Privacy is a very important question we must all analyze as a part of our Big Data Collection efforts. But perhaps the simplest way to review this is to first understand your consumer and how they want to interact with your website, eCommerce experience, or social media. If the privacy question is not answered by first understanding who your client is, how they want to interact with you, and how they perceive of the data that they supply you is being protected and used you may have failed from the beginning. After all everything begins with building customer confidence, enhancing customer experience, and delivering on customer expectations. Once we loose the trust we loose the customer. So begin by knowing your customer and then begin to determine the level of security you need to build to fulfill their expectations for engaging with your activities. You will be far more successful with this path than any other.
Make Privacy Your Strategic Marketing Advantage
CMO EXCLUSIVES | November 12, 2013
by Nick Corcodilos
In the quest for Big Data, marketers walk a fine line between going after the information they need and respecting consumers’ right to privacy. As for consumers, while they’re seemingly in control of brands’ fates, many also realize that if they want to download an app, sign up with a social network, or do business with a company, they need to cough up their data in return.
- “Our privacy statement gives us cover to do a lot of things, but we mostly don’t want to do them.”
- “Don’t capture data you don’t want—it’s nuclear waste.”
- “Opt-in as a strategy does not work for a CMO.”
With that as a backdrop, what exactly do privacy-minded CMOs really need to know? Is the privacy debate as confusing and complicated as it might seem?
“Privacy is not a 34-page, nine-point type document that users click on. It’s not checking the compliance box,” according to the venture capitalist Gilman Louie, of Alsop Louie Partners. “If privacy is done right, it has consumers choosing your brand over somebody else’s. Privacy is a strategic advantage in your marketing.”
CMO.com spoke to several technical, legal, and investment experts to guide marketers on how to do privacy right. They homed in on five key issues.
1. Liability: It Isn’t Just Legal
The privacy component of your marketing strategy affects your company’s value
Privacy laws and regulations create liabilities for companies.ThePrivacy & Data Security Law Journal reports that “some experts contend that compliance with SOX is incomplete without an adequate information-security program.” While a company’s executive officers are responsible for internal controls, it’s the company’s programmers and marketers who are on the front line of security where, for example, customers’ personal information might be subject to breaches.
“A common naive approach to Big Data is to collect everything possible and set a team of stats-chimps on it to generate marketing insight,” said Dwight Irving, a founder of personal data marketplace start-up DataBanker, in an interview with CMO.com. “One of the big issues with that approach is that the collected data has a liability aspect to it.” (Read related article, “The Big Mess In Big Data.”)
Data protection attorney Jim Halpert agreed and mentioned the obvious caution about liability: Your company could get sued in a class-action lawsuit under the Fair Credit Reporting Act if customer credit card data is breached, or face enforcement action by the FTC if Web site users are misled into disclosing their personal information, he told CMO.com.
But Halpert also pointed out that “it’s important to put fairly reasonable compliance measures in place not only to be able to build a small business, but to be able to obtain financing at full value for a much bigger, brighter future as your business matures.”
Irving emphasized that a company’s privacy liability isn’t just legal. It affects the value of the business: “I’d like to see that liability aspect show up in the annual reports.” If the idea seems extreme, Halpert put a sharp point on it: Using big data too aggressively could mean a smaller payout when someone wants to buy your business. Suddenly, your privacy strategy starts to look like it could really cost you money.
2. Privacy: Don’t Be Creepy
Compliance is not the only path to trust, customer loyalty, and brand integrity
Well-publicized security breaches have put marketers on edge. Serious as these breaches are, they reveal weak security systems. But in marketing, the challenge of privacy also surfaces in marketing strategies and practices.
The consumer data being gathered today seems to be as big as the apparent invasions of privacy are disparate. It has become so you have to look askance at your own car, whose telematics system tracks how you drive and where you go, while you also reconsider the permission you granted to LinkedIn to use your e-mail list to solicit new members. The issue is trust.
This is the kind of breach that CMOs should be concerned about, said Lawrence Greenberg, SVP and chief legal officer at the Motley Fool, one of the first online investment communities.
“You want your customers, your prospects, and your members to trust you, to like you, and to continue to patronize your business,” he told CMO.com. “If they’re going to do that, you can’t be taking actions that breach whatever relationship of trust you have with them, or that make them feel ill-used.”
Although the company uses big data to its advantage, it hasn’t had any privacy controversies, Greenberg added.
