Are privacy and effective marketing mutually exclusive?
Lisa Teifke, Vice President, Fidelity Information Services
Question: Given the high level of consumer expectations regarding privacy and the progress corporate America clearly still needs to make, are privacy and effective marketing mutually exclusive?
Answer:
Happily, I believe the answer is absolutely not!
In fact, there are many ways you can use your online facilities to build relationships with your customers so that privacy concerns become less of an issue for them - which can only mean good things for you. Results of a Harvard Business School study indicate that a very modest increase in customer loyalty can have dramatic effects on your company's profitability. So instead of being mutually exclusive, to the extent you can utilize your approach to privacy protection to build relationships, privacy and effective marketing might actually be mutually reinforcing!
I believe this can be accomplished through a three-step program:
Respect privacy
Nurture relationship
Strengthen relationship
Respect privacy
Promise to protect the privacy of customer information clearly and obviously.
Posting a privacy policy that can be understood - and found - can be categorized as providing "Notice with Integrity," surely the methodology to follow to demonstrate you respect your customer's privacy.
In a survey performed in the spring of 2002 by Ponemon Institute and sponsored by Peppers and Rogers Group, consumers were asked to assess their banks privacy practices. One of the most intriguing findings: At the top-rated bank, 88 percent recalled receiving their privacy notice in the last year. At the worst-rated bank, only 28 percent reported getting one. The founder of Ponemon Institute, Larry Ponemon, did not think that this reflected actual percentage of banks mailing notices, but the differences in the notices themselves and how their mailings were handled for maximum effect. The trust placed in those banks with the highest ratings for privacy translated, in this survey, to a much higher percentage of online customers (75 percent versus 33 percent between the highest and lowest rank banks in the surveys). Given the indications that online customers are even more profitable than those who do not pursue their business electronically, this is worth sitting up and noticing. The Jupiter Media Metrix survey cited earlier found that only 30 percent of consumers found the notices they did read easy to understand - we have our work cut out for us.
Finally, make the defaults for receiving e-mails "OFF" instead of tricking customers into getting unwanted e-mails, offer wish lists, reminder services, gift registries and automatic reorder schedulers. They will only grow to resent you for this later.
Nurture relationship by adding value
Nurture the relationship you create with your customer from its seedling beginnings. Once customers feel satisfied that their data is safe with you, the next step is to persuade them to share more of it.
How? Offer them something of value in return for the information you've requested like preferred customer sets of incentives such as discounts or frequent spender points. Offer them the ability to influence your next generation of product or service or promise access to technical research and development or things that will improve their experience with your product or service over the long run. Also, make relevant offers based on the data they have so generously provided (because now more than ever it would be a slap in the face if they were just a nameless face in the crowd). If you think people won't give out information in exchange for something of value, consider Napster - it took AOL 12 years to get 9 million customers, Napster, 6 months. The main guideline is don't take more than you give. For example, don't ask for more information than you need, especially all at once.
Solidify the Relationship
To solidify the relationship, you need to fulfill promises and do so consistently.
Give customers access to the information you have about them on the opening Web page to easily review and correct themselves - link a customer control panel, where customers can review and revise the information collected about them, to the main menu.
Solicit feedback to ensure you have accurate information and are providing valuable information, products and services.
Respect your customers' time. Avoid creating a complicated Web site that makes it hard to find the information or functionality they need.
Use the information you have to make your Web interface pertinent and accessible.
Carefully analyze the information you have and use it to their best advantage - highlight savings opportunities for them.
Ask if they want information pushed to them and how they want it sent.
Be consistent.
Make sure you provide promised value over time.
Treat people consistently. If they are a VIP on the Web but not in the branch, you will lose their trust and they will be less willing to provide personal information and remain a customer.
Collect information anonymously and identify it blindly by segment.
Always give visitors the option of browsing anonymously or logging in under a registered name.
Strive for opt-in relationships and tie the customer service manager's quarterly bonus to the number of customers that opt into higher level relationships.
Beat the competition to the punch - privacy is one trump card that hasn't been played yet. Place privacy seals on your Web site for the comfort of your customers.
When you get right down to it, you have to do these things because you are not in charge, the consumer is. If you don't respect privacy, what do you think consumers will do? According to Forrester, at least 32 percent of consumers lie about who they are/what they are like to avoid spam, etc. And if you try to collect too much information, they abandon yo
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