EXPERT ADVICE

Ask for Too Much Information, Watch Customers Flee

The game has changed for retail. In an era of increasingly competitive online business, failing corporate giants and consumer fear over the state of the economy, it’s clear that small online retailers will face an uphill battle over the next several months. The good news is, e-commerce may be the one bright light in an increasingly dismal world of retail, and there are simple steps retailers can take to improve their profits online.

According to a recent survey from JupiterResearch, sharing personal information is the No. 1 reason consumers do not complete their online purchases. Consumers are increasingly protective of their privacy, and subsequently, they are concerned about how companies handle their personal information. As business owners focus on increasing sales, reducing costs, and managing inventory and payroll, online privacy can easily get overlooked. With the many opportunities consumer have to comparison shop online, it’s important to have rock-solid privacy practices to ensure that wary are spending on YOUR site, and not sites of your competitors.

Privacy Pointers

Here are six ideas you can apply to use privacy to gain a competitive edge:

  • Don’t gamble with privacy. In a tough economy when budgets are tight, it may be tempting to cut corners on privacy compliance. If in-house IT, legal or compliance experts need to be downsized to control payroll and internal staff are spread thin, outside providers can monitor your privacy practices. For example, companies can participate in privacy certification programs include monitoring and consumer notification for a fraction of the cost it would take an in-house team. Participation in a program of this nature allows the company to display a seal on their site, showing consumers that their information is safe. Consumers who continue to have positive and trustworthy experiences will undoubtedly be the kind of customer all businesses hope to have, and the ones who will continue to come back when the economy turns around.
  • Carefully navigate targeting methodologies to hold on to your current customers (tightly). Promotions and appeals are always nice, but these are much more effective if they are targeted to suit an individual’s needs. Targeting based on past purchase or demographic profiling are popular practices for retailers as it delivers appropriate offers that match consumers’ tastes and buying preferences. While targeting based on consumer behavior can boost sales, it also has to be done right. Best practices can be confusing to many businesses, especially as guidelines and best practices continue to change as we adjust to the latest technologies. Ensure that the data you are collecting on consumer behavior is in compliance with existing privacy laws, as consumers can be unforgiving and highly vocal when companies misstep. Especially as more media outlets allow readers to post comments about companies and the blogosphere increasingly serves as a widely-read forum for angry customers to grumble, what may seem like an annoying complaint on an obscure blog could spiral into a full-blown public relations nightmare overnight.
  • Make your privacy statement both easy to read and easy to find. When the privacy statement contains easy-to-read, straight-forward language, consumers are more likely to feel confident, stay on the site and make a purchase. Consumers want to know how their information will be used or shared as it is used in cookies, IP addresses and URL tracking, and for third party marketers. Full disclosure of privacy practices is essential to avoid any complaints and costly damage to your company’s reputation.
  • If a breach occurs, respond immediately. Scammers and phishers are trolling the Internet in greater numbers than ever before. The Anti-Phishing Working Group reports that crimeware-spreading URLs rose 93 percent in the first quarter of 2008 to 6,500 sites, nearly double the previous high of November 2007 — and an increase of 337 percent from the number detected during the same time period a year before. Statistics show that malware is on the rise, and experts anticipate that it will continue to climb as cyber-criminals get smarter and more savvy. Don’t let your business and your customers fall victim to scams and data theft by hackers who infiltrate sites left vulnerable due to security loopholes. If a breach does happen, take the appropriate steps. Web site seal and privacy compliance companies are able to track complaints so you can respond to your customers quickly and fix the problem.
  • Be respectful when using social networks. In an undeniably Web 2.0 world, viral marketing has proven to be inexpensive and effective. But businesses must tread carefully when using social media tools for marketing, making sure you are collecting personal data in a responsible manner. The practice of importing address books and contact information is a common feature offered through social networking sites. To ensure that imported information is safely contained within established parameters, privacy seal providers can work with you to help implement or modify your social marketing programs. Providing the consumer with clear notice about how features work and how these will impact their privacy is an important step toward building and maintaining trust.
  • Leverage your reputation. Is your company’s reputation rock-solid with consumers? Then now is the time, with modest investment, to capitalize on that differentiator. If it isn’t, then your competition will have an easier time luring your customers away and converting new prospective customers. If you’re a mid-sized company, you’re most likely competing with bigger, more credible and more established competitors for deals, capital and customers. Take the time to invest in a privacy infrastructure that puts your e-commerce business on par with the bigger players.

Privacy and the Bottom Line

People want to buy from the companies they know and trust. Strong, trustworthy privacy practices will give your company the tools it needs to build brand equity and customer loyalty.

By knowing and implementing the best practices for Internet privacy, smart businesses will have a better chance to differentiate themselves in a tough economy.


Fran Maier is CEO of TRUSTe, a San Francisco-based company with a mission to help millions of consumers identify trustworthy online organizations.


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