Business Intelligence Needs Must Consider Consumer Privacy Concerns

The prospect of a consumer backlash against business intelligence (BI) activities would strike fear into the hearts of many Canadian companies. Recent Ipsos Reid research suggests that while many BI activities pass muster with consumers, data mining is viewed in a negative light. In addition, our research indicates that consumers want more guarantees that the information they provide to companies for their BI purposes is treated carefully and securely. Companies may want to review their BI and privacy protocols to ensure that they are respecting consumers' feelings on these matters and contributing to an environment in which business intelligence practices are accepted.

The Purpose and Scope of the Research

Business intelligence (BI) - the gathering, storing, and analysis of data and information on a company's performance - helps companies to improve operations, make better strategic decisions, and improve the quality of products and services they offer to consumers. But BI often depends upon consumers agreeing to provide feedback as well as personal data to companies. Ipsos Reid recently conducted an online study of nearly 600 adult residents of BC and Alberta on behalf of the Marketing Research and Intelligence Association (MRIA) to find out how supportive consumers are of BI activities, particularly when they are asked to participate, and how they feel about sharing their personal information to benefit companies.

The research shows that BC and Albertan consumers are knowledgeable and supportive of companies that conduct certain BI or related activities, and personally participate in a wide range of these activities. But it also shows that not all is rosy on the BI front: surveyed consumers were very suspicious about data mining, and they had significant concerns about their personal privacy and the potential misuse of their information.

Business Intelligence Is Quite Widely Understood

Surprisingly high proportions of respondents indicated they are either "very" or "somewhat" knowledgeable about business intelligence/knowledge management (44%), environmental scanning/secondary research (40%), and competitive intelligence (44%). The vast majority is knowledgeable about market research activities (84%), and a small majority is knowledgeable of companies' data mining activities (52%). Comparisons to a similar survey Ipsos Reid did last year shows that consumers are almost as knowledgeable about BI activities as business intelligence leaders at organizations who conduct these activities.

Marketing Research Receives the Most Support

For the most part, respondents indicated they are also very supportive of businesses that conduct these types of activities. Marketing research receives the strongest support (84% strongly or somewhat support organizations that do this), followed by environmental scanning (69%), and business intelligence overall (63%). A smaller group supports competitive intelligence activities (45%). The most skepticism is reserved for data mining activities: nearly half are either "somewhat" (27%) or "strongly" (21%) opposed to data mining, and only 32% support companies that conduct this activity.

Issues of Trust Loom Large

Respondents assess a number of factors when it comes to participating in business information activities, and have reservations about some of the information they are asked for. They indicated they will give out information only to companies they trust (88%), and are very concerned about personal identity theft (72%). They also believe that companies are asking for too much personal information (63%) and unnecessary information (64%). A slight majority believes that companies misuse the information that they collect (55%), and many believe companies don't make good use of the information they do collect (45%).

Those who are reluctant participants in BI activities cited concerns about getting more junk mail and spam, invasion of personal privacy, the selling of personal information, identity theft, and uncertainty over what companies are using their information for. Concerns about security and privacy of personal information have remained stubbornly high since we began tracking consumer perceptions in this area 10 years ago.

Most Respondents Have Facilitated BI Activities

The vast majority of respondents have at some time participated in BI activities including responding to market research (98%), giving out credit card numbers online (87%), giving personal information for warranties (85%), willingly providing email addresses to companies (80%), joining customer clubs to receive rewards/price discounts (79%), joining mailing lists (74%), signing up for frequent purchase cards (74%), providing personal information to get free online content (53%), or paying a fee for customer club cards (52%). They agree there are a wide range of benefits associated with doing these types of things, like getting rewards for frequent shopping, getting price discounts, getting free information, having the ability to voice their opinions to companies, saving time, building personal relationships with the companies they shop with, and finally, allowing companies to tailor their offering to match buying patterns of the consumer.

A Call for Diligence and Transparency

Canadian consumers are highly sophisticated, and they exist within a context of capitalism where only the fittest companies survive. Globalization - and Canadian companies' need to compete on this international scale - has affected all of us in some way, and so it makes sense that the consumers we surveyed would understand the need for businesses to collect information from them and to conduct various business intelligence activities.

Their understanding, however, does not mitigate their concerns about how their personal information is treated. Consumers are requesting a quid pro quo - I will help you make your business more informed so it can be more successful and deliver better products and services, but in return, you should treat my personal information with respect and provide it the security it deserves. They have been asking for this exchange for some time, and our research suggests they don't feel their request has yet been adequately honored.

So far, consumers' nervousness about the protection and use of their personal information seems not to have stopped them from participating in business intelligence activities. However, businesses must do a better job in this realm to prevent real damage from being done to consumer trust. If businesses are up front with consumers about why they are collecting personal information and clear about the benefits they will receive, consumer participation rates will remain high. If companies are secretive about what they are collecting information for, or don't make good use of the information - or worse, sell that information to a third party - then consumers will shut the door on future participation, and potentially paint all companies with the same brush, thus hurting the entire industry.

In the meantime, there is a great opportunity for companies who do place a premium on treating their customers' information with care. They should communicate the extra vigilance they are enforcing, as consumers value this and may view it as a reason to go with one company over another. More than ever, consumers' trust is hard-won, valuable, and incredibly important for businesses aiming to succeed in the long term.