TrustArc Blog

Smart Practices for Marketers Collecting Consumer Data

November 25, 2014

By Andrew McDevitt, senior privacy consultant at TRUSTe

This article is based on a presentation “Privacy in the Digital Age- Avoiding Consumer Backlash: Smart Marketing Practices for Collecting Customer Data while Improving Personalization, Trust and Transparency” which was delivered by Andrew McDevitt, TRUSTe at The Customer Centricity Summit,” sponsored by Knowledge@Wharton, the online business journal of the University of Pennsylvania’s Wharton School.

 

For companies, knowing how to effectively identify and understand valued customers through the use of predictive data analytics, customer lifetime value programs and location data technologies is essential for growth. Of course, the privacy implications of amassing consumer data should also be a major concern for companies.

Addressing more than one hundred senior level data marketing executives at a conference in New York City earlier this month I discussed the various data protection and trustworthy computing implications of these consumer-centric business practices.

Companies make use of such technologies to promote effective customer engagement, loyalty and segmentation. Many of these organizations want to improve their customer experience strategies, create competitive advantages within their industries while driving long-term sustainable growth.

Within diverse industries, companies have turned to customer data analytic programs to help identify high-value customers that can be engaged more directly through tailored marketing initiatives focused on their specific product/service interests. By knowing their high-value customers more intimately through the data acquired about them, businesses can create more meaningful customer experiences to drive the desired growth that traditional strategies are no longer providing.

However, in recent years, consumer attitudes to data collection on both computers and smartphones have changed – especially after last year’s NSA/Snowden revelations, as well as several other significant consumer data breaches in the news.

Data privacy issues will have a significant impact on the future business objectives and data use strategies of many organizations. As more consumers lose trust in the brands they know and love due to new privacy technologies that can be perceived as creepy, business revenue growth projections will suffer and existing technology investments to increase more meaningful customer engagements will not create the anticipated ROI. If government officials increase their legislative and/or regulatory actions limiting how businesses collect, process, share, store and use consumer data, we could collectively lose some important technologic innovations, economic gains and even shared societal benefits.

To combat these negative repercussions for the long-term future, I believe the best approach is to adopt a business mindset that advocates for incorporating both privacy and trust as a competitive advantage and valued asset of any organization. Essentially, privacy and trust should be two core pillars of your brand. It’s imperative that organizations take a more proactive posture toward privacy – not reactive – by incorporating privacy by design into the development of products, programs and services that touch consumers. By doing so, I believe we could begin to effectively roll back today’s consumer privacy confidence numbers. It is also important for businesses to create safe places for consumers to interact and shop online to truly help drive the growth that companies are striving to achieve. This can be accomplished by promoting increased consumer choice, control and transparency around the online and mobile interactions consumers have with various brands.

So, how can this all be achieved within your organization? Think of privacy as a global team sport! To effectively incorporate privacy into the DNA of your organization­ and promote trust with consumers, multiple stakeholders need to focus on privacy within an organization. Even if a company has a dedicated chief privacy officer with a small team of privacy experts, other C-level colleagues must be engaged with privacy matters across their entire enterprise. Corporate communications, data analytics, human resources, information technology, marketing, procurement, training, sales, and product development and management must also help coordinate, manage and support an organization’s privacy initiatives to incorporate them into the culture. Once it becomes a mature and recognized cultural trait, consumers and government officials alike will recognize and respect it immediately.

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