The Skinny on Customer-Controlled Data

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Giving consumers more control over the information that is being collected about them could be smart business.
Customer Experience

How much do businesses know about you? As consumers leave a trail of data that traverses the Internet and stores, it is often unclear how many pieces have been amassed by businesses. Tracking people's digital and offline activities has become a common business practice. Companies like Google and Facebook as well as data providers like Acxiom and Bluekai, gather data on people's activities to develop detailed profiles that are used to market products.

In the age of the customer, however, companies are beginning to see value in allowing consumers to control some of the information that is collected about them. Companies are also under increasing pressure by government organizations to shed more light on their data collection practices and explain how the data is used.

One such company is Acxiom, a marketing technology firmthat collects, stores, analyzes, and sells consumer data. The company has collected numerous details about people's shopping preferences, interests, household demographics and other data points which clients such as retailers, credit card issuers, and insurance companies use to target their ads or identify new customers.

Last year, Acxiom unveiled a free website called AbouttheData.com that allows consumers to review information that the company has collected about them. The website's data includes an individual's age, marital and homeownership status, number of children, vehicle information, education levels, and purchase behavior.

Each entry has an icon that visitors can click to see the sources behind the data, such as voter files, self-reported consumer surveys, or warranty registrations. The website also allows people to change or hide individual data fields, as well as opt out of having Acxiom collect and store marketing data about them.

Acxiom launched the site for two reasons, according to Jennifer Glasgow, Acxiom's chief privacy officer. "We've been leading our company down a path to transparency because it's good for business and good for the consumer," Glasgow says. "Second, there was a lot of mystery around companies like Acxiom and we wanted to share with the consumer exactly what we knew about them because there's been a lot of speculation about our having very detailed information that we don't have."

More than half a million unique visitors have come to AbouttheData.com since the site was launched and approximately 50 percent have signed in to review their data, Glasgow says. Among the registered users, 10 percent have made some changes to their data and 2 percent have opted out of having their data collected.

The most commonly changed data field is an individual's political affiliation, followed by household income, marital status, and education. The average person has about 150 data points and only about 1.4 percent of those data fields are changed, she adds.

The company distributes the updated consumer information from AbouttheData.com to its data products. And while Glasgow said she was unable to tie a dollar amount to the value of letting consumers correct data, it is a "win-win situation" in that the company receives data that is more closely tied to the way that consumers want to be marketed to, she says.

"We noticed some people changed their age from what we were pretty sure was accurate based on public records," Glasgow comments. "But if a 35-year-old person wanted to be marketed to as a 20-year-old, for example, we decided not to reject that change."

In addition, consumers still have misconceptions about the ways that businesses collect and use data in their marketing, Glasgow adds. Consumers often "view this data in the same way they view their credit report and they're highly incensed if something is off. The reality is it doesn't have to be as accurate as your credit report for you to get value from it," she says. "Campaigns target people who fit a certain kind of profile, instead of individuals, which is an important difference that is not obvious to most consumers."

Facebook has also launched a tool that lets users see the likes and interests it has gathered about them in ad profiles. They also can change or delete the information in those files. In June, the data behemoth began introducing ad preferences, an offering which appears as an arrow icon on ads on Facebook. When users click on the icon, Facebook explains why they're seeing that specific ad and allows users to add and remove interests that the company uses to target the ads.

Opting out of receiving any ads on Facebook is not an option, of course, but users can choose not to receive targeted ads on Facebook and other sites through the Digital Advertising Alliance's website.

Facebook's ads continue to be a huge revenue-generating engine for the social network. The company reported $2.7 billion in advertising revenue for the second quarter, a 67 percent increase compared to the same quarter last year, and $2.9 billion in overall Q2 revenue.

And like Acxiom, Facebook has said it will continue to add more details to users' profiles. It's only a question of how involved users want to be in tailoring those ads to their interests.

Giving consumers some control over the data that marketers collect about them is "a great marketing tactic," notes Eric Bradlow, marketing professor and chairperson of the Wharton Marketing Department at the Wharton School of the University of Pennsylvania.

"More people are beginning to realize that businesses are able to track them and so giving people options lets you appeal to those who care about data privacy and also those who want offers that fit their interests," Bradlow says.

But even if a company allows consumers to review and change their ad profiles, Bradlow adds, most people don't have complete insight into how they're being tracked. "Companies can still track people through IP addresses, device types, and other ways that many people are not aware of or don't take the time to learn about," Bradlow notes. "So it's not as if companies are giving up all their data."

It is also unlikely that many companies will be able to match Acxiom and Facebook's abilities to let users review and change ad records, says Forrester Research analyst Fatemeh Khatibloo.

"Facebook and Acxiom can invest in this because they have billions of records with thousands of lines of data and attributes," Khatibloo notes. "But for a retailer to say we'll show you everything we know about you, that is very difficult when the information changes all the time and trying to maintain a consumer-facing dossier is incredibly difficult."

However, there is an uptick in companies creating consumer-facing profiles of buying preferences that individuals can control, Khatibloo adds. Three examples are Sephora.com, Michaels, and The Home Depot.

Sephora.com offers a preference center as part of its loyalty program. Members can enter personal information such as hair and eye color and skin tone that lets Sephora.com show them products that match their characteristics.

On a similar note, Michaels and The Home Depot let customers create profiles about their preferences and interests to receive relevant messages. Notably, none of these systems are designed to say, "This is the data that we buy about you from Acxiom or here's what we've inferred about you based on your purchases," Khatibloo adds. "But it still provides a level of control that most retailers have never offered to their customers."

In addition, your customer journey map is a useful tool for identifying the best times to ask customers for more information, according to Khatibloo.

"When is the customer most engaged? When do they have the most trust in your brand? That's when you can leverage a profile system to say, 'We would like to provide you with more relevant products in exchange for more information,"' she says.

Even if a company cannot afford to launch an extensive customer preference center, giving consumers choices and providing clear data collection policies is important for earning customers' trust. Failing to communicate to users how their data is collected and used can also hurt a brand's identity. Even though Facebook's ad revenue is rising, for example, the company is frequently criticized for its approach to monetizing user data that often takes users by surprise.

Government regulators are also taking a closer look at the ways businesses collect and use data. In February, Senator John D. Rockefeller, Democrat of West Virginia, and Senator Edward Markey, Democrat of Massachusetts,sponsored a billrequiring data brokers [companies that collect consumers' personal information and resell or share that information] to disclose more information about their practices and to give consumers more control over their information collected and sold by the companies.

In June, the Federal Trade Commission issued a report on data brokers criticizing the advertising industry for its lack of transparency and called upon Congress to enact new legislation that would better protect consumer data, including requiring companies to give people more control over the digital files collected on them.

And even if a company does provide a clear data collection policy, a major mistake is building a preferences program and failing to execute it. Asking customers for data and not following through with tailored communications is "worse than not doing it all," Forrester's Khatibloo warns. "This tells people that your systems aren't able to deliver on the promises that you made and it's a quick way to lose your customers."

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