Preferences can be any customer attribute that influences a purchase decision - context, characteristics, needs, values, interests, likes/dislikes. Preferences cannot be assumed or inferred, they must be voluntarily shared by a customer (this is also called "zero-party data"). When businesses use preferences (by itself, or in conjunction with other data, like behavioral, loyalty, or demographic) to personalize experiences, that’s called preference-based personalization.
Tracking behavior or purchasing data can often result in bad customer experiences. With preference-based personalization, relevance is delivered based on data that is freely given – meaning experiences are always welcomed.
Preference data comes directly from your customers, and is therefore the most accurate data your business can collect. Stop wasting ad spend on people you think could be your customers, and just target people who declare their needs and interests.
With demographic or behavioral data, most personalization efforts stem from months of behind-the-scenes number crunching and trend analysis. Using preferences for personalization makes it unnecessary to perform data analysis, as you can immediately act on declared customer preferences.
Giving customers transparency and control over how their data is shared and utilized by a brand builds brand trust and customer loyalty.