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2 EXECUTIVE AUTHOR S NOTE OVERVIEW Early in 2013, inspired by growing trends like the Quantified Self and Open Data, thought leaders like Doc Searls and Joel Gurin, and previous work by teams at Communispace, I set out to conduct some research on the topic of privacy and personalized marketing the consumer experience today and how it might look in the future. I started, like any good researcher, by immersing myself in the topic. I read dozens of articles, blog posts, and whitepapers. I devoured Searls rousing book, The Intention Economy. I attended webinars and conferences on Big Data, Small Data, Open Data, Bad Data, Data Privacy you name it. Current events like the NSA PRISM scandal and the WikiLeaks trial kept these same issues in the headlines. But what struck me, time and again in meetings at work, listening to panel discussions, over dinner with friends was the undeniably personal nature of this topic. During a breakout group at a conference on privacy and big data, the conversation was punctuated with firsthand accounts of targeting gone wrong or the creepiness inherent in the business of data tracking and trading. That is, a room full of marketers many of whom undoubtedly engage in these very practices could not remove their consumer hats and discuss the topic without stumbling over the distasteful ramifications of treating human beings as data points. And the hits kept coming. A male co-worker shared the unnerving experience of being haunted by Huggies advertising after a Gmail exchange with his girlfriend regarding a pregnancy scare. Similarly, weeks after I threw a baby shower for my best friend, which involved several significant shopping trips to Babies R Us, I received a glossy card from one of Boston s world-class hospitals (the hospital where I was born, in fact). It featured a young couple with knowing smiles and serif font that probed, Planning on Having a Baby? No, actually, I m not. The copy on the back addressed an expectant mother, describing the hospital s prenatal services in detail and how I could learn more about having your baby with us. The card has been tacked above my monitor at work ever since, as inspiration. Finally, while working on the final draft of this paper, I received a letter from a different Boston medical center, addressed to The family of Martin Lerman. Martin Lerman is my dad; he passed away last year. The letter was an apology from their practice administrator, explaining that my father had inadvertently been included in a mailing about this year s flu vaccine, the result of an incorrect data field being used for the mailing. I wasn t appalled or upset, but I did have to roll my eyes. This wasn t a complex predictive algorithm gone wrong. A mail merge? Something has to give. Targeted marketing is not a manifestation of customers in control ; it s just better-informed mass marketing. But a customerdriven revolution is underway, and if it succeeds, we may finally show each other the respect we deserve. Katrina Lerman Senior Researcher, Communispace 1

3 EXECUTIVE SUMMARY With this study we aim to provide the marketplace with timely data from a broad range of consumers, to better inform their marketing efforts and the ways in which they gather, use, and share personal data. Our research suggests serious risks for companies who don t respect their customers wishes for privacy and control, and who continue to push messages even personalized messages without providing corresponding means for customers to seek them out and signal their intentions. It also suggests a real opportunity for companies ready to engage with consumers on their terms and re-negotiate power in the vendor-customer relationship. Targeted marketing, while more precise than mass marketing, is still inherently one-way, backwardslooking, and full of guesswork. And, often, it s just plain wrong, or worse, disturbingly accurate, signaling to consumers the presence of a thriving personal data market just out of sight. While people increasingly accept some loss of privacy as a cost of doing business, or a way to earn perks, the majority say they do not appreciate the covert tracking that takes place in the name of added value and customized experiences. And with more ways than ever to shut advertising (and advertisers) out of our lives, it s becoming clear that, despite the surge of enthusiasm around big-datadriven marketing, it may not be the Holy Grail that was hoped for. Instead, consumers describe their ideal relationship with brands to be much more transparent, reciprocal, and respectful than what they experience today. Right now, consumers have few means to bring about such a coup, but that s about to change. Tools that will enable individuals to track, manage, and selectively share their personal data are in rapid development, along with new ways for consumers to signal their needs and preferences to brands, one-to-one, in real time. In the meantime, businesses that begin to disarm by moving away from the military model of advertising (premised on targeting and blitzing) will be in the best position to earn loyalty and build relationships when consumers really do take control. 2

