How You Collect and Use Data Can Make Or Break Customer Loyalty

In 1999, then-CEO of Sun Microsystems Scott McNealy made an outrageous comment during a product launch. “You have zero privacy anyway. Get over it,” he declared.

Over a decade later, Sun Microsystems is an entry in microcomputer history, but online privacy rests precariously close to the “zero” that McNealy prophesized.

Today, millions of businesses collect data that describe customers personally. With each click, online shoppers and users give away a piece of their privacy.

In exchange for that privacy, they receive product and service discounts, online messages about the newest products from manufacturers and various other kinds of alerts, on everything from national disasters to celebrity malfeasance.

As a business owner, you benefit from collecting that data. Personal information is either explicitly given via credit card purchases or market research surveys, or implicitly derived from tracking customer interactions on the Web. Both kinds of data play an important role.

Here are 5 key things to remember when collecting and using personal customer information.

1. Notice and Choice
In the United States, you have a legal obligation to give your customers notice and choice. This simply means that you must notify them on your Web site that you are collecting data, and what you will do with it. You must then offer customers a choice to allow the use of personal data or not.

2. Don’t collect what you will not use.
Today’s customers are savvy enough to know what data is really essential in transacting business with you. So don’t ask questions that are too personal, or that won’t provide them with what they feel is an equal exchange — their information for something of value. For example, the local baker who offers a free birthday cupcake can ask for a birth date (just day and month, please). The dry cleaners might have a difficult time extracting the same information.