MIT Sloan Executive Education Blog

Three ways to use privacy policies to build stronger customer relationships

In the quest for progress, companies continue to explore how technology can interpret consumer data to improve our quality of life. For example, Google continues to push boundaries with its latest invention, Google Glass, designed to display information in a smartphone-like hands-free format and interact with the Internet via natural language voice commands (see video below).

But with this new breakthrough comes increased concerns. Recently, eight members of the House Privacy Caucus sent a letter to Google co-founder and CEO Larry Page concerning the privacy aspects of Google Glass—and for good reason. The new Google Glass technology exposes anyone in the path of a Google Glass wearer to unauthorized photography and monitoring. Unfortunately, the lines are becoming increasingly blurred between using big data to improve our lives and intruding upon our privacy.

With this heightened concern among consumers over privacy, businesses must be aware of how their online privacy controls are affecting their relationships with their customers—and how privacy policies can serve to strengthen trust.

Three Ways to Use Privacy Policies to Build Customer Relationships

Catherine Tucker, Associate Professor of Marketing at MIT Sloan and one of the world’s leading experts on digital privacy, has three recommendations for leveraging privacy policies as a means to deepen the customer relationship.

  1. Develop User Centric Privacy Controls: If the privacy policy information is not clear and transparent, customers grow suspicious of how companies are using their data.  Growing mistrust destroys the customer relationship. Avoid this pitfall by developing user-centric privacy controls that allow consumers to set limits on what aspects of their data the company can access. Studies show that as customers feel more in control of their data, they grow more responsive to targeted advertising campaigns that may in part rely on that data.
  2. Avoid Multiple Intrusions: Tucker’s research shows that intrusions backfire more in combination than separately, for example: combining pop-up ads and web browsing targeted ads within the same web browsing session. On their own, customers may tolerate either one, but the combination is too distracting and the customer feels manipulated, damaging the relationship. Choose your interruptions strategically and make sure they do not distract your customer beyond a second or two.
  3. Separate Employees from Customer Data: Manage data in a way that minimizes how much contact employees have with customer data. Customers react better to a highly personalized intrusion when they believe a computer—rather than a human being—is responsible. Pharmacies, for example, often notify patients via an automated system when their prescriptions are ready. Studies have shown that customers respond better when they can tell this call is automated—a robo-call—as opposed to when the pharmacist calls and uses their name personally (reminding the customer that they know what prescriptions they are taking).

Catherine Tucker is the Mark Hyman Jr. Career Development Professor and Associate Professor of Marketing at MIT Sloan. She teaches in the Entrepreneurship Development Program, and the Global Executive Academy, as well as the Strategic Marketing for the Technical Executive and Systematic Innovation of Products, Processes, and Services programs.