Inside This Issue - Opinion
The Data Dilemma
June 9th, 2014
by Justin Shepherd & Naveen Menon
NEW YORK – Recently European courts decided that individuals have the “right to be forgotten” in their digital lives, while on our own shores the suggestion that Google and other service providers may be obligated to facilitate this preference has thrust the issue of personal data and privacy once more into the limelight.
Government data collection and use practices have come under scrutiny, and the private sector — and retail in particular — has been pulled into the mix as well.
For several years we’ve been taking a close look at these issues, most recently in collaboration with the World Economic Forum (WEF). The newest report on data privacy, “Rethinking Personal Data: A New Lens for Strengthening Trust,” examines ways to strengthen the trust that consumers have in personal data use. For many businesses in the retail sector this presents a serious adjustment in thinking. More and more, the steady flow of data by and about customers (and potential customers) is the lifeblood of successful retail analytics. But what hadn’t been considered from the outset was how to get consumers to buy into the use of their personal data.
Using personal data to more accurately target customers is by now a well-accepted mantra for retailers. To an extent, from the customer point of view, loyalty programs and online account profiles that allow retailers to understand consumer behavior, and information about what products they have purchased and when, have become acceptable by default, in exchange for the customized offers and discounts that consumers receive.
Retailers and consumer packaged goods firms have made big strides with regard to using consumer information. Indeed, retailers rely increasingly on data beyond purchasing behaviors — such as mobile phone footprints that help them understand foot traffic for optimal ad and storefront placement — that leave consumers feeling that they’re being stalked. A recent survey by the Oxford Internet Institute showed that two-thirds of individuals feel companies collect too much data about them, while the mobile operator Orange found that 78% of individuals think it’s hard to trust companies when it comes to the use of their personal data.
Our study with WEF has recommendations for how to strengthen trust between those whose data is being collected and those using it. To that end, retailers need to be thinking about creating a stronger partnership with consumers, engaging with them in simple and transparent terms. Our study lays out a set of recommendations, including these three actions:
• Delivering meaningful transparency. Rather than focusing on disclosure and overwhelming individuals with excessive and often incomprehensible details, organizations can strengthen trust by engaging with individuals in a meaningful way that both provides them with insight into how their personal data will be used and allows them to express preferences for that use.
• Strengthening accountability. Without a doubt, accountability is a key to improving trust. Current approaches based on notice-and-consent models have the unfortunate consequence of shifting the majority of the risks and responsibilities onto individuals. By changing the focus to base accountability on the impacts of data use on individuals, responsibility can be more equitably distributed throughout the value chain.
• Empowering individuals. The growing volume of information generated by new technologies, often analyzed far from the original point of collection, makes it difficult for individuals to understand where they fit into the personal data economy. Trust cannot be strengthened while individuals are kept in the dark and at a distance. New approaches can empower individuals by basing data governance around their interests.
Strengthening trust is essential to maintaining the flow of information that’s so essential to consumer insight — but retailers need to preemptively address consumer concerns about the use of this information. By clearly communicating how data is being used and how it can benefit consumers, retailers can begin to engage in a truly forward-looking and equitable solution to a serious issue, making it palatable to consumers and sustainable and profitable for companies.
JUSTIN SHEPHERD is a consultant and NAVEEN MENON is a partner at global management consulting firm A.T. Kearney. They can be reached respectively at Justin.Shepherd@atkearney.com and Naveen.Menon@atkearney.com.