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The Modern Marketing Blog covers the latest in marketing strategy, technology, and innovation.

Are you guilty of big brother with big data?

Consumers are constantly asked to share their phone numbers, email addresses or zip codes -- both online and off. But how many of them are told what happens with that personal data? Not enough, says Bryan Pearson, the bestselling author of the soon-to-be-released book, The Loyalty Leap for B2B, and president of Air Miles, a credit card rewards program based in Canada.

Pearson says the lack of transparency is one biggest challenges facing digital marketing today. The good news is, he adds, it's a problem that marketers can solve themselves. Pearson recently spoke with the New School Marketing blog about how digital marketers can best use personal data to build, not destroy, consumer loyalty.

Q: What concerns do consumers have when asked for personal information?

A: They're worried about their lack of control in the process, and the fact that they don't really know what companies are doing with the data. According to our research, last year only 42 percent of 2,000 American and Canadian consumers said they trust businesses. Of them, 79 percent say they are concerned about how much of their personal information is being held by others and 77 percent are worried companies share their information without consent. Seventy-eight percent said they don’t feel they receive any benefit from sharing their personal information, up from 74 percent in 2011. That's the most troubling figure to me.

Q: How can companies use big data without turning off consumers?

A; They can do it by using the data to create mutual, and relevant, value for the consumer. The data exchange shouldn’t be one-sided – it should clearly benefit both the consumer and the brand. Fail to do this, and the brand is at risk of eroding consumer trust and, worse, creating “madvocates.” Think about it. If a hotel frequent-guest program asked if you had special room preferences, and you requested a room away from the elevator, wouldn’t you be frosted if the room you ended up with was by the elevator?

Q: When asking customers for their information, what should companies avoid doing? 

A: While there are many do’s and don’ts, here are my top three things to avoid:

  1. Don't enter into a data exchange without a clearly stated purpose. What do you want to achieve through the data collection, and what data will you need to achieve that goal?
  2. Don’t abuse the consumer’s willingness to share. Providing a personal email address to a brand is not the equivalent of rolling out the welcome mat to daily messages that are irrelevant and, frankly, annoying.
  3. Don’t cross the creepy line into the ultra-personal areas such as personal finance or children.

Q: What are companies today doing to successfully use Big Data to strengthen customer loyalty? 

A: Companies that have successfully created customer loyalty aren’t looking at the data from the point of view of product creation or the need to meet periodic sales goals. They look at the data from the point of view of their best customers, and then base their decisions on what is important to those customers.

This means pinpointing specific preferences. For example, La Quinta Inns & Suites uses its loyalty program data to create and send personalized postcards with updates about the properties its members frequent. Not only are these messages well received, many members write back with photos documenting their own travels to La Quinta locations -- leading to more shared data and deepened trust.

At Air Miles, our privacy policy is rigorously explicit regarding what we’re collecting and why, and we make it very clear to consumers that they have control over what offers they receive from us and how they receive them. While consumers in Canada have the legal right to request their data history from any company, we’ve had fewer than 100 requests from customers to examine their data over the 20 years the program has been in operation. We boast an opt-out rate of less than 0.01 percent among our customers.

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