The basic agreement underlying basic consumer facing loyalty programs is that consumers are willing to trade a certain amount of their privacy in return for a discount on goods, services or other rewards.
Moving past that basic agreement, more sophisticated consumer facing organizations provide targeted offers or suggestions to consumers based on their selections or buying habits with the consumer’s agreement.
Now consider the internet generation and web 2.0, where few question the fact that every online and mobile service online is ‘free’. All comers are completely willing to provide their intimate details to populate the key fields of the system – a marketers dream. In this environment, the consumer’s data is the price of admission for a ‘free’ service.
Last.fm keeps track of all their members’ music and listening habits in incredible detail. In return, it is possible to listen to new music online with links to purchase music from iTunes, discover concerts and share music online or even right on their mobile device (video is coming, too). The data captured is an irreplacable resource that can be sold to music artists and labels (or movie studios). Detailed listening data can be used to target consumers of specific musical taste, providing spot on targeting, reducing promotional costs, and driving revenues.
While this could still be considered a fair trade, assuming data is kept anonymized and used for legitimate and agreed upon commercial purposes, it does bring up troubling privacy issues. In 2009 most people are comfortable sharing their information online in social media experiments like Facebook, last.fm, Bookarmy, Evernote and countless other very useful applications. There are certainly other applications for these consumers’ data that have not been considered by the consumers as they provide it, and insidious or not, it signals change in our society and our consumer interactions.
Privacy issues or no, the first consumer facing organizations that discover a seamless way to allow customers to move as themselves from point of service to online to the web, remembering preferences of product and business method, purchases, while making useful recommendations and generally acting as our trusted advisor will certainly profit. There are many attempts being made today.