Each year, most of us receive annual privacy notices from firms we do business with -- whether they pertain to travel, hospitality, healthcare, entertainment, or financial services.
Companies are required to disclose how they will share the personal information they collect on customers, although unfortunately, not all consumers read this paperwork.
The Fine Print
Even though they may be user-unfriendly in appearance and tone, companies must pay close heed to their own privacy notices -- or else.
In many cases, the data collecting is far more comprehensive than people imagine it to be, thanks to new ways to plumb the data, such as reality mining, which gathers and analyzes information from machine-generated data that is capable of predicting individuals' social behavior.
On a website, this is done by tracking customer buying patterns. It's the reason why you see a recommended "buy" list of books or DVDs in the same general category as the last purchases you made on Amazon. Smartphones further extend this intelligence because they log calls, messages, and record where you are and even who you are proximate to via GPS. The final layer to this intelligence gathering is social media, where third-party services actually track your activities and who you affiliate with.
How does this help business?
If you're an online retailer, you've got a matter of seconds (while the customer is on your website) to consummate a sale. The better you are at predictive selling, the better your sales numbers will be.
If you're a healthcare services provider monitoring Alzheimer's patients in their homes, the more real-time data you can collect based on their whereabouts, activity sensors placed in their homes, and on their cellphones, the easier it will be to intervene if patients need help and are unable to request it.
If you're a metropolitan area monitoring city traffic flows, the more up-to-the-minute data you can collect about developing traffic jams, the better you can preempt complications by sending out messages to roadside e-billboards that inform motorists of upcoming congestion and advise them on alternate routes. You may be able to control traffic lights more effectively to control the flow of vehicles in the congested area.
If you're a financial institution, the more you know about a person's buying patterns (and potentially, even the people they associate with in social media channels) the likelier you will be able to reach out to more customers with the right products.
The balance enterprises need to strike in using this data is how far they should go to exploit this vast morass of data. This is the balance organizations must strike between helping the customer (and improving profits) and maintaining trust (which also builds profits).
Financial services is a good example, because major banks reserve billions of dollars for loans they anticipate will "go bad." Some of these institutions have begun using social media affiliations (or who their customers "hang around" with) as a new dimension of data intelligence that they apply to customers. Some consumers worry that lending institutions will start leveraging personal affiliations as one of the determinants of whether -- or not -- to make a loan to a particular individual. Banks and credit card services companies insist they only use only such information for marketing purposes, not for making any loan decisions.
Social media is an attractive route to increased information about prospective clients. It could help them capitalize on new sources of customer information that are good for business, while maintaining the trust of their customers. Enterprises should place the same emphasis on this as they presently do for regulatory compliance and internal policies.
Enterprises can proactively do this by:
- Including the information that demonstrates how they balance their decision with due diligence whenever they roll a new source of intelligence into their operations.
- Finding an automated way to integrate this new intelligence-gathering into their daily operations, so that line employees are not deciding how and where to use it.
- Telling customers in their annual privacy statements not only about who they will share customer information with, but also how the information will be used.
The data is out there and tools are available to pull it all together, but organizations must walk a fine line so they don't frighten prospects or existing customers away. It is a balancing act, and corporate reputations depend on getting it right.
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— Mary E. Shacklett is president of Transworld Data
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