Trade Talk: Consumers open up about their privacy concerns

Our mail boxes are stuffed dally with catalogs and credit card come-ons. Our phones ring with calls from long-distance providers and carpet cleaners. Why won’t these people leave us alone? Do they think we’re interested in all this junk? Unfortunately, yes. And we’ve told them we are by sending back those credit card applications, signing up for that new calling plan, or ordering a pair of chinos from that snazzy catalog.

In other words, direct marketing works. But consumers are becoming more and more fed up with the deluge of sales pitches they receive. And they’re growing stingier with the amount of data they’ll share with marketers. For the most part, that information is used for legitimate purposes, and it has allowed people to receive pitches that better suit their interests, but the public is understandably wary about where all this is leading.

In their Marketing Science Institute working paper Marketers’ Information Practices and Privacy Concerns: How Willing Are Consumers to Provide Personal Information for Shopping Benefits? authors Joseph Phelps, Glen Nowak and Elizabeth Ferrell use findings from a mail survey to explore consumer privacy concerns and their implications for marketers.

The authors sought to identify 1) the kind of personal information people are most and least willing to give to direct marketers and other retailers; 2) consumers’ feelings regarding the benefits of providing personal data to these merchants; 3) specific factors that affect consumers’ willingness to provide personal information; 4) the trade-offs consumers are most and least willing to make in exchange for providing personal information.

The mail survey was a six-part booklet which was sent to samples from two databases, one a list of known and recent catalog shoppers and the other a general database of residential addresses. Part one of the survey assessed general catalog purchasing habits; part two gauged perceptions of catalog and advertising mail volume; part three looked at specific kinds of personal information and how willing respondents were to provide that information at the time of purchase; part four focused on their opinions of how business use of consumer information should be controlled; part five used conjoint analysis to determine how factors such as control over information use, type of information requested, future mail volume, and shopping benefits affected their purchase intentions; part six collected demogaphic information from the respondents and also asked about at-home/from-home shopping purchases.

Despite the daunting 11-page survey (which made liberal use of white space to make the form seem less packed), the researchers earned a 55.6 percent completion rate (a $2 incentive was included with the survey).

Findings

Not unexpectedly, consumers were most willing to give marketers information on marital status, education, hobbies, and recent shopping purchases but gew nervous about divulging their phone number, Social Security number, income, and kinds of credit cards owned.

Despite all the bawling about being flooded with junk mail, 57 percent said they enjoy receiving catalogs and 40 percent said the catalogs and mailed advertising are helpful. Further, 40 percent said they would like to get more mail and catalogs about products and services of interest to them. Of course, nearly 90 percent said they would like to receive less mail about products and services they aren’t interested in.

Consumers don’t feel like direct marketers have their best interest in mind: 73.6 percent disagreed with the statement "Most catalog firms and other companies that sell products and services through the mail are concerned about consumers’ privacy." And 62.4 percent feel that marketers know too much about consumers. But nearly half ageed that the more a company knows about a consumer the more useful their catalogs and mailings become.

Nearly 80 percent said it’s not OK for a company to share its mailing list with other companies or organizations. And 85.6 percent said there should be limits on how much information businesses can collect about consumers.

Three-quarters of those responding to the survey wished they had more information about how to remove themselves from mailing lists and 84 percent felt that if they had more control over how companies used information about them they would be subject to less junk mail and fewer phone solicitations.

Implications

One of the most important findings is that the respondents who expressed the most concern about marketers’ use of their personal information are frequent catalog and/or direct marketing buyers. So in addition to being a good idea from a PR standpoint, marketers might find it in their own best interest to hew to the five steps the authors provide to alleviate shoppers’ privacy concerns:

Step 1: Make your information requests make sense. Shoppers said it’s OK for a bank or insurance firm to ask for financial information but someone trying to sell them a sweater doesn’t need detailed earnings data or a Social Security number.

Step 2: Give consumers some control over how their information is used. The conjoint portion of the study showed that doing so "has a relatively dramatic impact on consumers’ purchase intentions." Respondents indicated they were more accepting of advertising offers they had a hand in initiating.

Steps 3 & 4: Send less junk mail and make the offerings you do send more relevant. A difficult task, to be sure, because the best way to target market is by gathering more information from shoppers!

Step 5: Self-regulate your use of personal information and make sure consumers know about your efforts. "Rather than simply calling attention to ’opt out’ options," the authors conclude, "the results obtained here suggest such efforts should offer - and demonstrate - information control features that provide consumers with tangible value and utility, such as reductions in unwanted advertising mail."

Marketers’ Information Practices and Privacy Concerns: How Willing Are Consumers to Provide Personal Information for Shopping Benefits? (Report No. 99-112) is available from the Marketing Science Institute, Cambridge, Mass. Phone 617-491-2060. E-mail pubs@msi.org. Web www.msi.org.