10 Moreover companies frequently change their privacy policies and practices without giving users adequate notice. Laura glanced again at the clock. But the richest and most lucrative source of information, as well as direct contact with consumers, is through information portals like Google and social networks, particularly Facebook. ShopSense was already selling its scanner data to syndicators, and, as her CFO had reminded her, the company currently made more money from selling information than from selling meat. Customer analytics are effective precisely because firms do not violate customer trust. This is … To be meaningful, consent must be informed and freely given. Even better, both firms would be engaging in trust-building—versus trust-eroding—activities with customers. 17 Even when companies give assurances, as Google and Facebook currently do, that they do not sell their data to unaffiliated outsiders, it is still available to their advertising "partners," which gives the companies, not to mention the subjects of the data, even less control over where it goes and how it is used. But as the firms in the case study are realizing, there are also plenty of risks involved with using these data. Lots of people get arrested for all kinds of reasons, most of which have nothing to do with their employability. Some … This would address the “unintended use of data” problem; customers would understand exactly what was being done with their information. They use collective data, along with sophisticated statistical analysis techniques and psychological models, to predict peoples' purchasing preferences and behavior and to identify those factors that most strongly influence consumers' loyalty and choices. There had been some tension within the group about Steve’s contribution to several widely disseminated articles about ShopSense’s embrace of customer analytics. Nutritional analyses of some customers’ most recent purchases were being printed on receipts in a few of the test markets as well. ... Keep in mind that by not addressing ethical use of data … In addition employers can often gain access to employees' and applicants' profiles on social media, including photos, comments, histories and lists of associates, either because the subject did not make them private or because someone who had access made them available. Peter urged Donna to drop the issue for a bit, as he scribbled his comments about the wine they’d just sampled on a rating sheet. It should be the same with an online retailer, email provider, search service, or social network. The deal was certainly legal. Ethics matter to your customers and your partners. 12 Just recently, in response to pressure from governments, consumer groups and other critics, some companies have begun to give users better control over how and where their information is collected, stored and used, through providing "opt-out" provisions and finer privacy controls. The arrangement is legitimate as long as the users have knowingly consented to the collection and use of their personal data and that use is limited to what was agreed to. ShopSense’s loyalty card data are at the center of this venture, but the grocer’s goal here is not to increase customer loyalty. This information can be purchased from credit agencies, motor vehicle departments, the post office and many other sources, as well as gleaned from public records. 20 Yet the data belies those claims. Wouldn’t we have to share that kind of information? A version of this article appeared in the. Another concern for consumers is what I call “battered customer syndrome.” Market analytics allow companies to identify their best and worst customers and, consequently, to pay special attention to those deemed to be the most valuable. Humana provides health benefit plans and related health services to more than 11 million members nationwide. The value of its relationship with IFA is solely financial. If IFA came up with proprietary health findings, would the company have to share what it learned? It will help the company to develop new products that will fulfill the expectations of the customers… He was pretty confident he had majority support; he had already spoken individually with many of the top executives. “Some poor soul puts potato chips in the cart instead of celery, and look what happens.”, “But what about the poor soul who buys the celery and still has to pay a fortune for medical coverage,” Donna argued, “because the premiums are set based on the people who can’t eat just one?”. This violates one of the fundamental principles of privacy, that a person must be able to control how much personal information is revealed to different parties, depending on the nature of the relationship and level of trust with each one. Laura for years had been interested in the idea of looking beyond the traditional sources of customer data that insurers typically used to set their premiums and develop their products. We carefully control the content and frequency of even our own communications with Rewards members. I honestly don’t think these companies have hit upon a responsible formula for mining and sharing customer data. Companies engaging in customer analytics and related marketing initiatives need to keep “win-win” in mind when collecting and handling customer data. It’s not just about what the information can do for you; it’s about what you can do for the customer with the information. How can these companies leverage the customer data responsibly? 