Boston Consulting Group (BCG) today published the results of a survey on "big data" that highlights how trusted brands obtain the most information about their consumers.
BCG took a sample of 10,000 people globally throughout developed and emerging economies. Its key finding was that trust matters about all else: companies that inspire consumer confidence can obtain 5 to 10 times more data than the baseline. Data can and often does mean the difference between profitability or flat sales.
Consumers worldwide guard their financial and health data, but are less concerned about sharing basic demographics or product preferences. U.S. consumers are selective when they share data. Customer loyalty programs, brand name products, and cable companies are disarming to consumers, while financial companies, health insurers, social media Web sites, and the government aren't nearly as well trusted.
Other findings were that Millennials, a generation that grew up with the Web, are almost as concerned about their privacy as older adults. Consumers were also more willing to share location data than their dialed number history on smartphones. Sharing location data is often incentivized through coupons or other valued added offerings.
Companies that want to obtain more consumer data should focus on building trust. BCG advised that, "trust can be systematically built and strengthened -- if organizations master the internal principles, codes of conduct, compliance mechanisms, and trust metrics involved in stewarding data and holding themselves accountable, and if they communicate transparently with consumers about their actions and performance as data stewards." It recommends C-level involvement to ensure appropriate oversight.
Other surveys have had similar findings about consumer behavior. It's also well understood that consumers will sacrifice their privacy in return for some clear benefits. The consensus is that it's important to articulate those benefits to customers and not to overreach. The example of Target using data analytics to inadvertently expose a young woman's pregnancy to her family is a cautionary tale on why privacy still matters -- a lot.
Algorithms can reveal useful patterns of behavior from customer data, and companies that are trusted obtain more of it. It's equally important for businesses to maintain that trust through privacy policies, security, and transparency.
In other words, companies which sacrifice some data in the short term in order to preserve the trust of their customers will ultimately gain more in the long term.
(image credit: EPFL, ZDNET)
This post was originally published on Smartplanet.com