Big Data for marketing: Respect consumer privacy or get burned
Many companies are pursuing Big Data with the ultimate aim of better understanding and selling to their customers. After all, it is well-understood at this point that even basic personalization, like using customers' individual names, can substantially increase open and response rates for physical and digital mail. And Big Data promises a far greater degree of personalization and targeting. But collecting that data can be like handling a live wire: You can wind up having a real bad day if you don't treat it with respect.
"The pursuit of data is really the pursuit of relevant communications," says Dan Kohn, vice president of corporate marketing at Pitney Bowes, which recently conducted a survey of consumers in France, Germany, the U.K. and the U.S. and their feelings about the collection of personal information. "When data is our goal, we've got to get there in a step-wise fashion and with respect. You want to build for the longer haul-build a relationship of trust and build the brand. When you go for the short-term, that's where the pitfalls are. Every interaction is a chance to build trust or potentially wreck it."
Kohn says that the Pitney Bowes survey found that consumers are aware of the value of their data, and they also value their privacy. The survey found one-third of consumers across France, Germany, the U.K. and the U.S. are unwilling to trust any type of organization with their personal data. But for the most part, consumers are ready to part with certain types of data so long as they perceive a benefit in doing so; however, they will hold other data close no matter what.
Willing to Share Personal Data, but Privacy Is Important
A recent Eurobarometer survey conducted by the European Commission found that 74% of Europeans have increasingly come to see disclosing personal information as part of modern life, but 43% believe they have been asked for more personal information than necessary. And a study by the College of Business in Illinois found that prospective customers become irritated when they receive email with personalized information that has nothing to do with the content of the email. That study concluded that, at best, consumers view such communications as pushy. In extreme cases, customers feel threatened that companies know so much about them. Also, a recent McCann Worldwide Group report found that 56% of respondents said that when they consider sharing data with a company, a commitment from that company to not share personal information with a third party was of critical importance.
"When we look at consumer activity online, it is clear that although consumers worry about the collection and use of their online data, they will continue with online tasks and exchange their data if they perceive a benefit," Forrester Research concludes in a recent report.
"As marketers, we would like to get the more personally powerful data," Pitney Bowes' Kohn adds. "But consumers in the world today are more protective of that data. For those categories where the customer definitely gets something in return, they are willing to make the personal tradeoff. But when it gets closer or more personal, they're not willing to do that yet. Organizations that use data need to recognize that not all data is created equal."
Appropriate Data Management a Balancing Act
Kohn says that successful marketers must recognize appropriately requesting data and applying it to make customers feel valued is a balancing act. Inappropriately requesting too much information or applying information in ways not connected to your message can give consumers an uneasy feeling about your brand. To attain maximum return on investment in multi-channel communications, it is critical, he says, to establish a barometer of consumer willingness, and unwillingness, to share personal information.
Based on the results of the survey, Kohn says Pitney Bowes has divided consumer data into four categories: transactional, physical, secure and intimate.
Transactional data is data consumers commonly share as part of basic transactions like subscribing to a website, subscribing to a mailing list or joining a social media community. Most consumers are willing to share transactional data. The Pitney Bowes survey found that only 10% of respondents were unwilling to share their date of birth, 13% were unwilling to share their postal address, 14% were unwilling to share their email address and 22% were unwilling to share their bank details.
Consumers are also for the most part willing to share physical data. Only 22% of respondents were unwilling to share their height, 24% were unwilling to share their weight and 23% were unwilling to share a home phone number.
Secure data is data consumers are more reticent to share. These data include income (36% are unwilling to share), mobile phone number (38% are unwilling to share) and credit card number (40% are unwilling to share).
Finally, intimate data covers consumers' attributes and beliefs: sexual preference, ethnicity, religion and political persuasion. Pitney Bowes says this data has a virtual lock and key around it and marketers and their brands should be aware of the sensitivity consumers perceive around these data. Of these intimate data, consumers are most free with their sexual preferences: only 45% of consumers are unwilling to share their sexual preferences. Sharing data about ethnicity is taboo for 54% of consumers, while 71% of consumers are unwilling to share data about their religion. Political persuasion is the most closely held data: Fully 76% of consumers are unwilling to share information about their politics.
The percentages do vary somewhat by country. For instance, Kohn notes that Germans are far more willing to share information about their sexual preferences than respondents from the U.K. or U.S. Respondents from France are the most reticent about sharing information about their sexual preferences. The French are also more guarded about information relating to their political leanings, ethnicity or religion than respondents from the other surveyed countries.
Security and Data Privacy Compliance Essential
"Every marketer must begin with full compliance with all security and privacy regulations in his or her country," Kohn says. "Beyond that, brands would do well to be aware of these consumer perceptions as they collect data across all channels. By honoring consumer sensitivities across these four archetypes of data, brand interactions should hit home and multi-channel marketing metrics may improve dramatically."
Consumers' willingness to share their personal data also varies by the organization asking for it. Consumers are most willing to share their personal data with doctors and other healthcare providers (an average of 39% of respondents across the countries surveyed are willing to share data with their doctors and healthcare providers). Kohn attributes this to the fact that consumers understand the quality of the care they receive is dependent on the information they share, so they perceive the value in sharing. Consumers are least willing to share their personal information with fitness clubs (only 13% are willing), retail loyalty programs (15% are willing) and utilities (19% are willing).
"Consumers don't necessarily see the value in trading off data with these organizations," Kohn explains. "What they get in terms of a quid pro quo with those suppliers is not quite so clear. With a bank they can get guidance. A doctor will help you with that information. Consumers are looking for a two-way, value-creating conversation, not just an offer."
Six Steps to Better Data Management
When it comes to collecting and leveraging Big Data for customer communications, Kohn recommends the following data management steps:
Ensure compliance with all local and federal data regulations and keep up with current legislation.
Get the basics right (name, address, etc.) before trying to develop the customer relationship further.
Be clear about your intention. Say why you would like to know more and explain the benefit of sharing the data to your customer.
Understand the limits of your brand. Do customers come to you because you do a simple service well? If so, don't attempt to create a bigger "customer experience" where it may not be necessary or valued.
Don't let data defeat you. Technology and support exists at every business level.
Close the loop on communications. Use what comes back from customers to fuel further conversations and provide rewards to customers that shared their data with you.
Thor Olavsrud covers IT Security, Big Data, Open Source, Microsoft Tools and Servers for CIO.com. Follow Thor on Twitter @ThorOlavsrud. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Thor at firstname.lastname@example.org