21 MIT scholar Sherry Turkle, in a thorough and thoughtful study of how teenagers use and are affected by social networks, found that those she studied were very careful and intentional about how they crafted their online identities. Once the register printer had stopped chattering, the cashier curled the long strip of paper into a thick wad and handed it to Laura. O.Z. The cashier scanned in the groceries and waited while Laura swiped her card and signed the touch screen. We want it to improve the flow of leads and sales. But if companies are forced to choose between ethical behavior and maximizing shareholder value, the track record seems to … Laura had flown in two days ahead of the meeting and had sat down with the chatty statistics expert and some members of his team, going over results and gauging their support for continuing the relationship with ShopSense. Meanwhile, Steve is busy trying to work out details of the sale with executives at ShopSense. Like IFA, we ask our customers to share their personal and medical histories with us (the risky behaviors as well as the good habits) so we can acquaint them with programs and preventive services geared to their health status. One of the biggest problems in U.S. health care today is obesity. 2 Employers can also obtain credit records, medical and insurance records, and histories of workers' compensation claims. “ Customers find out, they stop using their cards, and we stop getting the information that drives this whole train.”. We spend billions of … As the use of customer data holds distinct, research-backed competitive advantages to marketers, however, the bad and the ugly elements need to be mitigated to make room for … As a benefit to society?”. If you do that, the benefits to your business -- in the form of increased sales and customer … 5 In the same way, information from medical records or insurance claims, such as disabilities or past illnesses, should not be used to refuse employment, yet they often are. There are plenty of examples of unethical … Data ethics and its role in providing better customer service. The vast majority of solicitations from these sources are merely intrusive and not unethical. Harvard Business Publishing is an affiliate of Harvard Business School. Donna could see the headline now: “Big Brother in Aisle Four.” All the more reason to make it worth our while, she thought to herself. In our Personal Nurse program, for example, we’ll have a registered nurse follow up with a member who has filed, say, a diabetes-related claim. Cooper had commented to Jason after the meeting. Those details are stored in a central database. In this fictional account, for instance, a shopper’s grocery purchases may directly influence the availability or price of her life or health insurance products—and not necessarily in a good way. Big Data should not interfere with human will: Big data … Transparency is a critical component of any loyalty card program. Now she has to sell her company’s senior team on buying more information. Read the Ethical Use of Customer Data … Indeed targeted advertising is by far the greatest source of revenue for their businesses and what makes it possible for them to provide their services to their users free of charge. Does the organisation send a privacy notice when personal data are collected? Laura had read a profile of ShopSense in a business publication and learned that it was one of only a handful of retailers to conduct its analytics in-house. Her cart was nearly overflowing in preparation for several days away from her family, and she still had packing to do at home. A big hole in these data, though, is that people buy food for others besides themselves. If this very sensitive and personal information is handed over to an employer or appears in the newspapers, the patient has lost control over an important aspect of his or her life. An arrest without a conviction should certainly not be grounds for denying employment. If consumers lose trust in firms that collect, analyze, and utilize their information, they will opt out of loyalty and other data-driven marketing programs, and we may see more regulations and limitations on data collection. 22 Their age and lack of experience and wisdom leaves them very vulnerable to exploitation. This can happen for a number of reasons. Opting out is not a serious option for many. The situation with social networks is even more restrictive. We use proprietary data-mining and analytical capabilities to help guide consumers through the health maze. Frankly, he’d been having a blast slicing and dicing. Inevitably, however, customers will become savvier about analytics. 27, The heavy reliance on electronic communication also leads to greater possibilities for outsiders to tap into sensitive personal information. The internet has enabled both mass memorialization and massacres. Or those who control the data may not enforce the rules. Because the detailed and personal data is so valuable and because the ability to reach the target market directly online is so desirable, services such as Google and Facebook, which both provide the data and serve the ads to the intended recipients, are paid well for their part in the process. Unethical use of data tracking tools Unfortunately, concern over internet privacy still exists despite the implementation of data privacy laws such as the Data Protection Act . “Oh, paper, please,” she replied. Laura was keeping an eye on the clock; there were several themes she still wanted to hammer on. 15, An even greater concern is these sites' selling or other transmission of users' personal data to third parties without users' effective knowledge or consent. Google has also run into trouble a number of times for changing its privacy policy or practices. Digital trust is a focal point in the modern age — but it can be tricky to balance respecting customers’ privacy and crafting new customer … How can both companies leverage the data responsibly? 