The Fine Line between Personalization and Privacy in Marketing

The Fine Line between Personalization and Privacy in Marketing February 04, 2009
By Dave HenkelAs technology continues to advance, marketing and sales professionals can gather more information about their target audiences than ever before. With that information, there is excitement at the possibility of creating more relevant, personalized customer communications. Supporting this are statistics that show a better connection between a company and its customer yields a higher chance of retention and loyalty. However, just because data on customers and their preferences is available, doesn't mean it is always welcomed by the recipient. In fact, personalized communications can sometimes be regarded as a threat to privacy, particularly when they include even the most basic medical data or financial information.Printing technologies, database mining and other analytics technologies can allow for creating personalized campaigns that garner impressive response rates, but the growing consumer concern for customized communications that cross the line from a friendly, personal offer to an invasion of privacy simply cannot be ignored. Indeed, recent accusations of information misuse and even racial profiling by the Center for Digital Democracy and the U.S. Public Interest Research Group have left many sales and marketing executives extremely cautious. And rightly so. Cause for Concern In response to queries from a coalition of consumer privacy groups, the Federal Trade Commission (FTC) held public hearings late in 2007 to review issues related to "Ehavioral Advertising." This form of targeted marketing involves automatically tracking Internet users to gather technical information about their browser, operating system and personal information—such as the Web sites they visit, their online purchases, their geographic location based on an assumed or declared address, even their participation in online chat groups. Despite the fact that many consumers are willing to exchange some personal information for free services, software upgrades, reward points and personalized product recommendations, consumer watchdog groups claim that a marketing practice is an invasion of privacy when consumers aren’t told that they're being monitored and aren’t provided a simple and effective way to opt-out.
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The FTC has made efforts to strike a balance between the consumer's right to privacy and advertiser's need to research their customers. The agency has developed guidelines for industry self-regulation, advising marketers to take special care in the collection, handling, storage, and disposal of sensitive customer information. Apart from legislation like HIPAA, (Health Insurance Portability and Accountability Act) or in the financial industries, (Gramm-Leach-Bliley legislation), the government doesn't define exactly what kind of data is hands-off for sales reps or marketers. Choosing the Right Decision Based on the 2007 hearing, what did the FTC conclude in terms of how much personalization is too much? In its final report, the agency identified several highly sensitive areas of information: • Medical data, including insurance information as well as chronic health conditions, medical history, genetic information, prescription drug and related purchases.• Financial information, such as bank accounts, personal income, investments, credit ratings, income tax and related data. • Personal identifiers like Social Security, credit card, driver's license and even telephone numbers; physical descriptors like height, body weight, eye color or clothing sizes.• Any material directed to a minor. • Individual sexual preference or orientation. Going a step further, the FTC has developed some useful guidelines for handling this type of information. These include:• Take Stock. Inventory the sensitive data you have on file in a centralized database, on individual computers, disks and CDs, correspondence, and other hard copy files. Credit card and other personal information may be in the sales or human resources department computers, as well as in the accounting or payroll system. • Scale Down. Legal requirements may dictate long-term archiving of some data, but businesses may be storing customer credit card numbers well past the account expiration dates, or sales histories for customers they haven't seen for years. • Lock It. Keep hard copy files and removable digital storage like CDs, disks and drives in locked file cabinets and locked offices. Businesses that operate with computers linked to a central database can establish a hierarchy of who needs exactly what data and use software applications to block access to anyone else. Complex password protocols are also useful for stand-alone or laptop computers. • Pitch It. If personal information on customers, employees, and suppliers isn't actively in use, destroy it. This means shredding, burning, or pulverizing paper documents and over-writing digital storage media—not simply hitting the "delete" button. • Plan Ahead. Protecting company and customer information must be taken seriously for simple good will and, worst-case scenario, to avoid legal liability. Develop a written security policy detailing how every member of your organization should handle sensitive information, along with a clear plan for dealing with a situation like a computer system breech. Decide beforehand who may need to be notified and how; this can include your customers. Investigate every complaint or reported violation immediately to help determine vulnerabilities and correct them. Keep It Both Relevant and Appropriate The fact remains that businesses do have the right to offer desirable products and services, and research their customers to improve the chances of a successful sale. Relevancy should be top-of-mind for sales and marketing executives, because if certain customer information has little to do with your company's goals, it should be avoided. Too often sales and marketing executives can get caught up in the creative aspects of what's possible and lose sight of the real goal—communicating your company's messages. As with any professions, communication with the general public is key. Ongoing dialog with customers about data collection, data safety, and their preferred level of privacy can help sales executives and marketing personnel gauge the success and professionalism of their efforts. General information provided by the customer, like gender, age, and geographic location, can be used to improve response, yet eliminate the need to mine the database too deeply and risk triggering privacy alarms. When used appropriately, personalization is an effective tool for increasing sales and securing customer loyalty. Dave Henkel is president of Johnson & Quin located in Niles, Illinois. Johnson & Quin is a national leader in targeted full-service direct mail printing and production, offering the latest data and personalization technologies. He can be reached at dhenkel@J-QUIN.com.