Here’s one of many articles describing the challenge of maintaining personal privacy amidst the spread of data brokers http://www.mcclatchydc.com/news/nation-world/national/national-security/article166488597.html
The core and often unacknowledged challenge here is the asymmetry, that people will generally modify their behavior (self-censor in some contexts) according to their surroundings and present purposes. This ability falters when we do not know what our friends and adversaries know about us, preventing us from leveraging our friendship or guarding against their power. So far we’ve avoided the utopic and dystopic extremes, but the classic example of Target illustrates the potential benefits and dangers:
“My daughter got this in the mail!” he said. “She’s still in high school, and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?”
The manager didn’t have any idea what the man was talking about. He looked at the mailer. Sure enough, it was addressed to the man’s daughter and contained advertisements for maternity clothing, nursery furniture and pictures of smiling infants. The manager apologized and then called a few days later to apologize again.
On the phone, though, the father was somewhat abashed. “I had a talk with my daughter,” he said. “It turns out there’s been some activities in my house I haven’t been completely aware of. She’s due in August. I owe you an apology.”
These situations and extremes can be avoided. While the first responsibility is on companies to ethically and honestly interact with their customers, that is essential, I can see the temptation to wring customer data for pennies, and that once some return has been achieved to expand these datastores. As Target stated in the preceding, “We’ve developed a number of research tools that allow us to gain insights into trends and preferences within different demographic segments of our guest population.” and “Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and exceptional guest experience…”
Years ago, I complained on twitter that companies like Roundy’s, in the notoriously low-margin grocery sector, have customer loyalty programs but retain all of the data and conclusions for their internal use. Hiding the purpose and mechanism of these programs is one way to avoid customer ire, but this tactic is one misstep or abuse from cataclysmic failure. I think it better to share the results with customers. Given the limited shelf life of many products and limited shelf space for all the rest, customer predictability is directly related to efficient stocking and pricing, but they could do much better than coupons in creating and maintaining product demand. Specifically, grocery stores should email or have an app that forecasts my likely grocery needs and serves as a starting point for the weekly grocery list. It is quite easy to curate a list of things that a given customer uses on a weekly and monthly basis and is probably close to running out of. This is a service to the customer, an aide to their busy life, but most importantly it shifts the customer’s mindset from one of generally needing to get groceries to a plan to go to a particular grocery store for these specific items…and some others. Coupons could be issued in the email/app for ancillary purchases (Cool Whip® to go with the planned ice cream), but they’re made more valuable because they can be applied to the customer’s shopping list, reinforcing the commitment and articulating the expected savings. At this point it does not matter if other stores have the same prices and coupons, they can’t match the convenience. This system would naturally encourage online/pre-bagged grocery pickup and it could give a very meaningful perspective on the customer’s consumption trends. Again, they have the data and are currently using it to improve their processes while denying the same benefits and insights to their customers; if they open the access both grocer and consumer can understand their consumption, but they can also collaborate and discover a more efficient relationship.
So, I do not see a reason for companies to hide their insights from their customers and believe that the negative effects, both in bad PR and missed opportunities, exceed whatever benefit there is in deceiving customers. As we both know, it’s been too long since I had a Twinkie..