Customer Data Designing For Transparency And Trust
Though some companies are open about their data
practices, most prefer to keep consumers in the dark,choose control over sharing, and ask for forgiveness rather than permission.
In a future in which customer data will be a
growing source of competitive advantage, gaining consumers’ confidence will be key.
The internet’s first personal data collectors were
websites and applications. By tracking users’ activities online, marketers could deliver targeted advertising and content.
More recently, intelligent technology in physical products has allowed companies in many industries to collect new types of information, including users’ locations and behavior.
The rich new streams of data have also made
it possible to tackle complex challenges in fields such as health care, environmental protection, and urban planning.
At the same time, consumers appreciate that data
sharing can lead to products and services that make their lives easier and more entertaining, educate
them, and save them money.
If companies understand how much data is worth to
consumers, they can offer commensurate value in return for it. Making the exchange transparent will
be increasingly important in building trust.
(1) self-reported data, or information
people volunteer about themselves, such as their e-mail addresses, work and educational history, and age and gender
(2) digital exhaust, such as location data and browsing history, which is created when using mobile devices, web services, or other connected technologies
(3) profiling data, or personal profiles used to make predictions about individuals’ interests and behaviors, which are
derived by combining self-reported, digital exhaust, and other data.
We also examined three categories of data use: (1) making a product or service better, for example, by
allowing a map application to recommend a route based on a user’s location;
(2) facilitating targeted marketing or
advertising, such as ads based on user’s browsing history;
(3) generating revenues through resale, by, say, selling credit card purchase data to third parties.
Our surveys reveal that when data is used to
improve a product or service, consumers generally feel the enhancement itself is a fair trade for their
data.
But consumers expect more value in return for
data used to target marketing, and the most value for data that will be sold to third parties.
Firms may earn access to consumers’ data by offer‐
ing value in return, but trust is an essential facilitator, our research shows.
Numerous studies have found that transparency
about the use and protection of consumers’ data reinforces trust.
Many have argued that the extensive data collec-
tion today’s business models rely on is fraught with security, financial, and brand risks.
Teach your customers. Users can’t trust you if
they don’t understand what you’re up to. Consider
how one of our clients educates consumers about its use of highly sensitive personal data.
This client, an information exchange for biomedi-
cal researchers, compiles genomic data on anonymous participants from the general public.