4 EXECUTIVE SUMMARY KEY FINDINGS Consumers feel invaded and fatigued by targeted marketing and the tracking that fuels it: 86% of consumers would click a do not track button if one was available and 30% would actually pay a surcharge for a guarantee of no data capture. Targeted advertising is missing the mark: Only 14% of consumers would prefer to shop by receiving targeted offers based on their search and purchase history. While advertising fueled by big data is generally accurate, it does not create credibility, trust, even relevance; if anything, it repels consumers by appearing overly familiar. METHOD AND SAMPLE This study was conducted during the summer of 2013, with 8,343 participants across 52 of Communispace s private online communities. Methodologies included 2 open-ended, threaded discussions and 1 16-question survey. Group difference tests were performed with age, gender, and country as independent factors, and additional analysis was conducted on open-text responses using Luminoso text analytics software. 87% Privacy concerns increase with age: Younger consumers are more open to explicitly negotiating for access to their data, while older consumers are more eager to preserve anonymity: 60% of Millennials would willingly share their data for coupons or promotions (i.e., a loyalty program), while only 38% of the Silent Generation say this. Respect the relationship: Offers based on purchase history with a known company are perceived more positively than those based on predictive models or targeted marketing from unknown companies. Indeed, just 13% of consumers think it s acceptable for any company to purchase data about them in order to personalize their marketing. From outside-in to inside-out: Consumers express a desire for a more open marketplace in which they can bypass targeted efforts and proactively initiate brand interactions based on their unique needs. In fact, 24% say they would prefer to shop by announcing their intention to buy and having vendors bid for their business. 24% 3% COUNTRY 13% 68% GENDER 32% 46% GENERATION 27% US NON-US FEMALE MALE MILLENNIAL GEN X BOOMER SILENT 68+ 3

5 LIFE IN THE CROSSHAIRS LIFE IN THE CROSSHAIRS Since that moment when people who buy things became known simply as consumers, advertisers lenses have been fitted with a crosshair. Prospective customers are viewed as targets, their attention a commodity to be captured by precisely-honed messaging and divvied up among worthy vendors. The problem is, this doesn t really work that well for most brands. Even as mass campaigns have been joined by micro, and demographic data have been joined by behavioral, advertising is still filled with guesswork and waste. Companies continue to spend tons of money 1 with few meaningful ways to measure success. The traditional model of advertising is also based on the assumption that everyone is a potential customer, all the time, and that we customers don t know what we need. But in today s hyper-connected world, there is no lack of consumer desire or means to sate it; if anything, there are too many choices. Yet, marketing and advertising are still focused on eyeballs, on grabbing our attention. Consumers lack ways to cut through the noise and express their needs proactively, and instead find themselves stalked by advertisers all over the Web. FRICKIN LASER BEAMS I received [a targeted ad] on my phone via an SMS, there seemed nothing abnormal about it so I clicked on it. Next thing I know my phone bills are rising like grass up to my neck it subscribed me to a website that costs about R60 a month! These targeted advertisements make me feel small because of my past experiences; it s like a laser dot aiming at your head, waiting until you click on the targeted advertisement. Male, Millennial, South Africa Once relegated to direct mail pieces, targeted marketing has become a ubiquitous part of our digital lives, populating our inboxes, apps, browser windows, media streams, and search results. Consumers recognize that it pays for free services like search and , and they re also increasingly aware that the specific content they see is informed by their trail of clicks and conversations. Indeed, we found that most understand that information like , IP address, location, cookies, and browsing history (or, everything, as many put it) is captured by websites they visit. This behavioral tracking is justified as the means to an end the perfectly personalized brand experience. But, ultimately, it s just a more sophisticated, better-informed variety of push marketing. Julie Wittes Schlack, Communispace s SVP of Product Innovation, described this evolution as analogous to the transition from carpet bombing to shotguns to lasers. Each new weapon in the arsenal is increasingly precise, but as a consumer, I still don t enjoy being a target. 2 The current advertising bubble is increasingly fueled by a high-stakes personal data market 3 where consumer information is bought and sold like so many mortgagebacked securities. And, like derivatives trading, it brings big risk for companies making bets that their targeting has the best aim. Awash in a sea of big data, marketers are enamored of their newfound ability to personalize, add value, and provide relevance like never before. But that doesn t begin to describe some consumers experience of these perks. 1 Global AdView Pulse Lite Q (2013, Oct. 15). Nielsen. Retrieved from 2 Schlack, J.W. (2013, Aug. 15). From Reach to Relevance. MediaPost MarketingDaily. Retrieved from 3 Sullivan, M. (2012, Jun. 26). Data Snatchers! The Booming Market for Your Online Identity. PCWorld. Retrieved from 4

