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Customer privacy: It's worth it

Harvey Schachter

Most of us expect companies to respect our privacy. But when we're on the other side, manoeuvring for advantage in the marketplace, privacy often seems like an unnecessary barrier that it would be convenient to ignore.

In Privacy Payoff, however, Ann Cavoukian, Ontario's information and privacy commissioner, and Tyler Hamilton, a technology writer for the Toronto Star, argue guaranteeing consumers the privacy they want in commercial transactions in fact can be a competitive advantage. "Customers who feel their privacy expectations are met will reward organizations with their loyalty -- their business stays with you," the authors argue.

Just as in the past two decades being green started to pay off for companies, they argue that taking an active role on privacy will avoid the risk of lawsuits or regulatory action against your company, satisfy and even entice consumers and cut (rather than add to) costs.

That financial saving comes because companies are collecting too much information, which they then must waste money managing. "Getting a solid and comprehensive handle on data flow and information systems will help an organization identify inefficiencies, discover misplaced or inaccurate data, flush away useless data and detect potential problems -- well beyond privacy -- that could lead to a better-run, more profitable business," they advise.

Lots of information being collected on the Web, for example, is garbage. Upset at being asked for too much information, people lie -- one estimate is that 40 per cent of consumers are giving false information. Companies then base their strategy and specific marketing thrusts on that false information.

The authors insist people will give accurate information if the request is reasonable and consumers view it as being in their interest. Privacy rules, therefore, can enhance rather than detract from data collection by ensuring that the data are relevant and accurate. "Privacy rules and practices simply aim to give more control back to consumers by giving them an opportunity to decide whether to participate in marketing campaigns," they say.

Companies and consumer groups are at loggerheads as to who owns the information in a corporate databank -- the corporation or the individual. The authors suggest one solution is to consider it a partnership, in which each owner has a responsibility to the other yet they share common goals. Both expect to benefit from or be rewarded for the information collected.

Smart companies, they add, may want to go one step further, as a courtesy treating personal information of customers as their personal property. "If consumers feel they have ownership over their personal information -- and, therefore, personal control over how it is used -- they are more likely to entrust that information to you. Organizations that choose this path may be pleasantly surprised by the results," they say.

That might mean paying a little less attention to your legal advice. The authors note that far too many privacy statements are difficult to comprehend -- particularly in the short time most of us are willing to devote to reading them. They urge Web sites to present simple privacy messages that clearly outline the main points in language consumers can grasp, with click-throughs for the lawyers' version.

Companies have always known that legal contracts are important but good business is ultimately dependent on trust and good relationships. "Privacy policies and statements, often buried in the legalese of service agreements, are being used primarily as legal disclaimers when they could be used as relationship builders," the authors write.

The book is timely, with federal privacy legislation to take full effect in just more than a year. The authors offer a comprehensive, easy-to-read guide to the technological, legal and philosophical issues surrounding privacy, albeit with more acronyms than necessary, and a staunch argument that businesses should view this as an opportunity. (The Globe and Mail)