For consumers, the line between piracy and privacy is thin, but personal data is vital to effective marketing and increasingly available through new technologies. The actions of maverick companies who abuse the knowledge, however, mean that restrictive legislation looms large. Among others, Kraft and Unilever have launched a self-regulatory initiative to protect the information, while big businesses gain its advantages. just-food.com’s Bernice Hurst investigates.
A new industry has sprung up over the past few years devoted to the technology needed to make sure manufacturers and retailers could find out what their customers’ preferences are, and how best to harness them, to fulfil their every desire and contribute to the business’ bottom line in the most painless way possible. That is, how to create a win, win economy.
While this may sound wonderful on paper (or screen), the down side is that the general public is finally waking up to intrusions on their privacy and the amount of data held – and circulated – about them. While they may agree, in principle, to having certain information made available for certain purposes, they are less likely to agree to having that information used for wider ranging purposes. Getting discounts with their supermarket shopping because they’ve signed up for loyalty cards was never really understood (by customers) to be effectively offering blanket approval for analysis of their lifestyles and economic status, and the passing round of that information to anyone who asked.
Dunn Humby helped Tesco launch its Clubcard in 1996. Now, there are some 14m cardholders whose response rate to personalised letters and coupons is said to average 90%. Dunn Humby’s CEO, Edweena Dunn, told Martha Rogers of CRM consultancy Pepper and Rogers that they helped Tesco evaluate and act on what it learned. Definitely an example of win, win, win – although how aware customers are of how the information they provide is being used is, possibly, questionable.
There is considerable debate about the ethics of customer choice regarding opting-in or opting-out of data saving and circulating. Most reputable web sites now include privacy policies detailing the ways and means by which they collect and use information, and whether or not they pass it on to others. One thing that is common to a large proportion of sites, however, is the way in which the statements are buried in the small print. They may be there for all to see, but are not always easily spotted. And once in, the etiquette of Internet copywriting is frequently breached. Suddenly the site becomes word heavy, with few paragraph breaks or headings. They are visually unattractive and intellectually complicated. Simple words are never used where fancy ones can be substituted, all in the name of legalese.
The use of personal information is dressed in attractive clothing, designed for the wearer’s comfort and benefit. It is not just used to sell more but to selectively eliminate advertising and offers in which customers may not be interested. And, conversely, to offer products and services which they may positively and actively desire. Spin is the name of the game. Tempting customers to opt-in, or not to opt-out, should they even take the time and trouble to find and read the privacy statement, is the object of the exercise.
Where does customer care begin to infringe on privacy? In some cases, consumers do not mind revealing certain information about themselves even when their preferences may be contradictory. Unilever‘s research program revealed, amongst other things, that respondents like to have contact with companies they know, and enjoy free samples and promotional materials but do not want their names passed on or used in any way that might be construed as infringing on their privacy.
Clearly there are benefits to consumers as well as companies in the controlled disclosure of personal information. Most consumers are willing to trade personal information in exchange for better customer service, tailored information and offers that add value to the trading relationship. Their fears arise out of the mavericks who misuse or fail to adequately protect this personal data, who simply abuse their trust.
The basic message from consumers is:
“Don’t pass on our names”
Manufacturers and retailers may be spending their money with no sinister intentions in mind but customers may be wondering whether giving away anything about their preferences is opening the floodgates to intrusions on their privacy. As H. Robert Wientzen, president and CEO of the Direct Marketing Association points out, the difference between privacy and piracy is trust. “Direct marketing is an industry built on customer trust,” he commented following publication of the Association’s report on e-commerce and privacy.
Privacy abuses by food companies, particularly those promoting breakfast cereals, soft drinks, confectionery, fast food, snacks and biscuits online, were instrumental in the introduction of American legislation specifically designed to limit the activities of marketers on the Internet. These abuses related to the aggressive way in which companies solicited personal information online from children, often using games and activities centred around specific brands and designed solely to extract personal details from young visitors.
Another factor fuelling the privacy debate has been the rapid development and deployment of powerful and potentially privacy-intrusive technologies such as web profiling and tracking and the advent of targeted marketing and geo-tracking systems in the new 3G wireless devices. The OECD points out that technologies such as these have focused the entire world on privacy issues “to an extent that has not yet been seen throughout the history of data protection”.
In their own defence, industry sectors are beginning to band together to agree on common approaches to privacy. One example is the Privacy Leadership Initiative, headed by the CEOs of such global giants as IBM, Proctor & Gamble and Kraft. This is an attempt at self-regulation and consumer education, designed to create industry standards and ensure that personal information can be gathered in ways that are both open and lawful to the benefit of consumers.
Such self-regulation may be perceived as an attempt to appease legislators and pressure groups, pre-empting a real fear that investment in expensive CRM systems and online personalisation technologies will soon be subject to a crackdown by legislators, if something is not done to curb the excesses of the wild cards who mismanage their customers’ personal data. It is also a way of ensuring that money spent on technology contributes to the win, win economy everyone seeks.
To view related research reports, please follow the links below:-
B2C eCommerce: Opportunities and Implications to 2005
Exploiting eFMCG Opportunities: Stimulating new revenue streams through consumer dialog
Online Grocery in the US 2001 – Profitability at the virtual checkout