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Privacy & profit-making

How to make money from your customer lists without abusing privacy

Much has been written over the last year or so about the invasion of privacy and theft of the identities of millions of people. So how can you make money from your customers without abusing their privacy, destroying their trust or breaking the law?

What is Privacy?

People often think of privacy as some kind of right. Unfortunately, a right seems to be some kind of absolute standard, and privacy is not. What's worse, it's very easy to get confused between legal rights and moral rights, on the other. It turns out to be much more useful to think about privacy as a thing that people like to have lots of.

Privacy is the interest that individuals have in sustaining a 'personal space', free from interference by other people and organisations.

So why is it valued? There are four levels of privacy:

Difference to Data Protection

Data protection is a legal obligation under the Data Protection Act (DPA), requiring a trust-building activity that companies can employ, using secure databases and identity confirmation processes.

In the UK, the DPA states that to communicate with an individual (the law does not cover companies – yet) you must get an 'active opt-in.' This means that the customers must indicate that they want to be communicated with. This is not an opt-out, whereby doing nothing means that you receive information.

Unfortunately this legislation has not stemmed the worldwide flood of Spam emails. Spammers are either law-breakers (the most common group), or exploiting loopholes in countries without such legislation. One such country is the USA, although they have invoked other laws to stop the activity.

We have heard recently of the rapid rise of identity theft, which now costs the UK £1.7 billion annually (Source: UK Home Office). Fraudsters are not only using hacking techniques to get hold of personal data, but the careless actions of consumers also provide them easy access to personal information.

A worrying example is the growth of suppliers and institutions who ask for your mother's maiden name as a security check. Reveal this to a fraudster and many doors open to them.

The identity cards and biometric passports due very soon, should see an end to this, but a security firm in the Netherlands breeched national systems, exposing the personal data of millions of people. The security boffins will have to go back to the drawing board.

Profiting from your customer database

All companies are in business to make profit, although it appears to be a dirty word in the UK. You can make additional profits by making your customer lists available to third parties, so long as you acknowledge the privacy requirements of your customers.

List brokerage, or the management of lists, has been around for years, with details of customers bought and sold globally. The DPA threatened to destroy this industry, but by asking customers whether they would accept communications from third parties, we have found a solution.

Customer take-up of third party opt-ins is very low, mainly thanks to the influence of Spam. But don't let this deter you. If you are in possession of a large database, and you have a significant number of customers who have opted in for third party information, you can allow your database to earn you extra money.

Most brokers will allow you to select the companies/industries allowed to use your lists, and you can also veto any application for your lists. It's in your interest to be involved in who your list goes to, avoiding association with spammers and direct marketing cowboys.

Trustworthiness

Is all this trustworthy? If you are seen to be exploiting your customers, you could destroy any trust they have in you.

To avoid this, you need a simple, understandable and clear policy on the use and sale of customer data, and demonstrate that you abide by them. By doing this, customers may still not agree with the policy, but they will understand your views and practices, and what will happen to their data if they choose to opt-in to third party communications.

Another trust-builder is to prove your privacy and security policy. There is, to my knowledge, only one recognised audit available – the W-Mark, operated by the EIQA. This is a quality mark that evaluates your Internet privacy, security and accessibility. By being audited, you can build trust, and be more confident in your list sales, as customers maybe more willing to opt-in.

The Future

Technological advancements mean customer targeting will become far more personalised. Potentially, customers will choose which third parties they want to hear from.

Improved technology could also lead to an advertising environment as depicted in the Spielberg film Minority Report where people have personalised adverts displayed to them following retina scans. Would this, itself, be some form of abuse – or a marketing nirvana?

Alternatively, will we become so obsessed by privacy that we value it even more, withdrawing from public areas (physical or virtual)? Will this destroy communities? Let us hope not. We should all be in control of our own security, and only choose to do business with trustworthy partners.

About the Author

Thom Poole is a Chartered Marketer and Fellow of the Chartered Institute of Marketing, and a member of the Marketing Society. A marketer with over 19 years experience in marketing and 14 years in online marketing and web strategy, Thom is strategic marketing consultant for Jack Marketing Solutions, working with SMEs. He runs a number of websites providing information and support for leisure and business topics. A regular speaker on the CRM and e-marketing event circuit, Thom has also recently written a book on ethical e-marketing, called 'Play It By Trust.' The book is available at the publishers as a hardback or download.

Also published in the Daily Telegraph Business Club, February, 2006

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