6 LIFE IN THE CROSSHAIRS INTERNET PEEPING TOMS When we asked members of our private online communities to describe their experiences with personalized marketing, the words creepy, annoying, intrusive, and ignore were prevalent and closely related to the term targeted ads. So, however, was the word accurate. I do not click on them and sometimes find them very peculiar and inaccurate. Other times, they are disturbingly correct, like someone was reading my mind. I hate the whole idea of it. I liken it to someone watching me through my window. Internet Peeping Toms motivated by greed rather than lust. It s a violation of my privacy and extremely disturbing. Female, Gen X, US The problem is not that targeted ads are necessarily wrong, but that accuracy does not guarantee relevancy, and it certainly does not guarantee engagement. Indeed, the most creepily accurate ads the ones clearly fueled by inferred or tracked data are actually the most off-putting because they reek the most strongly of Big Brother. Adding to their ineffectiveness is the fact that targeted ads are inherently backwardslooking, often hawking a product or service that is no longer wanted (e.g., cruise tickets, big-screen TV). Perhaps the underlying data was from a different user on the same computer, or part of a work or school assignment, or conducted while travelling. Think of the mother who is tailed by ads for power tools after buying a present for her husband or my own experience after a friend s baby shower. Even Google, who arguably collects more data than anyone, has not mastered the science of inferring demographics and interests. Even when these ads are both accurate and relevant, consumers report almost never engaging with them directly. This is partly a safety measure; they are worried the ads are not what they appear, but rather fronts for scams, spyware, and viruses. Others say that they have come to ignore digital ads altogether or that they literally don t see them, just as they have learned to tune out most television, radio, and print ads over time. 5

7 LIFE IN THE CROSSHAIRS Finally, context matters a lot and can lead to seemingly inconsistent or illogical attitudes. Many ads are perceived as just plain intrusive, especially when they pop up in digital places that feel private, such as personal s, friends news feeds, and mobile phones. Ads that appear during an Internet search or a visit to a retailer s website are helpful at best, and annoying at worst. Ones that flash across the screen or practically address you by name are unwelcome invaders. As new technologies that leverage geo-location and biometrics promise to bring brand messages even closer to home, marketers need to be especially mindful of context and to not crossing boundaries. THE JOY OF DISCOVERY I love the joy of exploration and discovery. I love offbeat things, and unusual little jewels of life that are not necessarily well known or widely available. To have someone dogging your every move subjects that information to the perception of the gatherer, so they can take what you intend one way and interpret it completely differently. Female, Gen X, US Pragmatically, many consumers consider targeted advertising to be the lesser of two evils if they must be subjected to advertising, at least this way it has a better chance of being relevant. However, others seem to resent the implication inherent within personalized marketing or really any advertising, these days that we don t know what we need or how to find it; displaying a stubborn unwillingness to click, just because it s been suggested. Some consumers even feel that responding to targeted ads is tantamount to letting marketers win, a validation of their intrusive methods. Even if they are interested in a product or service they see advertised, most prefer to go directly to the website or to conduct further research, rather than click on an ad. As Google has rightly identified, consumers have become hummingbirds, 4 with their own routines for gathering information, deals, and opinions. In fact, some feel that targeted ads actually hinder the act of searching and discovering new brands on their own terms, by presumptively narrowing their options. These very behaviors illustrate how today s technology renders much of traditional advertising obsolete: consumers have so many self-directed ways to learn and discover that they don t need ads to direct their attention. What they need is responsive, real-time marketing at the moment they are actively shopping. Become part of the discovery journey. Since most consumers today shop by searching and gathering information from many sources, create as many engaging, relevant, consumer-initiated touch points as possible. Make it easier to discover your brand. Be an educator! Use great content to draw people to you, and establish trust and expertise by playing the role of curator. For example: Faced with the reality that most women fire their male financial advisors after their husband dies, Charles Schwab worked with their online community to develop in-branch workshops highlighting topics important to women. 5 By becoming part of the conversation, and not just the broadcaster, Schwab strengthened existing relationships, laid the foundation for new ones, and gained valuable insight into this market in the process. 4 Google Hummingbird. Wikipedia, the Free Encyclopedia. Retrieved 24 Sept. 2013, from 5 Rosensteel, S. (2013, Apr. 19). Consumer Collaboration: How Charles Schwab Used Real-Time Research to Enhance Relationships. Forbes. Retrieved from 6

