Chapter 22. Customer Privacy: Seize Your Opportunity
Customer privacy, once upon a time a topic of great interest and ever increasing importance is still around. California's state legislature came very close to passing a law to establish a no-phone zone, a “do not phone” list that anyone telemarketing to California residents would be required to use. It didn't quite pass—this time.
Privacy is still a huge political issue and a huge legal issue, but most important, it is a huge opportunity for you to build trust and loyalty with your customers and enhance your brand image! Like many of the things we've already discussed, the Internet hasn't created the privacy issue, but it has significantly raised its visibility and importance. Nothing illustrates how pervasive a topic has become better than when it becomes the subject of humor in a publication like The New Yorker (see Figure 22-1).
Figure 22-1. A little privacy humor
The political and legal implications of an individual's right to privacy (to be left alone) are far from understood, much less well defined. Globally as well as in North America, the political climate regarding privacy is inconsistent, and the legal situation continues to evolve. Europe enacted its Directive on Data Privacy in October 1998, which prohibits the transfer of personal data to non-European Union nations that do not meet the European “adequacy” standard for privacy protection. The United States government initially favored industry self-regulation based on industry shouldering responsibility for adopting sound privacy practices, hoping to limit the amount of restrictive legislation hampering the fledgling industry. Little industry movement coupled with strong consumer concern resulted in the creation of some industry-specific legislation in the United States, with the possibility of more to come.[1] Much of the rest of the world seems to favor limiting legislation, thus encouraging the growth of the Internet. There is a strong case for a consistent global approach to privacy because the Internet knows nothing about country borders, but it may take a long time to get there.
[1] Medical and educational information has been legally protected for years. Just in the past year, we have seen new legislation in areas such as financial services and children's privacy.
The Direct Marketing Association (DMA) has an informative web site that answers common business questions regarding the new Gramm-Leach-Bliley Act passed early in 2002. You'll find it at www.the-dma.org/government/grammleachblileyact.shtml#top.
For more information on the Children's Online Privacy Protection Act (COPPA) which went into effect in April, 2000, see the Federal Trade Commission's excellent KIDZPRIVACY web site at www.ftc.gov/bcp/conline/edcams/kidzprivacy/index.html
Because so many customers are adopting the web to transact business, e-commerce has been exploding. Electronic sales to consumers passed $20 billion in 1999, and consumer online revenue is projected at $184 billion in 2004. Internet sales in the business-to-business market are growing at an even faster rate and will eclipse the consumer e-market. Still, there are many customers who remain reluctant to move to the web, with privacy and security concerns identified as the biggest barriers. The Gartner Group reported that of those customers who bought online in Q3 1999, 38 percent agreed that privacy concerns prevented them from placing further orders. And Jupiter Communication tells us that 58 percent of customers they surveyed were worried about a company selling their information to a third party.
This is where your opportunity presents itself. The opportunity is the difference between doing right and not doing it wrong. You must stop thinking about privacy as a political issue or legal threat that is about to be imposed. Privacy is a tremendous opportunity to improve your customer relationships, increase trust, and build loyalty. Bob Dorf, President of the Peppers and Rogers Group, put it this way:
Privacy is the single greatest threat to the successful implementation of one-to-one [relationship management]. Any company that is going to do [one-to-one] and not totally respect the privacy of the customer's information is just waiting for disaster…begging for a disaster.
I could not agree more!