
While consent and preference management keep companies compliant with data privacy laws and empower customers, they affect a business differently.
Consent management ensures the marketing team does not use unethical methods to collect and track the cookies of customers. This ensures that customers trust your organization with their data.
Often, the marketing team cannot leverage the preferences given by customers. Preference management provides the marketing team with an additional layer of data that helps uncover new market segments and increases an organization’s overall growth.
Preference management allows users to control their settings and enables businesses to track where and when they provide consent.
It ensures that the user is content with communication received, allows previous customers to unsubscribe from email, provides opt-in options, and creates a route to subscribe to newsletters.
This helps in creating transparency, which is an essential feature of a winning brand.
Impact on customer relationship
Giving customers the power to grant consent determines the trust a customer has in an organization. The higher the level of trust, the higher is the customer loyalty. This results in repeat business, which eventually increases growth.
Preference management empowers companies to send personalized messages and zeroes into what customers expect and want from a brand. When served with content that focuses on customers’ interests, it provides a more positive customer experience.
Typically, customers consider such organizations genuine and caring toward their needs and requirements.
When a brand respects consent and abides by customers’ preferences, it shows that organizations hear their voices. Personalization delivers a first-rate experience that builds connections between different brands and target audiences.
According to research, 44% of customers feel motivated to make repeat purchases when an organization offers personalized content.
What do privacy laws and regulations say about consent and preference management?
The GDPR and California Consumer Privacy Act (CCPA) are the cornerstones of data privacy. Based on these two laws, companies denote and record where and when a customer gives consent.
It helps understand what type of content a company wishes to gain, identify who they are, and why they want that specific data.
According to these laws, a company must grant withdrawal consent and provide various methods.
Apart from the principles set by GDPR, the CCPA law empowers a company to sell its data to a third-party vendor upon customer consent.
Explain some trends related to user experience about consent management and preference management.
According to a survey, close to 71% of customers want to manage their data, and the same percentage of people share their information if they maintain control over their data usage and tracking.
Customers expect organizations to provide the right to delete and allow them to unsubscribe or change their consent whenever they want.
The trend shows customers want to control their data and see how companies use it to create personalized marketing campaigns.
Most customers think that it’s their data and they have every right to govern what happens to it.
That’s precisely where data privacy laws like GDPR and CCPA come into the picture.
What industries get affected by preference and consent management?
Any industry or website that wants to collect customer data employs consent and preference management strategies.
For instance, retail businesses use consent and preference management to provide customers with product updates. After receiving consent and preference, companies collect search and purchase histories that customers might be reluctant to disclose to outsiders.
Another industry that widely uses consent and preference management is the SaaS industry, which discloses to customers how they plan to use their data while giving customers an option to opt in or opt-out.
How do companies focus on consent and preference management?
With data privacy laws, consent management, and preference management, organizations might find themselves in deep waters trying to manage everything independently.
Complying with the data privacy of different countries while running a successful business can be challenging. That’s why organizations use consent management and preference management systems to get peace of mind.
Apart from ensuring compliance with GDPR and CCPA, these platforms ensure that vendors and third-party businesses do not put an organization at risk of non-compliance.
Tools like Osano provides a single source of truth for all consents and ensures an organization focuses on GDPR compliant consent management process.
Creating a thriving marketing strategy
The way organizations market to customers is changing rapidly. As new privacy laws get introduced every other month, organizations feel forced to work with customer consent and preference at the core of their strategies.
Today, consent and preference management are no longer optional strategies. It has become an integral aspect of marketing strategies.
Laws and regulations like CCPA and GDPR have made implementation mandatory, and more and more states and countries are implementing their privacy laws.
Six out of 14 most prominent GDPR fines issued between 2020 and 2021 were due to non-compliance with the consent management clause of GDPR.
Companies focusing on consent and preference management are better at showing customers that the company respects their data and information.
James is the head of marketing at Tamoco