More on Consumer Privacy

It's always interesting to read how other countries are handling the same concerns that we face here in the US. Take, for instance, this article from The Toronto Star, titled: Protecting privacy makes business sense.

The article discusses how marketers "collect, use and share a consumer's personal information in the marketplace". It talks about how recent data breaches and the US legislation around privacy issues are fueling increased public scrutiny of this topic. The article makes the right conclusion and recommendation to marketers: "Companies that people see as trustworthy will be rewarded with a higher degree of customer loyalty. For this reason, consumer privacy and good data handling practices make good business sense."

All good info. But, the primary reason why I'm talking about this particular article today is because of one sentence kind of buried within the article that talks about Canadian law: "Canada's federal privacy law quite rightly gives individuals the right to control the collection, use and disclosure of their personal information. And consumers are demanding the ability to exercise that right."

So, what does this mean exactly? How does a consumer get to control the use of their public data, for example? If a mailing list compiler takes a name and phone number from a phone book, does that compiler have to offer a mechanism to the consumer to change/add/delete his info? Can that consumer control which marketers have access to his name and address? How is this regulated and how does it work?

Prior to starting my own consulting business, I worked for several of the leading data collectors/compilers such as Experian and InfoUSA. I know that it would be a logistical nightmare to let people control data that is compiled about them. It's hard enough to do this in a regulated environment (i.e.: credit bureaus are required to respond to consumer corrections about their credit reports, and rightly so). In an unregulated environment (think of all the mailing lists out there), it would be madness. But, it might be the right thing for the consumer.

I'd love to hear from Canadian direct marketers who may be dealing with this federal privacy law today, or making plans to comply with the finer points of the law tomorrow.

Consumer privacy issues are only growing. We need to face them head-on and anticipate how to keep data secure AND give control back to the consumer.

JC Penney -- Leading the Way in Multi-Channel Marketing

JCPenney is leading the way towards a successful retail-oriented multi-channel marketing approach. Through the utilization of micro-websites targeted to their specific customer segments, they are driving more traffic online. In addition, by advertising these websites in their retail stores and catalogs, they are increasing sales in all channels. This is smart direct marketing at it's best -- using the traditional, more-costly channels to drive traffic to the less-traditional, less-costly channels while increasing sales in all channels. Brilliant!

In the recent DM News article, JCP.com is Linchpin in JCPenney's Multi-Channel Marketing Strategy, Senior Editor Chantal Tode reports that in "hoping to encourage in-store shoppers to purchase more at JCP.com, JCPenney devised a program to take advantage of the complementary nature of the retail and direct assortments in its newborn/infant/toddler business, where 90 percent of in-store sales come from apparel and 87 percent of online sales are generated by furniture and strollers. The pilot was launched during the third quarter of 2006 in 40 stores with several in-store displays featuring signage communicating the expanded department available online. Shoppers could also pick up a catalog highlighting baby furniture or learn about JCPenney’s Baby Solution microsite, where pregnancy advice and tips for decorating a nursery are available. Results from this multichannel strategy were encouraging enough that JCPenney is planning to roll it out nationwide."

This strategy has proved so successful for the infant/baby/toddler market segment that JCPenney is continuing to use this synchronized approach across channels to launch many of their new brands across market segments. And as their retail strategy (in terms of store size and location) continues to evolve, the article reports that this internet-focused, multi-channel approach also helps them to better determine new store type and location.

We often discuss the importance of using multi-channel marketing as part of your direct marketing strategy. In fact, we're so passionate about this subject that we've created a white paper on best practices for Multi-Channel Integrated Marketing. JCPenney is proving how a traditional retailer can embrace the use of all channels to not only better target their customer segments, but also to decrease costs by efficiently driving traffic to the less-costly channels. It'll be interesting to track the success of JCP.com as they continue to expand and to see the overall impact to JCPenney's bottom-line. We think profitability is bound to rise!

Nine New Customer Segments

I love it when advertisers get involved in understanding and defining consumer segments. They normally package the data nicely to really bring segments to life (something all of us Direct Marketers and analytical folks could learn from).

See this Ad Age article, The Latest Consumers You Need to Get to Know.

