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PROFITS AND PRIVACY: HOW THE TWO CAN COEXIST ON THE WEB

Posted on January 29, 2001

      Privacy - just dropping the word into a conversation sparks a spirited discussion. Even the 200-year-old practice of taking a national census has created consternation by asking people private details about their income, lifestyle, and household plumbing.

      Capitol Hill has jumped on the privacy bandwagon. In March, Senate Majority Leader Trent Lott stepped forward to advise people not to answer any Census questions that hint at privacy invasion. The Senate and House have set up privacy task forces, submitted several privacy bills, and written privacy rights acts currently before the legislature.

      President Bill Clinton proposed reforms to protect the privacy of consumers' financial and health information online. After years of supporting Internet self-regulation, the Federal Trade Commission has recently changed its tune and recommended regulation of Web privacy practices.

      Rumors about the dangers of Website cookies and online tracking have reached epic proportions. A full 81 percent of consumers say they worry about privacy invasion online. And for too long, the technology industry has under-reacted to the public's concerns. If high-tech companies continue to develop privacy policies only after coming under fire, they will find themselves pilloried.

      Dot-coms need to step up to the plate and address privacy concerns proactively.

Leap of faith

Today's privacy debate is all about trust. People flocked to online commerce at first for its convenience, but lately they have drawn back-60 percent now abandon their online shopping carts before completing the purchase. According to IDC, many shoppers attribute their flight to privacy concerns. Consumer unease may be justified: A recent study reports that while many companies post a privacy policy, these same companies violate it in practice on a daily basis.

      If companies do not address consumer concerns directly and promptly, people will not only back away from ecommerce, but will inspire legislators to establish extensive regulation. To bridge this growing digital gorge, high-tech companies need to earn consumer trust: executives need to educate the public (the legislature and consumers). Internet companies must give privacy priority, both internally and externally.

      Here are six basic steps to take to get your company on the right track:

1. Learn the issues in the privacy debate. Visit the Electronic Privacy Information Center at www.epic.org and view its online guide to privacy resources.

2. Place an officer in charge of privacy issues. Make the officer an executive-level leader with the ability to create and change privacy initiatives at every level of the company. In the wake of recent gaffes, several companies, such as Excite@Home, named consumer affairs experts as chief privacy officers. Naming a privacy executive puts a human face on an impersonal technology and shows customers that someone at the company recognizes privacy concerns.

3. Adopt a privacy policy. The key here is KISS: "Keep it simple, stupid." Develop a straightforward policy that can be easily retrieved and interpreted by ordinary users. Steer clear of complex, jargon-loaded privacy policies that are "subject to change." Give a translation of the legalese, perhaps point by point, in ordinary, easy-to-read English. Post the privacy policy and adhere to it. This last point may seem obvious, but numerous companies have dropped the ball after posting a policy. Maintain customer trust by following through on the contract.

4. Work to implement privacy standards, like the Fair Information Practices, designed to give users information, choice, and control. One forum, the Platform for Privacy Preferences Project (P3P), is developing a standard Website privacy format that all computers will read automatically. With this uniformity, consumers can program their computers to respond to requests for personal data automatically-accepting or rejecting certain requests or alerting the user to make the decision manually. Take the lead and push for the adoption of clear, universal standards.

5. Acquire and post a Third Party Seal of Approval from an organization such as WebTrust (WebTrust.net or PrivacyDetective.com), TRUSTe, or BBBOnLine. Join one of the privacy organizations, such as the "Golden Key Campaign" of the Internet Privacy Coalition. Connecting with these privacy organizations demonstrates a clear commitment to self-regulation.

6. Develop permission-based marketing techniques. Encourage customers to "opt in" rather than limiting them to "opting out." Give them control over which pieces of information they disclose and a chance to correct any errors. This "socially responsible" stance is the profitable approach; it will actually increase a company's percentage of loyal return customers. The best customers are those who trust the company and who appreciate the choices offered them.

Team Effort

We have seen time and again that when given the choice to offer their personal information in return for discounts and other personalized, preferred customer benefits, most consumers readily comply. With more education, consumers will better understand how sites track their visits and pass information to other parties.

      Consumers have an active role to play in this equation, too. They need to know how to protect their own privacy. They can learn how to "opt in" or "opt out," and take control of managing their private information.

      Soon, the whole privacy issue may become moot. Several up-and-coming startups are developing user-controlled tools to facilitate permission-based marketing. These programs give consumers control over their profiles, and enable them to edit and update their own information. Consumers will be able to create different levels of profile information based on the service level they expect from a company and on their level of trust for the organization.

      The future lies in creating classes of participation through permission-based marketing. Customers will make their most personal and most valuable profiles available only to those companies they consider to be their regular and trusted partners. It's a team effort.

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