8 HIDING FROM BIG BROTHER HIDING FROM BIG BROTHER I log out of Facebook and have disconnected other services from Facebook where possible. I have opted out of Google search and now use Duck Duck Go, which does NOT track you. I use anonymous browsing, installed do not track me software and an IP masking service. It may sound like extreme lengths to go through, but I feel my personal information should remain personal to the extent that I choose, not someone else. Male, Age Unknown, US New research from the Pew Internet & American Life Project confirms that consumers are doing their best to hide from advertisers on the Web, viewing them as a threat second only to actual criminals. 6 Indeed, almost no one would allow themselves to be tracked if they could stop it. Fully 86% of our sample would click a Do Not Track button if one was available. This is consistent with the 85% who said they would click such a button in a December 2010 poll on the Wall Street Journal s website. 7 That same month, the Federal Trade Commission issued a recommendation that browsers include a Do Not Track button. 8 If you could click on a Do Not Track button to prevent browsers from capturing your online searching and purchasing history, would you? A 13% 87% Yes, I would click Do Not Track No, I wouldn t click Do Not Track There is no standard button yet, but many consumers do take advantage of the private browsing functions some browsers offer, and utilize an arsenal of other tools and techniques to avoid or block out digital advertising. From ad blockers to clearing cookies to paying for ad-free to privacy managers that identify and weed out tracking software, they are fighting back against data collectors. The Pew study showed similar efforts, finding that 86% of Internet users have taken steps online to remove or mask their digital footprints. 9 6 Rainie, L., Kiesler, S., Kang, R., and Madden, M. (2013, Sep. 5). Anonymity, Privacy, and Security Online. Pew Internet & American Life Project. Retrieved from 7 Searls, D. (2012). The Intention Economy: When Customers Take Charge (p. 34). Boston, MA: Harvard Business Review Press. 8 Ibid (p. 35). 9 Rainie, et al. (2013). 7

9 HIDING FROM BIG BROTHER PRIVACY: WHAT S IT WORTH TO YOU? Consumers don t just feel annoyed or invaded by targeting and tracking; a significant minority would actually pay to block it. When forced to choose, 3 in 10 would pay a 5% premium to preserve their privacy, while 70% would take a 5% discount to willingly share their data. Perhaps unsurprisingly, older consumers were more likely to say that they would pay for anonymity, while younger generations were more interested in trading privacy for perks. Would you pay to prevent data capture or share for a discount? 80% 60% 40% 20% 30% 70% Pay a 5% premium for a guarantee that your personal data would not be captured Voluntarily share personal data with a company in exchange for a 5% price discount MILLENNIAL GEN X BOOMER SILENT 68+ Now, the purpose of this question was to put the issue into stark relief; in fact, few vendors offer this kind of privacy, even for a surcharge. When given the more realistic option to share only what s necessary to do business or to provide additional data in exchange for some type of discount, we saw a shift towards anonymity: the sample was now split between their desires for privacy and perks. 8

10 HIDING FROM BIG BROTHER Would you share your data for perks? 80% 60% 40% 20% 48% 52% Refuse to share anything other than what s necessary to pay them Charge them (in form of discounts, promotions, or payments to you) for access to your personal data MILLENNIAL GEN X BOOMER SILENT 68+ The generational breakdown underscores these mixed, but evolving views: a majority of Millennials and Gen X-ers would share data for discounts, while a majority of Boomers and Silents would not. This trend doesn t necessarily reflect an indifferent attitude towards privacy, but it does indicate an increasing willingness among consumers to re-negotiate their relationship with brands and let themselves be better known in ways that benefit both parties. Collaborate with leading-edge customers. Identify your current consumers most open to negotiating their relationship with you (e.g., sharing more about themselves for increased personalization and perks), and work with them to understand how to transform the push marketing paradigm into a mutually beneficial relationship. For example: Look for ways to safely explore boundaries around privacy, dig deep into concerns, and re-imagine the future with a select group of customers. Use a specialized tool like private online communities, or think about utilizing existing touch points, such as the live chat feature on an e-commerce site, in new ways to better understand customer needs. 9