"Consumer Eyes, a New York-based marketing firm, recently released its first collection of data on the subject in a book titled "Karma Queens, Geek Gods, and Innerpreneurs." After culling thousands of brand insights -- S.C. Johnson & Son, Motorola, PepsiCo, and P&G are on its client roster -- using the consultancy's Consumer Immersion process, founder Ron Rentel and his team selected nine C-Types of true-to-life consumers who they believe should be on every marketer's radar."

In an attempt to coin the next Metrosexual or Soccer Mom classification (ones we all are now very familiar with), Consumer Eyes has identified nine new customer segments, all complete with their celebrity representative. Here is a flavor of the nine: "Culture Crossers" represented by Gwen Stefani, "Innerpreneurs" represented by Rachael Ray and "E-Litists" as personified by Al Gore.

It's a really interesting way to approach customer segmentation and the article also provides a nice PDF of the 9 groups, complete with pictures.

We love it when attention is focussed on customer segmentation--a topic near and dear to our hearts. Typically, when we approach the task of identifying discreet customer segments within an overall customer portfolio, we don't rely on off-the-shelf, pre-determined customer segments. Instead, we let statistical techniques do their job of finding clusters. If a marketer has the bandwidth to personalize offers and messages, segmentation is a super way to boost response rates and sales results.

It's always great to speak to your customers and prospects with a message that resonates with them. We've found that customized segmentation is the best way to go. We've put together a paper, called "Advanced Segmentation Game Plan". Click on that button on our website and we'll gladly send it to you.

Online Shopping Behavior Changing Due to Identity Theft Concerns

Yesterday, we reported on the new proposed legislation regarding the use of social security numbers and the protection of consumer data. From a direct marketing perspective, we mentioned that this is an area where we need to be very proactive as an industry to protect our customers (and their consumers) from identity theft and other consumer privacy concerns.

We have a unique opportunity to impact this before consumers are impacted -- or heaven forbid -- they change their buying behavior. If we don't figure out a positive way to impact this problem, our customers will react -- and their reaction will definitely mean a negative effect on our bottom line.

Case in point . . . DM News reports today that "in the wake of recent massive data breaches at businesses, educational institutions and medical facilities, consumers are growing more concerned about identity theft and, as a result, changing their buying behavior . . ." In fact, the article goes on to report that "thirty-six percent of respondents said they would not use their credit or debit cards to make a purchase with a Web merchant they do not know. The study also shows that 62 percent of respondents have been notified that their confidential data have been lost, and 84 percent of those reported increased concern or anxiety because of data-loss events."

This is not good news. Online purchasing behavior is changing due to these heightened security concerns -- and let's face it -- it's changing for good reason. If any of you have ever gone through trying to clear things up after your identity has been stolen, you know what a painful and time-consuming process this can be.

As an industry, it is imperative that we attack this issue head-on. As discussed yesterday, we do have the tools and technology to help protect our clients with sound data management and data security techniques. Companies like Experian, Acxiom/TransUnion and Equifax have full suites of tools developed specifically to combat identity theft. I realize that it is difficult to stay in front of identity thieves but it is incumbent upon us to anticipate their next move and squash it. Of course, there are definitely some steps that consumers can take on their own in order to protect their identity. However, as direct marketers, the best course of direction is to share best practices with one another as we come up with creative ways to ensure that our customer databases remain secure.

If you have a success story or best practice that you'd like to share, please comment so that we can post it here. At the end of the day, it behooves every single direct marketer to attack this issue to protect our valuable clients and stop those thieves in their tracks!

Protecting your Identity

As the days, months and years pass, and as consumer privacy and identity protection become pressing concerns to consumers, Direct Marketers have less and less data available to them. And, that's a good thing, I believe. We'll just have to learn to be smarter.

From today's DM News: House passes Senate SSN bill

"If the bill, HR 3046, is passed by the Senate, companies would be restricted in the ways they could use Social Security numbers.

“Federal, state and local governments would be prohibited from selling SSNs [and] displaying SSNs to the general public, including on the Internet,” the bill says. “[They would also be prohibited from] displaying SSNs on checks issued for payment and accompanying documents.”

The Direct Marketing Association expressed concern over the bill’s language in a letter to the House Ways and Means Committee.

The DMA was looking for a specific addition to the bill that would say it is acceptable for marketers and companies to use Social Security numbers as long as it’s for legitimate purposes. The DMA seeks an exemption in the bill that would preserve critical business-to-business uses of the numbers for fraud-detection purposes."

