Byline: MARTY ABRAMS
This isn't another Chicken Little story. I won't tell you that the privacy sky is falling. That we will be regulated, consumers won't trust us and our desire to communicate with prospects will become an issue. No warnings are necessary. Indeed the sky is falling down all around us, as every medium in which we sell is under attack.
Let's begin with telemarketing. The implementation of the Telemarketing Sales Rule and a National Do Not Call list will change that business forever. There will be fewer consumers to reach, the process will be more difficult and the cost of making a mistake will be more expensive.
Next we have the Internet. The Web has become so crowded with fraudulent and sexually explicit ads that with or without spam legislation it will be an unfriendly medium for prospecting. If this fact wasn't clear before, it sure was after the Federal Trade Commission's spam workshop, where the Direct Marketing Association was attacked for suggesting e-mail was an appropriate avenue for finding new customers. Our challenge is to preserve the ability to e-mail existing customers for marketing and customer service purposes.
This leaves us with old reliable direct mail. The volume of communication bombarding the consumer has become a real issue. Not only is marketing fatigue a problem, but policy makers are increasingly suggesting that too many messages can be harmful.
A leading direct marketing executive recently told me that he could develop the right message for every small segment in his file. However, he isn't yet able to predict that moment in time when the consumer is ready to be touched by that targeted message. That means he mails constantly so he can be in front of the consumer when she is ready to be touched. Multiply that scenario by hundreds and we have a consumer exhausted by the sheer volume of messages sent her way. It is not only mail volume, but also telephone calls, e-mails and hundreds of commercials on TV. This translates into sensitivity to the political message that unwanted marketing is a privacy issue.
The obvious answer is greater targeting precision, which requires more rather than less data. Yet the trend is toward more data restrictions. The Drivers Privacy Protection Act and financial services privacy legislation have reduced the accuracy of age data and taken data elements, like motor vehicle registrations, off the table. The behavioral data we need to predict lifestyle and income ranges has disappeared at a very rapid pace.
Furthermore, state by state, county by county, and even town by town, public record information is becoming more restricted as well. Data availability and quality are becoming a targeting issue.
We then turn to our analytic tools. Total Information Awareness, CAPS II and other government initiatives to isolate terrorist risk are illuminating the tools and data we use to predict consumer behavior. We are seeing stories about how the Patriot Act allows the government to demand access to consumer transaction databases, and how that information will be fed into models based on the analytic tools you use to predict who will be a profitable customer.
The bottom line is that consumer data may be used to determine if you are a security risk. While consumers want the government to do everything possible, including using analytics and data to fight terrorism, they don't want to be hassled unfairly. The Total Information Awareness project's argument that they were just using the tools the private sector has used for 20 years reminds consumers that data is being collected, stored, used and shared in ever more inventive ways. Research tells us, absent some sense that information is under control, consumers will demand that control themselves. This leads to more restrictive legislation.
Lastly, the industry is being asked to demonstrate that our thirst for data and predictive tools creates actual measurable consumer value. Industry arguments emphasizing soft benefits like convenience are getting increasingly shrill. Neither soft nor shrill works. A great example of this aired in a "60 Minutes II" story on April 30. A financial services industry representative essentially said that the cost of choice would lead to higher consumer prices, fewer new products and more hassles for the consumer. That may indeed be true, but the industry has yet to back that claim with hard data.
Some very trustworthy consumer research says consumers crave the value that comes from information used well. They want immediacy, personalization, great prices, quality, diverse choices and great service. The research says that giving consumers what they want when they want it translates into peace of mind. Our failure is that we haven't linked our information-intensive processes with consumers' peace of mind. We've had the opportunity to do so in the past, but we have not. That needs to change.
The FTC is holding a workshop on June 18 addressing "Costs and Benefits Related to the Collection and Use of Consumer Information." This workshop is supported by FTC commissioners and senior staff who want proof our methods combined with consumer information create real value for consumers. They are using a case study methodology that gives industry the best opportunity to make its case. This may be our last chance to justify the robust data flows necessary to do quality targeting. Getting the story right for the FTC will then position us to present that evidence in other venues as well.
The case studies aren't that hard to do. One begins with the business problem, shows how information and technology solved the problem and how that created real value for consumers. Some of that research has already been done by scholars such as Fred Cate, Michael Staten and Michael Turner. Getting data and support has been a challenge. We need more players to explain, in a systematic manner, how their information processes have created real value for consumers.
An absence of evidence would make it difficult for policy makers to hold the line on privacy legislation, which would restrict our ability to sell in a targeted manner. They would be more responsive to real consumer concerns about loss of control and surveillance.
Right now both the selling and the targeting are in question. We need to change that dynamic. The choice is ours: trust based on demonstrating real value or consumer markets that are much less interesting. Take your pick and start patching the sky before it vanishes completely.
Marty Abrams is senior policy advisor and executive director of the Center for Information Policy Leadership for Hunton & Williams, Atlanta.
THREE PATHS TO CONSUMER TRUST
* Demonstrate that our industry keeps data secure.
* Show that the industry has processes and procedures to ensure data use is under control.
* Prove that our use of information creates real, measurable consumer value.
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