“Our privacy statement gives us cover to do a lot of things, but we mostly don’t want to do them. We don’t look at our business in terms of how much we can extract from our customer in the short run,” he said. “We want to have a mutually beneficial relationship with our members over the long term. We send a lot of e-mails, but we’ve never aspired to be the people who are on the profitable side of being creepy.”
Compliance with the law is not a sufficient way to respect customers, Greenberg said. “Make sure you’re treating people well. Whether it’s opt-in or opt-out, say what you’re going to do in a way people understand, and then do it,” he said. “Not incidentally, it’s a good way to ensure you are complying with the law.”
3. Mobile: Join The Ecosystem
Be an active advocate for consumer protection in your industry
Privacy is a community challenge, according to DataBanker’s Irving. “Self-regulation isn’t working because of the usual short-term focus on profits at the cost of long-term brand-building strategy,” he said. “The failures caused by short-term self-interest will result in more stringent regulations that create more bureaucratic red tape and result in more industry costs and loss of consumer confidence.”
On the other hand, Alicia DiVittorio, director of communications at Lookout Mobile Security, told CMO.com that she believes self-regulation does work, especially in the mobile “ecosystem” her company is part of.
Lookout is a sort of “app cop” whose apps protect smartphones from malware in other apps. In July 2012, the company published Mobile App Advertising Guidelines for app developers, cautioning them to comply with industry and government guidelines or risk having their apps tagged as adware. Developers quickly started behaving.
DiVittorio said mobile app vendors must actively cooperate on standards to protect their own brands and to protect their community. “My advice to any CMO: Privacy by design, early and often, is critical,” she said. “For example, only ask for permissions you need for your app to function. Second, don’t capture data you don’t want—it’s nuclear waste, and if it leaks you’re creating a problem. Finally, transmit data you collect securely.”
4. Opt-In Or Opt Out: It’s The Wrong Question
For the CMO, this choice is a no-win strategy
Venture capitalist Louie, whose firm is funding “two or three privacy deals,” takes issue with the opt-in/opt-out debate. It misses a bigger point, he said.
“The problem with opt-in/opt-out is it’s black and white. Even if you ask a person to share information when it’s good for them, they’re not going to click the box. Opt-in as a strategy does not work for a CMO,” he said. “Change the mind-set a little bit—the real issue is whether the data is anonymized or not. Be able to clearly explain all the benefits of anonymized data to the user, with very clear guidelines about how their data won’t be misused.”
The brewing privacy battle Louie sees is not in the courtroom, but in the market. “CMOs who figure out how to leverage privacy in a positive way are going to win long term in the marketplace because users are going to start migrating their information to companies that respect them,” he said.
5. The Strategic Advantage: Be Trustworthy And Offer Better Deals
It’s obvious why consumers don’t mind sharing their purchase data on Amazon
It’s in CMOs’ best interest to ensure their peers are doing right in the name of privacy. “It takes just one bad apple to get us all in a lawsuit,” Louie said. “It becomes a strategic advantage because anybody who doesn’t use that standard of care, they’re going to get called out.”
Companies must adopt “a personal data standard of care as part of a social contract,” Irving added, but he also believes smarter regulation is necessary. “Why aren’t all businesses that collect personal data audited to provide a decent standard of care for that data, one that also includes internal authorization restrictions?” he asked.
Louie put responsibility squarely in the C-suite: “CMOs have two partners who don’t necessarily step up to the plate. One is the CIO, who needs to provide alternatives to opt-in/opt-out. Most CMOs are not up on the latest technologies that the CIO and the engineers are working on.”
The second partner is the chief privacy officer (CPO), but Louie thinks they’re often too isolated. “CPOs usually look at it from a compliance point of view or a defensive strategy point of view, rather than an enabling one: ‘I’m here to guarantee privacy.’ They become zealots,” he said. “They’re not putting it in the framework of the C-suite—what we guys do as a business.”
Ultimately, a better relationship is required among CMOs, CIOs, and CPOs “for big data to be used for the benefit of the consumer, in ways that ultimately will benefit the company, but in a way that measures up to the standards,” Louis said.
So where does this all leave marketers? At the end of the day, privacy is going to win, Louie said, “because not sharing any data is going to result in a terrible experience. And you’re going to lose.”
It’s up to the CEO to request a strategic plan of the CMO, CIO, and CPO “that uses a standard of care about how we handle big data in a way that makes our brand stronger, not weaker,” he said. “Take a look at Amazon. It’s obvious why consumers don’t mind sharing their purchase data on Amazon: They get better deals and a better experience.”