How to Collect Customer Data Without Being Creepy
It's amazing how two companies--competitors in a number of ways--can make some similar moves and yet get a completely different reaction in the marketplace. Today's example, from Nikki Baird at market analyst firm Retail Systems Research, looks at Amazon and Google. Although Baird writes for an audience of retailers, any type of company could learn a lot, given the drive to use customer data.
What Amazon Is Doing With Data
Baird looks at recent developments at both companies. Amazon announced drone deliveries and coverage of its new patent on "anticipatory shipping," or sending goods to a geographic area "without completely specifying the delivery address at the time of shipment," and then, while they're in transit, giving the final address. As Baird notes, the idea of "forward positioning of inventory," or sending products to where you think you'll need them, isn't new.
Doing so with goods in transit and then specifying the delivery addresses is an interesting twist. You could send an assortment of products you suspect a group of people will need in a given area and then appropriately direct the products at the last minute as people place their orders, looking like you're a mind reader. (Many outlets have assumed that products would show up at customers without them having ordered, which doesn't seem to be the point from what I see.)
But back to Baird. Her point was that shipping products on the basis of what a company thinks customers will want could be considered creepy, except that there seems to have been relatively little bad reaction.
What Google Is Doing With Data
Now look at Google, which bought Nest, maker of "smart home" products such as thermostats that can program themselves according to your usage to save money. Nest also makes a smoke and carbon monoxide alarm that tells you exactly what is wrong and where. Suddenly, there were a fair number of articles about people being uneasy with Google knowing that much more information about them.
Which company do you think has more practical information about its consumers, Google or Amazon? It's a tough one to answer--they both have large amounts of data that might be expected to make people uncomfortable. Yet Amazon, rightly or wrongly, largely avoids the security and privacy dogs that have followed Google for years.
Winning the Perception War
The difference between these two companies, as Baird pointed out, is in how they appear to use the information. Amazon wants to sell you things, certainly, but employs what it knows of you in ways to make life easier. You get recommendations for books or music or products, or maybe the office supplies you get from the company will start showing up amazingly fast after you place your next order. Amazon seems to keep the data inside and use it in a relationship with customers.
Google, on the other hand, gives things away and wants to make consumer data available, either directly or indirectly, to marketers from other companies that will pay to have advertisements delivered on the basis of that data. As Baird writes:
But for retailers watching the battle of these behemoths, and who's winning the perception war and who is not--it's worth learning something from the fact that even though these two companies are basically doing the exact same thing for the exact same profit motivations, for consumers, one is OK. And the other is not.
So, what data do you collect from consumers, and why do you do it? Are you trying to improve your direct relationship with them? Or are you like a promiscuous (in more ways than one) lover, picking up secrets from pillow talk in one bed and passing them on in another? If the latter, you may be popular for a while, until your practices come to light. Then don't be surprised if a competitor has managed to snag your prewarmed place.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.