11 HIDING FROM BIG BROTHER THE LOYALTY GAME Most loyalty programs today resemble the second option: consumers share information and allow themselves to be tracked in exchange for discounts, coupons, sales, and other perks. (Of course, you are often forced to share information whether or not the company feels like giving you anything in return.) However, just because consumers enjoy getting discounts, that doesn t mean they feel anything like true loyalty to these companies. In fact, the never-ending stream of customized marketing schemes has many questioning if there might be a better way. Imagine that you are intending to buy something. Would you rather...? 14% Go to a centralized site listing promotions and discounts from multiple vendors 24% 62% Announce your intention to selected retailers and invite them to bid for your business Be automatically sent promotions and discounts based on your demographics and prior searching and shopping history When given several options to choose from, only 14% of consumers across demographics would prefer to receive offers based on their search and purchase history the method marketers today consider most relevant. Most would prefer to shop by browsing a central site that lists offers and discounts roughly what they do now using search engines, mass e-tailers like Amazon, and numerous deal and specialty sites across industries. And a significant minority would like to become even more proactive by putting their business up for bids and having vendors come to them. Exchange eyeballs for engagement. There is still a real need for marketing and advertising, but it s much more relevant and useful when contact is initiated by the consumer. Instead of trying to reach everyone all the time, push at moments of intention. For example: Valpak, an icon of the direct marketing industry, recently added an augmented reality component to its digital coupon app: consumers hold up their device to see which local businesses have Valpak coupons available. Businesses with coupons pop up on the map with information that allows the user to interact with the business at the same time they're ready to make a purchase Sass, E. (2013, Oct. 16). Valpak Bows Augmented Reality Coupons. MediaPost MediaDailyNews. Retrieved from 10

12 CROSSING THE LINE CROSSING THE LINE: FROM PERSONALIZATION TO INVASION If companies want to attempt to cater to my desires and whims, then go for it. If my favorite companies want Why doesn t personalized marketing seem to be working as intended? Where exactly does it cross the line from helpful to invasive? When we got very specific with various personalized marketing scenarios and asked whether they were OK or not OK, it became clear that there is a fine line between increased relevance and invasion of privacy. While the exact location of that line may vary by consumer and context, it is quite clear to each individual. to dangle a carrot in front of me with a sweet offer that they know I ll be interested in, then dangle away. I want sweet deals and offers to come my way and I want companies that I am loyal to to reward me for that loyalty. Female, Gen X, US DATA SAFE ZONE: BETTER TOGETHER Consumers certainly understand that their transaction data is captured by the companies with which they do business, especially online. If they ve opted in to any kind of loyalty or frequent customer program, they have knowingly given some companies even more information. In exchange, they get perks they like (e.g., coupons on frequently-used items, recommendations based on purchase history) at places they like (e.g., , the register, your website) and these are acceptable tradeoffs. wif anything, consumers wish brands would use their data to customize more extensively and creatively, but in ways they choose and control. For example, we heard women practically begging online fashion retailers to fulfill their true potential as personal shoppers. Consumers envision services like customized settings to automatically filter items by any number of self-determined criteria, curated s, offers and content, and virtual models who match their measurements. Personalize the pull. Use data to personalize the entire brand experience, not just advertising. Allow customers to create personalized defaults to shape their ongoing interactions with you. Customize your website content, UI, microsites for different consumers. Find out what a personalized in-store experience looks like. For example: Yahoo is leveraging mass personalization tools to create a seamlessly customized experience. They ve partnered with Automated Insights to produce detailed and highly readable reports, analyses, and recaps for fantasy football players, based on data specific to each team. 11 While the end result reads like a complex narrative (featuring ads, of course), the reports are built by algorithms and served instantaneously; yet each user feels like it was written just for them. 11 Eule, A. (2013, Aug. 31). Big Data and Yahoo s Quest for Mass Personalization. Barron s. Retrieved from 11

