Our personal information is everywhere, whether we like it or not. Businesses collect email addresses and more during registration for rewards cards and store promotions. Hobbies, interests, and day-to-day routines are captured from social media posts, search engine queries, and GPS tracking. Businesses are figuring out new ways to use this customer data for their marketing efforts and to improve their services. The latter is an evolving landscape where the line between appropriate and inappropriate is still murky.
“The ethics around gathering customer information are at best gray,” says business growth expert Meridith Elliott Powell. “Given that this is a new, somewhat unchartered area, there is still a lot of leeway companies have in the methods they use — and perhaps lines they cross — when gathering data.”
The methods of data collection are often subtle and sometimes controversial. In June, Facebook made headlines for performing “mood tests” on users. Data scientists altered users’ news feeds and analyzed how their updates and posts changed depending on a preponderance of positive or negative content. Customers were not pleased to learn the social media giant was performing tests on them.
“It put a black mark on customer information gathering techniques,” says Powell.
Transparency Is Key
Most customers accept that their data is collected and analyzed, often for their own benefit — it can help save time and money and lead them to products and services they want. They just don’t like when this research is done without their knowledge.
“Customers should be informed specifically what their information will be used for, and how and by whom it will be used,” says Powell. “That includes not sharing the information with other companies, competitors or publicly, unless express permission is given by the customer.”
Some companies do notify customers, but the message often gets lost in fine print or a person’s email inbox. The key is finding a way to be transparent about how the information is used — and making sure the policy is seen by everyone.
Trust Is Everything
There is a lot of promise for using customer information in marketing and promotion. Something as simple as a phone app sending a notification about a restaurant recommendation or product sale when a customer is in the area could be beneficial to both sides. (Apps such as Swarm already do this.) However, that kind of automated service could also be perceived as intrusive or annoying, damaging the business-customer relationship. “Trust is everything,” says Powell. “When customers feel they cannot trust you, you have lost a major opportunity to grow and expand the relationship.”
As online data mining tools get more sophisticated, new guidelines and even laws will be formed to protect both customers and businesses. The biggest question is, can the rules keep up with the technology?
“I believe ethics will be established for every industry, and I see eventually heavier regulation will be put in place to further protect the customer,” says Powell. “Companies would be smart to not wait for their industry or the government to establish their policies, and instead do this themselves.”