It should be no surprise that businesses who lose the trust of their customers are unlikely to increase their Customer Life Time Value. This damage to trust can happen in many ways.
It may be due a failure to carry out your core service well or a failure to respond adequately to a customer concern.
For web businesses, data is becoming a big potential cause of loss of trust. In the last year, there have been a number of high profile examples of Government departments and companies losing customer data.
How companies use the data is equally important. In my case, I collect prospect data when people sign up to my marketing newsletter. However, I make it clear when people sign up that I will never sell or share their email address and they can opt out at any time.
USA Today recently reported that a woman in Texas had 'sued Blockbuster for alleging that they had transmitted her personal information to Facebook.com through the website's Beacon marketing program.' Her claim is that Facebook's Beacon got information on her movie buying and rental habits from Blockbuster by tracking her usage without her permission. Blockbuster deny the allegation. Read More
Facebook advertise Beacon as a programme to 'enable your customers to share their actions they take on your website with their Facebook friends.' For some people, viewing friends or colleagues purchase behaviour is considered helpful. For some years, Amazon have made recommendations such as "Other people who bought x also bought y.' However, they do this anonymously (as I don't know who the individuals are) but I have always found this service very useful and made numerous purchases based on the recommendations.
In time, we will find out the US court findings for the Blockbuster case. Blockbuster may have asked for (and received) her permission to share her data to others. The woman from Texas may have given her approval or not, but I assume that given she is taking the case to court that she doesn't believe that she gave her permission.
Permission is the key issue. Some people might not want their friends to know every book they have read or every film they have bought. I wouldn't feel comfortable about sharing every purchase I made to Facebook friends. I would be happy to share a selection or to share recommendations and by coincidence, last week I added an Amazon feature on this blog showing books that I have read recently. Some people might be interested and perhaps go on to read the books.
The key points for me to avoid losing your customer's trust are:-
- think long and hard before sharing user / customer data
- be sure that your business will really benefit, or is it a potential 'own goal'
- check the legal implications carefully
- even if it is legal, make sure it doesn't compromise your customer Terms & Conditions or just as importantly, their expectations
- make sure they know that the data is being shared in advance and as explicitly as possible
If you lose the trust of your customer, it will be hard if not impossible to get it back. It's more important to increase customer lifetime value, than 'make a quick buck'.
Peter Hawtin is an internet marketing specialist with Brand New Way, a UK web marketing agency which helps companies to attract and retain valuable customers online.
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