25 In a less public but more extensive case, an investigation by the Internal Revenue Service found that hundreds of IRS employees were accessing information on tax returns without justification, in some cases out of curiosity about friends, neighbors, antagonists or celebrities, in other cases to check up on business associates, and in some cases to alter the tax returns. Through phone conversations and e-mails, the RN can help the plan member institute changes to improve his or her quality of life. Sure, a customer database has value, and a company can maximize that value in any number of ways—growing the database, mining it, monetizing it. This is limited information at best and inaccurate at worst. As one critic put it, "too much is made of consent in this context. If you wouldn’t want your personal data used in a certain way, chances are your customers wouldn’t, either. Sammy will understand, the CEO told himself as he sank deeper into the love seat in his office, a yellow legal pad on his lap and a pen and cup of espresso balanced on the arm of the couch. Neither company seems to particularly care about its customers. Furthermore, they are at an age when they are discovering and defining their identities. “Do we need more sunscreen?” Laura wondered for a moment, before deciding to go without. First and foremost, they need to let customers opt in to their data-sharing arrangement. Therefore they want as few limits as possible on what they can do with that data; and their privacy policies reflect that. Many of its card-driven marketing programs had since been deemed cutting-edge by others in and outside the industry. Like most successful retail companies, our organization is customer focused; we’re always trying to see a store or an offer or a transaction through the customer’s eyes. In response, Laura and her actuarial and sales teams conceived an offering called Smart Choice, a low-premium insurance plan aimed at IFA customers who didn’t indulge. “I don’t know whether to grab a cup of coffee or a bat,” Steve joked to the others, gesturing at the life-size cardboard cutouts and settling into his seat. It was several days after the review of the ShopSense pilot, and Jason was still weighing the risks and benefits of taking this business relationship to the next stage. Steve was hoping to persuade CEO Donna Greer and other members of the senior team to approve the terms of the data sale to IFA. Focus on solving your customers' problems first. Cambridge Analytica’s use of Facebook data was a ‘grossly unethical experiment’ New, 45 comments The personal information of more than 50 million users was misused It can also be generated internally. “Of course, those customers realized later they might pay a higher premium when the company found out they routinely exceeded the speed limit—but that’s not a legal problem,” O.Z. “Given that this is a new, somewhat unchartered area, there is still a lot of leeway companies have in the methods they use — and perhaps lines they cross — when gathering data.” Big Data Ethics and AI “Beauty Contest”[6] In 2016, the first AI (artificial intelligence) judged … That can make large segments of the population unemployable. Both CEOs are subjecting their organizations to a possible public relations backlash, and not just from the ShopSense customers whose data have been dealt away to IFA. When business opportunities come along, they’ll be screened according to those standards—and the decisions will land right side up every time. This is a serious attack on the autonomy and dignity of the individual subject. That may be an extreme example, but it suggests that IFA’s correlations may be flawed. She is the co-author of. It wasn’t the same as when that online bookseller got into trouble for charging customers differently based on their shopping histories. As the case study illustrates, companies will soon be able to create fairly exhaustive, highly accurate profiles of customers without having had any direct interaction with them. Steve had hoped to move on to the financial benefits of the arrangement, but Denise Baldwin, ShopSense’s head of human resources, still seemed concerned about how IFA would use the data. 11 In particular in 2009, Facebook users were stunned to find out that personal information they thought was available only to their chosen "friends" had been made public. After all, her industry wasn’t exactly known for embracing radical change—even with proof in hand that change could work. When dealing with vast quantities … Laura made a mental note to speak with Miss Maryellen about what sugary cereals do to kids’ teeth (and to their parents’ wallets). Cooper broke in over the speakerphone. “‘Directly’ being the operative word here,” Denise noted wryly, as she took her copy and passed the rest around. If you looked at a breakdown of purchases for my household, you’d say “Wow, they’re consuming a lot.” But the truth is, I hardly ever eat a bite. No one else has the historical data we have or as many customers nationwide.” He was right, of course. Over time – if not right away – customers know when they are being “had.” It can range from slightly exaggerated claims to blatant lies – and everything in between. When the tougher, gray-area decisions need to be made, each person has to have the company’s core principles and values in mind. “Exclusive rights to our data will give you information that your competitors won’t be able to match. Many users of these services do not realize that service providers are constantly monitoring users' online behavior and the information they store and communicate through the site, storing, compiling and analyzing the results, using it for the service's own purposes and sharing it with others. IFA had been looking at this relationship only in the context of individual insurance customers, Steve explained, not of group plans. Or so he thought. 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