Let's assume that this bill will pass (and it really should, right?). Financial marketers will simply need to be more clever in their fight against fraud, and in their abilities to make appropriate financial offers to their customers and prospects. For example, in the pre-screen arena (where marketers access consumer credit reports to extend the appropriate credit or loan offer to a consumer), the credit bureaus will need to figure out accurate matching without the use of SSNs (and they're already there, I believe).

We cannot fight the fact that consumers are fed up with their personal information being available to hackers or other bad people. Direct marketers need to go the extra mile to develop systems and processes that protect their customer data. We need to do this BEFORE legislation happens.

It's not enough for us to reluctantly comply with new regs. As an industry with intelligent data processing tools and a long history of working with data and databases, we need to innovate NOW in the areas of consumer privacy and data security.

I'd love to hear stories of how marketers are addressing the very real needs to protect consumer information. Horror stories of how they aren't are welcome, too.

Intelligent Direct Marketing with Effective Use of Data

I'll bet you're all familiar with those cute little robot vacuums -- the Roomba -- right? Well, not only are they cool machines, but iRobot is using all of the right direct marketing techniques to understand and build their customer relationships. By using RightNow Technologies, iRobot has managed to use data to "get into their customer's head."

RightNow's approach is very intelligent. The AdWeek article reports on their novel approach. "To stay in synch with individual customers, the company also tracks every interaction with each consumer, so past interactions can be used to improve subsequent interactions. That data is fed back into e-mail marketing campaigns that produce more consumer data and generate sales of the circular $300 vacuuming robots. In all, hundreds of thousands of customer interactions across multiple channels are tracked and managed each month, and the data is used to constantly refine its communications. To prospective iRobot consumers, it can seem that the company is reading their minds."

RightNow accomplishes this by tracking iRobot's self-service web site and its phone and email interactions with customers. This is effective customer data integration and management at its best. They then utilize all of this customer intelligence in their direct marketing campaigns.

In our opinion, utilizing data intelligence with analytical tools allows for the most efficient direct marketing campaigns. Not only are you effectively communicating with your customer base, you are consistently utilizing customer feedback to hone your campaigns for the greatest response and conversion rates. This leads to campaigns that become better over time and helps your company to become proactive in terms of product/service development. This approach assists in the creation of marketing campaigns that can be measured and reported on to the leadership team for the ever-important profitability metrics.

If your company has had success using intelligent direct marketing, let us know so that we can share your success in an upcoming post. We love acknowledging savvy direct marketers and reporting on DM successes. It makes us all better at what we do every day!

Commercial, or not?

This piece from the Baltimore Sun got me thinking this morning: Turning to corporate America to save the world.

It talks about how the lines are getting blurry between celebrity fundraising and the corporate sponsors who help make the events a success. Discussed specifically are Bono's Red Campaign and Al Gore's Live Earth concert event. Both of these are highly visible campaigns to support a worthy social cause. Both of them included extensive advertising sponsorships--necessary to make them successful.

But, is the mix of corporate advertising and fundraising all good?

From the article: "By intertwining political messages in corporate advertising, Mr. Gore and Bono are attracting support for their causes, but they are also blurring important boundaries between commercial advertising and politics. The emerging role of advertisers as gatekeepers for political messages is a trend to be feared, especially with a Supreme Court that stands ready to bury the doctrine that distinguishes commercial speech (which may be regulated to protect the public) from political speech (which is protected by the First Amendment)."

Of course, this is the author's take on this (Robert Koulish). And, he has more to say:

"Mingling commercial and political speech would allow corporations to mislead - even lie to - the public about such matters as product safety, product effectiveness and corporate profits. Another danger is that once corporations start calling the shots and setting the agenda regarding global warming or HIV/AIDS, potential remedies for these ills would likely be limited to those that are also profitable."

I'm really struggling with this. On the one hand, I do understand the fears of big corporations misleading consumers, hiding behind the good message of a good cause.

On the other hand, I like the fact that more and more people and large organizations ARE standing behind a good cause. They're putting their money and their time into it--why shouldn't their brand benefit?

Regardless on where you stand on this topic, I do believe that this type of partnership between a celebrity, a social cause and big business is here to stay. It's an effective way to raise money and let the corporation build their positioning and their brand.

Thoughts, anyone?