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September 18, 2001

Partners In Privacy

Giving your customers "ownership" over personally identifying information may not only trump privacy concerns but strengthen your competitive position as well

By Jeff Magouirk

Continued from Page 1

Manufacturing Example

Let's take a look at an example of adsertor marketing in the manufacturing area. In this example, a manufacturer of high-end home furnishing products has been collecting warranty-card information for a number of years. The information collected from the warranty cards includes a great deal of demographic data, as well as future and past purchasing information. The manufacturer currently uses the data for some marketing purposes such as focus group recruitment, cross- product selling, and market research studies. The manufacturer has never sold the list on the open market and does not want to offend its customers. Executives feel that selling the list would be an invasion of customer privacy.

In 2000, a Federal Trade Commission (FTC) survey found that only 20 percent of the busiest U.S. Web sites had implemented all four of the FTC's "fair information principles." Read the report online at www.ftc.gov/os/2000/ 05/index.htm#22.

Now, let's say that this manufacturer wants to apply the principles of adsertor marketing to its customer database. When these principles are applied, the customers in the manufacturer's database could decide for themselves if they want to sell their names and information in the list market. The company would make money selling the list, and the customers would receive a dividend check at the end of the year. Along with the dividend check, customers would receive marketing materials that are relevant to their needs, which would increase in sales of the manufacturer's products.

Customers who have chosen to participate in the adsertor marketing program would also probably increase their loyalty to the manufacturer. This increase in loyalty is based on the feeling that they are now partners in marketing programs.

Another benefit of the manufacturer sending dividend checks to customers is the dialog that develops between the parties. This continuous dialog between the customers and the manufacturer, of course, is a major component of CRM.

The New CRM

The prevailing view of CRM is that the ultimate goal is to move a prospect into a customer role. Given the rising concern about the privacy of personal information, which is in no small part fueled by the increasing propensity of marketers to use that information for business gain, CRM should now have a new mission: to give customers ownership of their own names and make them part of the buying and selling process. This approach not only embodies respect for consumer privacy; it will also let enterprises develop better marketing programs.

Read President Bush's June 23 radio address about consumer privacy: www.whitehouse.gov/news/ releases/2001/06/ 20010623.html

Most companies are still moving from a mass-marketing mentality to a CRM-driven one. This move from mass marketing to what passes for CRM relies heavily on statistical or econometric modeling to transition from saturation of a market to focusing or tightening of the market. This tightening approach is better than the previous one, but is not yet a truly customer-driven process.

Instead, by allowing consumers to choose the type of enterprise that can contact them, as well as the data made available to those enterprises, it's far more likely they will move from prospect roles to customer roles. Furthermore, the amount of goodwill that your enterprise could earn will offer higher rewards than any mass-market campaign ever could.

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Jeff Magouirk [jkmdgr3518@sprintmail.com] is private consultant who has more than 13 years of experience in building consumer information systems at corporations such as EDS, Hunter Douglas, Public Service Co. of Colorado, and the Auto Club of Southern California.

WHERE DOES IT FIT IN?

Adsertor marketing can only be realized with strong support from your marketing and IT departments.

Implementation begins with having an up-to-date customer information database. Also needed is a plan to entice future customers into the adsertor program; current customers need to be contacted and asked to participate via direct marketing, telephone, or email. New customers would be asked to join the program with their first purchase.

The burden of managing this data, of course, falls on the IT department. First, IT would need to build a data warehouse that separates participants from nonparticipants. This data warehouse would hold information about purchases by the adsertor group, the number of times the list was sold, and who purchased it. It would also need to contain a table of self-reported demographics, other purchases, and the responses in term of purchases of goods or services from the selling of the list.

As the amount of information about them grows, customers become increasingly valuable on the list market. Thus, IT is invaluable in determining the value of the list and the resulting return on investment.