Advancing communications measurement and evaluation

Data Privacy vs. Personalized Communications: How to Trade Value for Data

If the Cambridge Analytica and Facebook scandal taught us anything, it’s that companies collect a lot of information about you.

Like, a lot of information.

And that information can be stolen, sold, or used in any number of ways, with or without your permission in some cases.

That concept is enough to make anyone uncomfortable and look for an escape off the grid.

But, not all data collection and usage has to be bad.

In fact, your data can be an amazing tool for brands to provide you with more effective, accurate marketing of products and services.

It’s important, however, to respect consumers’ information. Consumers must be gaining value for trading their data with companies.

As concerns over data privacy continue to intensify, brands must be mindful of privacy and ethics, as well as returned value to the customer, as they leverage consumers’ information.

Data privacy

Between the Cambridge Analytica scandal and GDPR going into effect at the end of May, there is a heightened focus on data privacy and ethical use of personal data.

Companies should take necessary steps to ensure people they don’t violate their privacy by storing and analyzing their information.

Be upfront about the information your brand collects and stores, and be honest about how that information is being used.

One of the most offensive violations of trust in the Facebook/Cambridge Analytica scandal involved taking data from those who did not consent to it. Although only 300,000 users took the quiz that Cambridge Analytica used to gather information, as many as 87 million users had their data just handed over—by Facebook—without the users’ consent. This is because any user who took the quiz exposed their friends’ data too.

Provide easy outlets for consumers to manage their data and opt out of communication. All emails sent to your lists should offer an easy-to-find link to manage email settings.

Conduct regular audits to ensure you’re not storing unnecessary data. Generate reports from the main databases that house prospect and customer data, such as your CRM software, to maintain an understanding of the data you store about your consumers.

Ensure your company stores records about how you gained the personal information, such as email addresses, from members of your database.

Provide your users with a copy of the privacy policy of your product or service in plain language that your users will be able to understand and are willing to read. For all of its recent shortcomings, Facebook’s privacy policy does provide its users with an easily understandable policy. In 2015, the Center for Plain Language rated them second, only behind Google, on the list of most readable privacy policies.

Data’s value

As brands continue to collect more information about consumers, data becomes increasingly valuable.

A recent New York Times article calls data the most important digital currency. The more data brands collect about their consumers, the more information they have to inform their strategies and better their businesses.

With concerns of data breaches, as well as the added annoyance of being marketed unnecessary or unwanted goods or services, consumers understandably want to be protective of their data.

By sharing some data and permitting companies to store it, consumers can receive more customized, personalized goods and services.

Personalized marketing and communication studies consumer data to reveal habits and groups together people with similar interests and trends.

Creating specific personality profiles allows brands to market their messages specifically to the right audiences.

Consider, for example, that you purchase several books by the same author from your local bookstore’s website. Would you be okay with the store accessing this browsing and purchase history and your email, provided you opted in to email communication, to send you a notification when they receive that author’s new book in stock, or to let you know when the author is scheduled to speak at the store?

Or, consider you buy running shoes and a water bottle from an online retailer. The site can aggregate the information of various profiles who purchase items related to exercise and physical fitness. Having this information would allow them to send a coupon code for more exercise equipment directly to those who already expressed interest in exercise products. They could partner with a local gym and offer a discounted membership to an audience of people who will respond positively to this opportunity.

This type of targeted communication benefits the consumer with customized products and services, and proves beneficial to brands, too, as it allows companies to target who they market their messages to, rather than spending time and money to share their messages with huge audiences who may not be relevant targets.

But how much data is too much?

Despite the potential value for sharing data, when do consumers draw the line on how much and what kind of data they’re willing to share with companies?

DNA testing companies and their customers have had to consider this question. These DNA ancestry companies have become popular in recent years. The companies send their customers a kit to deposit saliva in, which they test upon receipt to identify the customer’s genetic makeup and health history.

These companies trade DNA data for the provided value of giving consumers more information about their heritage. But what are these companies doing with the data after they test a person’s DNA?

According to Sheldon Krimsky, the Lenore Stern Professor of Humanities and Social Sciences and an adjunct professor at Tufts University, “The companies offering these tests largely make their money not from doing the tests, but from selling the genetic information to other companies interested in having access to large genetic databases. Almost 50 percent of the firms that sell you your ancestry information turn around and sell your genetic information to some other company…Only about 10 percent of the companies that offer ancestry tests destroy your original sample.”

Although DNA and health records are largely considered more personal than contact information, think of these companies as analogous to companies that gather email addresses to send a weekly newsletter, the perceived value to the consumer, and sell this information to advertisers or use it to market additional products, the tradeoff to the value gained by consumers.

Is the value provided by these companies, whether it’s ongoing or on a one-time basis, worth surrendering information for? How many times will consumers’ information be traded or sold after their initial consent to opt-in?

These are important questions to consider as companies continue to collect information about their consumers. Data’s value will only increase as time progresses, so companies must make sure they’re providing equal value back to the consumer and treating their information ethically and thoughtfully.

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