Data-driven practices are no longer the exception to the rule. They’re the gold standard of marketing, helping organizations gain better knowledge of their customers and prospects to provide more value and realize greater ROI. Marketing success in 2016 and beyond depends on the ability to combine different types of data to create a full and detailed picture of your target audience. And, in doing so, navigating the minefield that comes with combining data, analyzing data and the potential creation of sensitive data.
In the early days of data-driven marketing, organizations relied on first-party data; normally consisting of personally identifiable information actively provided by customers such as addresses, phone numbers, etc. So you knew John Doe, who lived on Main Street, had bought a new pair of boots from you. You had his telephone number, so you could call and let him know about new inventory. You could also mail him a leaflet with your latest offers.
This first-party information is all pretty basic as far as modern data collecting abilities go. But it’s also largely foolproof, and for that reason it’s still the bedrock all targeted marketing is built on. The difference today is that this information is combined with and enhanced by a wealth of available second- and third-party data –data collected by others.
Today, this additional information is mainly digital and is collected passively. These are details we either knowingly or unknowingly leave behind when we visit websites that have cookies or when we complete transactions or use applications. Independently, all these bits of information are like pieces of a jigsaw puzzle – a bit of sky here and there, some corner pieces that can hint at a bigger picture. But when brought together they could reveal details your customers might not have been aware they were sharing – for example, their religious or political affiliation, etc.
As Sheila Colclasure explains in our New Codes of Conduct video series: “Combining data gets very exciting and very powerful. It means that brands can bring first- and third-party data together to create an optimized consumer journey. … But it does complicate matters. What brands need to know when they begin bringing multiple streams of data together is that data comes with rules.”
Types of sensitive information
The Direct Marketing Association (DMA) and Networking Advertising Initiative (NAI) have codes of conduct to cover a range of data types. They mostly provide guidelines on how or how not to use information about children, financial details, Social Security numbers, medical records and prescriptions, and the use of multi-site data to determine eligibility for employment and credit standing.
These are the areas that are legally addressed, but there are many other types of data your customers would probably consider sensitive, too. The challenge is ensuring you only use the information your customers willingly shared and in the way they intended it to be used.
Where are we headed?
As the rise of the Internet of Things means more and more devices – from cars to mattresses – share more and more data, the accidental creation of sensitive data, and how we handle it, will become an ever-bigger issue. With this will come several questions surrounding the ethics of data use.
There’s a delicate balance between providing the most personalized and rewarding customer experiences and protecting the privacy of your customers in a way that makes them feel comfortable. As marketers, we are duty bound to be mindful about what data we’re collecting and how we’re using it, but doing this requires formal processes. By this I mean methods of ensuring you do the right things with data every time; identifying the sources and provenance of data, and knowing how it will be protected and used to deliver the best customer experience.
Ideally we want customers who are willing to share their information – because they both trust us to do the right thing with it, and recognize and understand the benefits sharing can bring them, such as more relevant marketing and less inappropriate spam. To arrive at this place, we need to make sure we handle sensitive data in a sensible manner, not with kid gloves on but with robust, repeatable and transparent processes.
Want to learn more about handling sensitive data? Watch our videos to see Sheila Colclasure talk about ethical data use, and read our whitepaper, The New Codes of Conduct: Guiding Principles for the Ethical Use of Data.