Are data ethics (a) really a business driver or (b) a “nice to have,” something that sort of helps the brand but doesn’t really move sales?
You could infer from a recent article on CMO.com that the right answer is ‘a.” In the data-driven world, data ethics build trust, which in turns helps propel revenue.
The article by Ernan Roman, president of customer relationship experts ERDM Corp., made a strong case for the value of “explicit” customer data. That is, detailed information on personal preferences that customers actively offer in return for personalized offers, relevant product news, more convenient shopping, and a better overall experience.
Explicit data is deeply specific to a customer and thus much more accurate than inferred or statistically modeled preferences. For these reasons, it’s more insightful and powerful to marketers. David Sable, global CEO at Young and Rubicam, called it “primal data,” the kind yielding insights that reveal who a customer is.
While Roman’s article doesn’t directly use the word “ethics,” it certainly implies that the value exchange couldn’t work without trust. And undergirding trust when consumers share information is the promise that brands will manage and use their data ethically, in a way that’s fair and provides value back to the consumer.
When it comes to data use, ethical failures often make headlines. We won’t call out any offenders here, but think for a moment and you can probably recall at least one recent breach of trust—and a company that paid the price in lost sales, public reputation, and brand equity.
Roman argues that when customers opt in to share valuable information, through dialogue boxes or a website’s “preference centers,” they help brands understand them better, versus findings gleaned from analysis of purchase or browsing history. Explicit data, he notes, “indicates deeper or longer-term preferences versus traditional implicit data, such as data-mined information or short-term consumer interests or needs.”
Roman quotes Scott Emmons, head of the Neiman Marcus Innovation Lab: “To achieve truly meaningful personalization and CX…we needed to get customers to opt-in and tell us their individual preferences.”
Emmons adds that to get deeper information, his brand needed to “make it clear that this information will be used to serve them in the stores and as part of ongoing email communications to reorder products or learn about new products that are uniquely relevant to them.”
“Making it clear,” or being transparent, is one hallmark of ethical data use. A brand states in plain English how it uses customer data and what customers get in return. If the brand intends to use the data for additional purposes—say, sharing it with or selling it to other brands—this too should be stated clearly so customers can give consent, or not.
Other best practices include anonymizing and encrypting data to protect consumer privacy and, if you do share data with partners downstream, make sure they abide by your code of ethics.
Neiman Marcus isn’t alone in seeing the value of explicit data. Roman cites other examples like Walgreens and Betabrand, a crowdsourced apparel company. Says Kathy Hecht, CMO of brand management company Silver Star Brands, “One cannot achieve true personalization without deep human data from your customers.”
You might add: deep human data comes from deep human trust, which is firmly rooted in using data ethically.
Learn more about Acxiom’s point of view on ethical data use.