inside/out: Worthy Goal With Dangerous Consequences

Thirty-five years ago I was introduced to the concept of the unit record: a punched card containing the details about a single transaction. It could be sorted and merged with other records to provide all kinds of interesting information about a customer, an inventory item, etc. This goal to compile and exploit information about customers is even more valuable today. It is attracting the interest of marketers and CEOs who want to use the captured information for business gain.

But toss the Internet into this recipe and it becomes a volatile mixture set to explode.

It comes down to this: capturing customer information and then using the data to achieve customer intimacy can build enduring customer loyalty, but disclosing the details of this relationship to others without permission may lead to government control reaching well inside a company.

There are two sides to the issue of managing the privacy of customer data. The matter is gaining more attention from the public. According to a recent study by PricewaterhouseCoopers, over 80 percent of the respondents were concerned about collecting personal information about children on the Net. Over 70 percent also expressed concern about tracking Web sites and using information improperly.

On the government control side is Marc Rotenberg, director of advocacy group Electronic Privacy Information Center (EPIC), who is quoted by Internet World saying that there is still a lot of work to be done in the privacy and consumer protection areas of the Net. His organization wants to see legislative standards on Internet privacy because the Internet industry is not doing enough, in his opinion. He thinks the government should step in.

Vice President Al Gore supports e-commerce, but would probably be quick to seize the initiative to promote government control if private industry gives him the opportunity and the public becomes more alarmed. It would make a useful campaign issue in the next presidential election.

On the opposite side of the issue is Justin Matlick, director of the Center for Freedom in Technology. He writes in the Wall Street Journal that if a user gives information to a third party, such as a Web site, the user has traded that information away in exchange for the right to access the site. He states that in a U.S. Supreme Court case, U.S. vs. Miller, the justices in 1976 ruled that information voluntarily conveyed as a negotiable instrument is surrendered to the flow of commerce. This, he says, applies to information on the Web.

One-on-one marketing is a worthy pursuit. It always has been. For years the sales people in better clothing stores have kept personal 3 x 5 card files containing information about their best customers. As new designs arrive, sales people call the customers whom they feel may want to buy the new style. Hair stylists also keep records so they can provide better service to their clients.

But such sellers probably do not convey their relationship information to other people or companies.

Customers give up this personal information because they like to be known by those with whom they do business. It makes for more efficient transactions, the seller can give the buyer customized information, and the buyer can make better purchase decisions.

But customers probably expect the information to remain confidential to this particular relationship.

Now that marketers have awakened to the value of information in their company database it is important to be sure the company's privacy policy is clear and ethical. Matlick's information freedom organization assumes consumers are aware of what they are doing in giving up information to a Web site. Rotenberg's privacy group thinks they are not. Matlick says privacy regulations would be redundant; Rotenberg wants to see government protection.

If the government gets into this it will be the start of something bad. It will be costly for business, intrusive for consumers and disruptive for e-commerce. Therefore, the best solution is for companies to act responsibly. Do not hide a privacy policy at the bottom of a window. Why not make a few very clear statements up at the top explaining how the information collected will be used? Properly worded, these can be strong sales points enhancing the one-to-one relationship you are creating with the individual consumer.

Don't wait for the government to tell you how to do it. Do it yourself!

After 18 years in marketing and sales at IBM, Bob Diefenbacher founded Denbrook Systems Associates, an IT consulting firm based in Malvern, Pa. denbrook@aol.com.