13 CROSSING THE LINE YOURS, MINE, AND OURS: WHEN BIG DATA GOES BAD It really creeps me out especially when the ad seems to have been generated in response to something that I wrote in an . Or, for example, when I changed my Facebook status to engaged and the next thing I know there are bridesmaid dress ads all over the place every time I open Facebook. It feels like a weird and uncomfortable mix of commercialism/consumerism and personal for me. At some point, however, all of this predictive work moves from helpful recommendation to invasive speculation. For most consumers, regardless of demographic, that transition happens when marketing methods move beyond using volunteered information and begin to make inferences based on that firsthand knowledge or, even worse, on data obtained from outside sources. These 3 types of data can be loosely grouped as ours, yours, and mine. 12 Company tracks each customer s purchase history and offers different coupons to different people based on what they tend to buy Company studies transaction data and prices best-selling products very aggressively and competitively 25.9% 28% 74.1% 72% OURS Female, Gen X, US Company identifies customers with children and sends them catalogs that feature toys before Christmas 39.8% 60.2% Store tracks all your purchases over time, monitoring your behavior to predict what you might need next (e.g., pregnancy or spring break) 47.8% 52.2% YOURS Company sends shoppers who habitually purchase swimsuits in April coupons for sunscreen in July and diet books in December 55.6% 44.4% Companies send offers, incentives, and advertisments based on matters of public record (e.g., birth, graduation, marriage) 59.7% 40.3% MINE Company buys data about your demographics, interests, lifestyle, habits, and past behavior, so that it can target its offers more appropriately 12.7% 87.3% NOT OK OK 12 Searls, D. (2012). The Intention Economy (p. 194). 12

14 CROSSING THE LINE Personal things like marriages and births, although they are usually public, are things that you choose to share with people, and companies shouldn t assume they have the right to that information. Female, Millennial, UK When my data information pertaining to birth and death, marriage and divorce, health, finances, ethnicity, race, religion, political affiliation, etc. is involved, acceptance drops off. Less than 20% of any demographic is comfortable with marketers buying data about them beyond what they have volunteered, although men and younger generations express slightly more tolerance for this practice. Many take issue even when the data is publicly available; if the information is perceived as sensitive or personal, it still feels like invasive snooping and out of bounds. (This leads to a larger discussion about what constitutes public in the digital age: for example, Facebook feeds are essentially unsecured, yet consumers still place them firmly in the private realm.) In this word cloud, the X axis has been set as Not OK (red), the Y axis as OK (blue). Looking at the quadrants this creates, it s clear that consumers feel positively about marketing, especially discounts (yellow), based on their transactions with a given company, and negatively about marketing based on data gathered through other means. You can also see varying feelings about different types of data collection (green): tracking purchase history is more acceptable than using publicly available data, which is more acceptable than buying and selling data. Unfamiliar companies also fall into the mine category. If you are contacting a consumer without their consent, it means you got their data from someone else. One consumer called this practice one-way personalization, a phrase that highlights the imbalance of power and information. Though not always appreciated, it s clearly more acceptable to target-advertise to existing customers, using data that they ve given you, than to non-customers. 13

15 CROSSING THE LINE There is, in a very real sense, an established relationship, a circle of trust and intimacy between brands and their customers. Consequently, the single biggest breach of trust involves the buying and selling of personal data. Even if they have technically granted their consent, consumers express extreme distaste for, and occasionally claim to boycott, companies that engage in these practices. Ultimately, when consumers willingly share data with brands, it is an opportunity to build relationship. According to Boston Consulting Group, organizations that create trust regarding their use of such information should be able to increase the amount of consumer data they can access by at least five to ten times. 13 But using this data in ways they perceive as over the line hurts the relationship, sometimes irreparably. As the line between public and private becomes ever more blurred, it is essential that companies get to know their customers intimately, to build in the intuition necessary to respect their boundaries. With big data comes big responsibility. Just because you have information, doesn t mean you have to use it. Know your boundaries. With customers, use common sense. Don t infer around sensitive topics (e.g., pregnancy, weight loss). Don t gather data without permission. With prospects, don t become overly familiar or you re just a stalker. For example: A CBS News story in May 2013 revealed that retailers, working with Euclid Elements technology, were using Wi-Fi signals from cell phones to track customers in-store without permission. 14 After a public outcry, Nordstrom, Home Depot, and others were forced to cease the practice. 13 Rose, J., Barton, C., Souza, R., and Platt J. (2013, Nov. 6). The Trust Advantage: How to Win with Big Data. The Boston Consulting Group. Retrieved from 14 Martin, A. (2013, May 7). Nordstrom Using Smart Phones to Track Customers Movements. CBS DFW. Retrieved from 14

