Inside 1to1:Privacy

Building Trustworthy Customer Relationships in the Digital Age

July 13, 2012

By Jedidiah Bracy, CIPP/E, CIPP/US

The rapid rise of technology and the emergence of Web 2.0 social platforms are changing the way individuals share and disclose information about themselves and their preferences.

A goldmine for businesses around the world and across industry sectors, this new culture of sharing can be a pitfall when companies exercise poor business practices, asserts Martha Rogers.

"Technology mandates a new level of trustworthiness by businesses," she says.

A marketing guru, Rogers is co-director of the Duke Center for Customer Relationship Management, and, together with Don Peppers, founding member of the Peppers & Rogers Group. Peppers and Rogers have recently released their ninth book, Extreme Trust: Honesty as a Competitive Differentiator.

"Many new technologies are creating a higher demand for trust," she notes. "Consumers can now share their experiences about a business with hundreds of friends online. They can like or unlike products or leave reviews on websites, which leaves companies more vulnerable to bad publicity."

The key, Peppers and Rogers argue in their book, is found in a company's ability to proactively protect the interests of their customers.

"We need trustworthiness on steroids," contends Rogers.

According to Extreme Trust, this new high-level need for trustworthiness is part of a paradigm shift where traditional business practices established prior to Web 2.0 networking "can no longer be trusted by customers and will soon become extinct, driven to dust by the competitive pressure of increasing consumer demand for fair treatment empowered by social networking."

Rogers and Peppers break down the concept of trust into competence and intent. To garner consumer trust, businesses need to prove they are competent enough to be relied upon--"doing things right"--and have good intentions--"doing the right thing." What's more, businesses need to exercise these concepts proactively, a concept that needs to be ingrained in an organization's strategy and culture.  

It's now possible for businesses to collect massive amounts of consumer data in ways never before imagined. "With this increased flow of big data, are we going to use it to help customers succeed?" queries Rogers, "Or are we going to use it to sell more stuff?"

In the short term, selling more products can help the bottom line, but trustability can help foster a relationship aimed for the long run. Rogers says that customers are willing to pay $28 more per year to a health insurance company they trust and $11 more per month to a trustworthy telecommunications company.

Rogers put forth the following example: A cell phone provider could easily charge customers for more expensive plans than their usage demonstrates but one that fosters "extreme trust" would proactively help a customer locate the right usage plan.

Rogers continues, "Say a customer is moving. The company could reach out to its customer, congratulate them for their move but realize the area to which they are moving has poor cell reception. Instead of ignoring the issue, the company could say, 'We just want to let you know, we're going to put up a tower in that area, until that time, your service will not be good, so we'll discount your bill.'"

In a networked world, companies also need to prepare for data breaches. Since perfect security is next to impossible, businesses need to be competent in securing their customers' data. If and when a breach does occur, businesses need to proactively contain the crisis while ensuring consumers are informed and offered a means to protect themselves from identity theft and other harms.

"A lot of companies aren't prepared for a crisis," Rogers says. She thinks businesses should build a walk-through in order to rehearse a crisis situation.

Rogers also advocates for transparency. Privacy policies can often become too cumbersome for consumers to read and understand. "If you have a lot of fine print," she says, "you're probably not trustable because nobody's going to read it."

If consumers realize a company has their best interests at heart, they will be more likely to stay with that company and share their preference with friends and family. "People, by their nature, are social beings," Rogers notes.

Rogers says we're entering into a brave new world.

"The younger you are, the less likely you're concerned about privacy in the traditional sense. I don't think that's a good thing," she opines, "but I think it's a reality."

As consumers start to think differently about privacy, the question becomes "whether or not I, as a consumer, will direct my business to companies who will be competent about how they handle it." For Rogers, that becomes the competitive differentiator.

"Customers are our only source of revenue," she states. "Products don't pay us money, the customers do." Once businesses realize this customer-centric use of trustability, they'll see an increase in loyalty and revenue.

Read more by Jedidiah Bracy:

Assistant Commissioner receives OBA Karen Spector Memorial Award for Excellence in Privacy Law
Facial recognition technology: Should faceprints be considered personally identifiable information?
IRS taxpayer authentication program combats identity theft: A Q&A with Rebecca Chiaramida