Is respecting (and protecting) customer privacy a part of the brand?

The short answer to this question is yes—absolutely. In our information age, a company’s brand acts as a vault of security for customer privacy. It’s a first line of customer trust. Strong brands protect customer privacy. Weak brands leak. Or worse, they’re information sieves, and can’t be trusted.

Protecting privacy builds customer trust

Yes, customer privacy is a brand issue, and a critical one. Simply stated, safeguarding customer privacy is a key part of a company’s strategy for building brand trust in the digital era. Customer privacy and brand trust are deeply intertwined. As products, brand programs and customers increasingly interconnect, interact and share information, customer privacy issues will increasingly determine which brands emerge with customers on their side.

Protecting privacy confers strategic advantage

The digital age has raised the bar on brands, and protecting customer privacy is becoming a new form of brand value, with strategic implications. Brand platforms can gain strategic advantage as they become strong privacy platforms. This is especially true as brands grow through customer initiative and innovation. Brands that actively team with customers on a platform of trust can develop more traction than brands that treat customers as a demographic resource to attract advertisers.

Facebook’s privacy faceplant

To witness how important privacy has become to the world of brands, we need look no further than Facebook’s recent faceplant over its widely criticized Beacon advertising program. Facebook’s experience illustrates how poorly conceived and/or poorly implemented privacy policies can threaten to undermine a brand.

The Beacon program tracks what Facebook users do on partner websites and sends that data back to Facebook. There, it is combined with user data (anonymously) and made available to advertisers for better ad targeting. It is also passed along to one’s Facebook friends as shared data, letting them know what you’ve been doing on those other sites.

Privacy issues raise questions about the brand

Facebook pitched Beacon to users as an easy way to share activities and information with friends. But as users realized that their private purchases and activities at other sites could now be revealed on Facebook, and also fed to advertisers, resistance set in. Was Facebook a brand of user enablement and expression, or a brand of information harvesting? And whose side was Facebook on? It wasn’t entirely clear how much control users had over their own data. And to make matters worse, opting out of the Beacon process was not easy.

Facebook clarifies its brand intent—to a point

After several weeks of mounting criticism (see here, here and here) Facebook’s CEO issued a public apology, and began steps to make Beacon elective for Facebook users through a more direct opt in process. This was a major step in clarifying what the Facebook brand stands for, although some critics argue that Facebook still needs to do more.

Ed Felten has a balanced overview of Facebook’s privacy issues and implementation, from which he derives operational lessons for all companies. To Ed’s list, we might add the following brand considerations:

To “monetize” customers is to erode the brand

A major brand challenge facing Facebook and similar social sites is how to balance their revenue needs with their strategies for social growth. Such sites are under pressure from investors to build profitable revenue streams, typically through advertising. The sites feel compelled to capture as much user information as possible, in order to make themselves attractive vehicles for highly targeted ads. But if the sites “monetize” their users by exploiting them as information resources, they risk driving their brands in a commodity direction—because they’re essentially treating their users as (information) commodities.

A social site that “monetizes” its customers often does so at the expense of the brand. To monetize means to make money the first principle of customer relations, whereas for brands the first principle is customer growth. (Brand-wise, monetizing is the opposite of value creation and innovation.)

The monetizing culture extracts value

A business model based on monetizing customers creates a monetizing culture that eventually sucks the life out of customers, and the brand. It extracts value (from customers) instead of adding value. It ends up trying to transform customers into revenue, when it should focus on creating the customers that will transform old markets into new markets. That’s the process I call: grow the customer, grow the brand, grow the business.

Make customer privacy a means of differentiation

Nic Brisbourne makes some very good points here and here on the current, fluid nature of customer privacy at social sites. There’s ample evidence that privacy issues are not “top-of-mind” for many users. But they might become top-of-mind if a social site differentiated itself via strong privacy protections, adding a privacy value that other sites couldn’t match. (Are patentable privacy solutions feasible? I dunno.) We do know that MP3 players were not top-of-mind in the general public until the iPod demonstrated what new value they could deliver.

The trick, then, is for the brand to elevate privacy from its current rabbit hole of “privacy policies” legalese buried in the fine print to a headline factor of engagement that attracts and mobilizes customers.

Social sites can lead with privacy

Why should social sites view “customer privacy” as a problem (potential revenue killer) in the first place? Why not treat it as an opportunity to create new value? Let lesser sites corrupt their brand vision by progressively monetizing customers until there are no customers left, and no new value on the horizon.

The search portal Ask has recently taken a value-added step in customer privacy by announcing AskEraser, an opt-in tool that deletes one’s search queries and data from servers. This is a small but good first step. The more important steps are yet to come.

Photo: mmahaffie — Flickr

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