16 TERMS AND CONDITIONS OF RESPECT TERMS AND CONDITIONS OF RESPECT One area where the vendor/customer relationship could become more equitable in the future is in the infamous Terms of Service. Typical e-commerce contracts today are one-sided, take-them-or-leave-them propositions, forcing the customer to sign away rights to privacy, anonymity, termination of contract, and more. Consumers have the choice to attempt to digest these complex documents, refuse the product or service, or consent without objection. But what would it look like if customers wrote the rules? THE CONTRACT OF THE FUTURE Customer Commons, an offshoot of Doc Searls Project VRM, aims to address some of these issues by doing for commerce what The Creative Commons did for copyright law: distill complicated legal documents into simple, easy-to-understand templates. 15 While Customer Commons is still a work-in-progress, we asked consumers to design their contract of the future, based on fill-in-the-blank items like If you really want to delight me and Under no circumstances should you The results were illuminating. The most common terms addressed issues of privacy and communication, and illustrated just how beleaguered consumers feel by today s avalanche of marketing. Consumers repeatedly demanded increased transparency, reciprocity, and respect in their interactions with vendors. In other words, they want to be treated like a human being you know, like your mom. If you really want to delight me, here are 3 things you need to do: 1. Understand that I believe my situation is unique and you should treat it so. (Even if it s not, no one likes buying a package.) 2. Be careful with the upsells and additional products; I don t know everything about your business, that s why I have you... so educate me, don t beat me up. 3. Follow up after the sale to make sure YOUR sale met my needs. In fact, if you treat me like you would treat your MOM, you will earn my loyalty and repeat business. Male, Boomer, US 15 Searls, D. The Intention Economy (pp ). 15

17 TERMS AND CONDITIONS OF RESPECT They long for increased clarity and control; in particular, the ability to easily opt in or out of data collection and marketing communications, and the knowledge of exactly what data is being captured, how it will be used, and with whom it will be shared. Customized levels of consent would help to build brand trust and drive engagement by allowing each customer to share only what s comfortable. I think websites should present you with a clear terms of use page before you can use them. In this, it should allow you to choose options for your personal use, and store them in either a cookie, or on your account. This way, people may consent to targeted advertising, or they may choose not to participate. If the system was clear and put forth, it would make me feel more secure in my online experience, and I would likely not block ads; but rather, I would use them. Male, Millennial, US Consumers are not shy about sharing information when they are ready to buy. Indeed, they are eager to be known, and wish that brands were as creative about using their data to improve the shopping experience as they are in using it to sell more. It s eye-opening to see the depth and breadth of information customers would volunteer to vendors if they had the means giving more nuance and texture than could ever be gleaned from behavioral or demographic data. I want to purchase cute shorts (can't be too short, but also shouldn't look like grandma shorts ) for a good price. I want to be contacted by my favorite brands, including The Limited, Old Navy and Gap, through , because it lets me look at the s when I have a spare minute from my phone, or when I have a bit more time to browse, on my home computer. So that you can do the best possible job, here s what I want you to know about me: I would like to see the shorts on models who are a more normal height (5'4" - 5'6"), so that I have a real idea of how the shorts will look on me. Female, Age Unknown, US 16

18 TERMS AND CONDITIONS OF RESPECT I want to purchase yarn for a new sweater I am designing. I want to be contacted by one of your designers and sales specialists, through at first, because I would like photos of the available yarns until I have narrowed my selection; at that point I will call you about specific questions I have. So that you can do the best possible job, here s what I want you to know about me: I am allergic to some natural animal fibers if they have been dyed specific colors don't try to sell me colors I don't ask about. Under no circumstances should you try to guess what I want. Female, Gen X, US It s also important to note that back off doesn t mean go away forever. There is still a crucial role for marketing and advertising, but consumers would like it to be more directly available at their moment of need, rather than a constant presence. Brands have a clear opportunity to play the role of educator and build new relationships by providing curated information and engaging content instead of yet another sales pitch. Walk a mile We need a marketer s golden rule. Ask yourself: Would it bother me? Infuse your marketing and advertising practices with transparency, honesty, and means for consumer control. For example: Trader Joe s has mastered the art of customer-centricity. They, quite literally, walk in their customers shoes TJs execs routinely tag along with shoppers on the floor, to better understand the in-store experience and what customers value. 16 THE INTENTION ECONOMY As mentioned earlier, only 14% of consumers across demographics would choose to be marketed to the way they are now based on their past search and shopping behavior. Even among Millennials (the most enthusiastic group) only 17% favor this method. The preferred way to shop browsing a list of promotions and discounts is search-based and consumer-directed: it s more precise and relevant than behavioral targeting, but still not based on real-time, individual consumer demand. 16 Searls, D. (2012).The Intention Economy (pp ). 17

