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Preparing for Do Not Track: Personalization and Privacy in 2013

January 31, 2013
Collecting customer data: filling the box, or opening Pandora's Box? --Watercolor by Charles Plaisted

Collecting customer data: filling the box, or opening Pandora’s Box? –Watercolor by Charles Plaisted

Do Not Track legislation and similar initiatives are at odds with the techniques used to personalize the customer experience. On the one hand, advocates of consumer privacy demand that people control the information that is collected about them, and how it is used. On the other, the web sites and advertising networks want to adjust every type of content to make it more engaging and effective. And, of course, to make money. Which, of course, goes to subsidize great services like email and virtual storage and voip.

I am skeptical about the threat from privacy regulation, as I explained in a recent post. But I am certain of the constant threat from the court of public opinion. Instagram’s public humiliation over its new privacy policy was a media sensation for weeks, and “to Instagram” will probably emerge as a privacy-related verb (spoken in a #fail tone of voice). Collectors of customer data, beware!

And yet, collecting customer information is undeniably valuable. It helps merchants present great product recommendations to visitors, show just the right content to engage their attention, follow up with engaging emails, and chase customers around the Internet with ads. There are also opportunities to monetize the customer information that’s been collected, via third party ad exchanges.

So how do you take advantage of the opportunities, keep your customer relationships, and avoid the #fail?

Some of the path forward is clear. All the consumer privacy initiatives have a few common demands, and honoring them will keep you out of trouble: Be clear about what you are doing, give consumers a voice, and don’t change the deal after the handshake.

But how do you honor these consumer goals while achieving your own goals?

I think your first action is to understand the balance between your business goals and your customers’s privacy expectations. Then you need to establish and test policies and practices for collecting and using customer information.

I think 2013 could be your last year to experiment safely in this arena, so here are my 4 Steps to Personalization Permission:
1. Set a privacy policy, and track compliance vigorously. I say track, not enforce. Over the course of a few quarters, estimate the impact on your business of adhering to your policy – what circumstances made you violate your policy, what opportunities do you forgo to adhere to it, what costs do you incur? Understanding the impacts of your privacy policy, you can adjust it to meet your business needs while customers are still mostly ignoring the whole issue, and regulations aren’t yet in place.

2. Plan your technology strategy for collecting and tracking not only customer data, but customer permission to collect and use that data. What approach to balancing privacy, permissions and monetization is budget-appropriate?

3. Start collecting customer permission. Your customers each trust you in certain ways. Ask them to be explicit about their trust. Try out various programs to get their permission to use their data for various purposes. I recommend being rather specific about this: not “information about you for marketing purposes” but “your interest in mountain bikes in order to select interesting things to show you.” Your goal is to find out what customers deem acceptable, what words soothe or alarm them, and what you need to offer in return.

4. Establish tools and skills for testing different approaches to asking permission, to describing how you use customer information, and for different approaches to using the information.

By year end, you’ll know what data you want, what data you use, and how customers feel about it. You’ll know how to ask customers’ permission. Just remember: if in future you realize you want to collect more data, or want to use it in new ways, then ask for permission again. Changing the deal after the handshake is a customer relationship #fail.

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