19 TERMS AND CONDITIONS OF RESPECT However, there is rising interest in a process like the one Doc Searls describes in The Intention Economy, whereby consumers become liberated actors and vendors respond to individuals needs, at their moment of need. 17 He explains that customers would no longer have to fly from silo to silo, like bees from flower to flower, collecting deal info (and unavoidable hype) like so much pollen. The Intention Economy is about buyers finding sellers, not sellers finding (or capturing ) buyers. 18 When I am looking to buy anything online, I get very focused.... Advertising dollars need to be spent on making the retailer s website more user-friendly and responsive. When I am focused on buying, I will contact you! Male, US In the intention economy, each consumer maintains their own VRM (vendor relationship management) system, a counterpoint to companies CRM systems that finally allows them to bring their demands to the table, by managing and sharing their personal data selectively and in real time. The purpose of VRM is to give individuals the ability to assert their own terms of service, manage relationships with organizations, and express demand on the open market through tools that make them both independent of vendors and better able to engage with them. 19 In our study, nearly a quarter of consumers said they would prefer to shop by announcing their intentions to vendors. Males, those under 50, and those outside of the US are most likely to be intrigued by this concept, available now in only a few industries (e.g., Lendingtree in banking, Priceline and Hotwire in travel). These consumers feel that brands should focus their marketing efforts on times of active shopping, 20 rather than infiltrating their online lives hoping to distract them with advertising. How would you rather buy? 30% 25% 20% 15% 10% 5% Annouce your intention to selected retailers and invite them to bid for your business MILLENNIAL GEN X BOOMER SILENT 68+ FEMALE MALE US NON-US 17 Searls, D. (2012). The Intention Economy (Prologue). 18 Ibid 19 Ibid 20 For more on active and passive shopping, see: Austin, M., Powers, T., Advincula, D., Graiko, S., Snyder, J.(2012). Digital and Social Media in the Purchase Decision Process. The Journal of Advertising Research. Available from 18

20 TERMS AND CONDITIONS OF RESPECT It s the difference between a mobile ad and a QR code. The difference between a company using their app to track your location and ping you near their store and you pressing a button to signal to businesses in the area that you re ready for lunch, or in the market for a new purse, or looking for a great hot stone massage. The difference between attention and intention. Reframe the sales funnel. Traditional sales and marketing models consider non-customers to be prospects or targets to be acquired. Instead, your strategies should be focused on building relationship and making yourself available at moments of need; in other words, make it easier for customers to target you. The sale will follow naturally, and this orientation is much more likely to cultivate long-term customers who are truly loyal to your brand. See how two different members, in their future contract, perfectly captured the current state of frustration and shared an Intention Economy-like vision for the future. Note the massively unmet need for information ( they make you jump through hoops ) and the significant role for marketing, now more focused on providing timely, relevant content than on pushing sales: My husband and I are interested in purchasing an RV in the upcoming year. I would love to be able to fill out a form that goes out to nationwide RV dealers, both new and used, and have them respond with options that fit these criteria. I'm also looking for horseback riding programs for my daughter. I'd love for the different programs to me letting me know what their requirements are, how much they cost, and what the kids learn. It would be great to do it by or some other way accessible both by smartphone and computer, as I can peruse it at my leisure and access the information when I need to. DEFINITELY NO PHONE CALLS and no texts either. And no barriers to information. Part of what we hate about sales is that they make you jump through hoops to get information about what they have to offer. They want more of your personal information, or for you to go through a credit check, or just to sit and talk with them for a long time about yourself and your needs, supposedly so that they can better address your needs, as though you aren't smart enough to figure that out. Female, Gen X, US 19

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