Posts Tagged ‘privacy’

Charities are Spying on You – But That’s Not Necessarily a Bad Thing!

May 26, 2010

The June 2010 issue of SmartMoney magazine contained an interesting article, “Are Charities Spying On You?,” which discussed the different ways nonprofit organizations are trying to find out information – available from public sources – on current and prospective donors. As one who has worked in the field of data mining and predictive analytics, I found the article interesting in large part because of how well the nonprofit sector has made use of these very techniques in designing their campaigns, solicitations, and programming.

At first glance, it can seem frightening what charities can learn about you. For instance, the article mentions how some charities’ prospect-research departments look at LinkedIn profiles, survey your salary history, and even use satellite images to get information on the home in which you live. And there is a wealth of information out there about us: Zillow.com gives info about the value of our homes and those around it; if you write articles or letters to the editor of your newspaper, online versions can often be found on Google; buy or sell any real estate? That too gets published in the online version of the newspaper; and online bridal and baby shower registries, graduation and wedding announcements, and any other news are fair game. And your shopping history! If you buy online or through a catalog, your name ends up on mailing lists that charities buy. Face it, there’s a lot of information about us that is widely and publicly available.

But is this so terrible? For the most part, I don’t think so. Surely, it’s bad if that information is being used against you. But think of the ways this data mining proves beneficial:

Customization

Let’s assume that you and I are both donors to the Republican National Committee. That suggests we’re both politically active and politically conservative. But are we engaged with the RNC in the same way? Most likely not. You might have donated to the RNC because you’re a wealthy individual who values low taxes and opposes a national health care plan; I might have donated because I am a social conservative who wants prayer in public schools, favors school choice, and opposes abortion. By seeking out information on us, the RNC can tailor its communications in a manner that speaks to each of us individually, sending you information about how it’s fighting proposed tax hikes in various states, and sending me information about school choice initiatives. In this way, the RNC maintains its relevance to each of us.

In addition, it’s very likely, in this example, that you’re donating a lot more money to the RNC than I am. Hence, that would likely lead the RNC to offer you special perks, such as free passes for you and a guest to meet various candidates or attend special luncheons or events. For me, I might at best be given an autographed photo of the event – in exchange for a donation of course – or an invite to the same events, but with a donation of a lot of money requested. I might get information about when the next Tea Party rally in my area will be held. Or even a brief newsletter. One can argue that the treatment you’re getting vs. that of what I’m getting is unfair. However, think of it like this: at a casino, people who gamble regularly and heavily are given all sorts of complimentary perks: drinks, food, a host to attend to their needs, and even special reduced rate stays. That’s because these gamblers are making so much money for the casino, that the cost of these “comps” is small in comparison. In addition, the casino wants to make it more fun for these gamblers to lose money, so that they’ll keep on playing. In short, the special treatment you’re getting is something you’re paying for, if indirectly. I’m getting less because I’m giving less; you’re getting more because you’re giving more. And the charity will give you more to keep you giving more!

Reduced Waste

Before direct marketing got so sophisticated, mass marketing was the only tactic. If you had a product to sell, you sent the same solicitation to thousands, if not millions of people and hoped for a 1-2% response rate. Most people simply threw your solicitation in the garbage when it came in the mail. Many recipients didn’t have a need for the item you were selling or the appeal for which you were soliciting, and disregarded your piece. As a result, lots of paper was wasted, and the phrase “junk mail” came into existence. In addition, if you used follow-up methods, such as phone calls after the mailing, that got costly trying to qualify the leads, just because of the labor involved.

Now, with targeted marketing and list rental, sales, and sharing, charities can build predictive models that estimate each current and prospective donor’s likelihood of responding to a promotion. As a result, the charity doesn’t need to send out quite a large mailing; it can mail solely to those with the best chance of responding, reducing the amount of paper, print, and postage involved, not to mention reduced labor costs involved, both in the production of the piece and in the staffing of the outbound call center. In short, the charity’s data mining is helping the environment, reducing overhead, and increasing the top and bottom lines.

Better Programming

By knowing more about you, the charity can know what makes you “tick,” so that it can come up with programs that fit your needs. Even if you’re not a large donor, if you and other donors feel strongly about certain issues, or value certain programs, the charity can develop programs that are suitable to its members at large. And while many larger donors may be granted special privileges, their large donations can help fund the programs of those who donate less. Everybody wins.

Not bad at all

The data mining tactics charities use aren’t bad. People don’t want to be bombarded with solicitations for which they see no value in it for themselves. Data mining makes it very possible to give you an offer that is relevant to your situation, is cost-effective and resource-efficient, and design programs from which you’re likely to benefit. It is important to note, that while major donors get several great perks, charities must not ignore those whose donations are smaller, for two reasons: first, they have the potential to become major donors, and second, because of their smaller donations, it’s very likely their frequency of giving is greater. This can mean a great stream of gifts to the charity over time. Hence, charities should do things that show these donors they’re appreciated – and, quite often, this too is often accomplished by data mining.

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Americans More Trusting of Online Social Networks than Brits and Canadians, Survey Finds

May 7, 2010

MarketingProfs’ article, Social Networks Influential, Not Always Trusted, provides the highlights of a recent survey by Vision Critical, which found that consumers are still quite wary of social networking sites in terms of information trustworthiness and privacy. The survey, which was conducted of consumers in the U.S., Canada, and the U.K., found these concerns consistent among the three countries. Of all respondents, 80% found family and to be either “Completely Trustworthy” or “Very Trustworthy” sources of information; 70% also trusted their friends. Just 12% trusted online social networks such as Facebook, LinkedIn, and Twitter.

Yet, what I found interesting was the breakdown by country, which was presented in tables within the article, but not really covered. The omitted narrative was very telling. Nearly two-thirds of Americans are concerned about their privacy on online social networks, and 55% worry about those sites selling their personal information to advertisers. British respondents were slightly less concerned than Americans, but Canadians were much more worried – 77% and 69%, respectively.

Americans, however, were more inclined than Canadians and Brits to view social networks as good places for brands and products to advertise, to learn about brands and products, and as a source where they can become more informed purchase decisions. Americans were also more inclined to have higher trust in brand placement on social networks, especially if the placement was in context of discussions and/or recommendations by family, friends, and contacts, or if the placement involved coupons. These numbers were still in the minority, but they are sizeable minorities. Generally, Americans were more willing to give up some privacy if doing so meant getting promotions that were relevant to them.

I think that tells us a couple of things:

  1. Although American consumers are concerned about privacy and trustworthy, they still consult the sites for information, so there is still value in your company’s having an online social network.
  2. Companies that focus on increasing the perceived credibility of their social networks – encouraging fans to pass their sites and info along to friends and family, and providing timely, objective, and thorough information – both online and offline will have a better chance of monetizing their social media marketing efforts. While only 18% of Americans bought a product through a social network, increasing credibility of the network can bring that percentage higher.
  3. Just because Americans are less concerned about privacy and trustworthy than Canadian and British respondents, that doesn’t mean that they are not concerned. Social networks need to increase their credibility and demonstrate that they are still ensuring privacy at the same time.
  4. There’s a real market opportunity to develop social network trustworthiness in Canada and the U.K. Even greater efforts in increasing credibility and privacy are needed in those two countries than in the U.S., but those efforts can pay great dividends. The trick here is finding the real issue behind the wariness and seeing how best to go about alleviating those consumers’ core pain points.
  5. Americans are more open to consulting several different sources of information when making purchase decisions or other judgments, and online social networks are a complementary piece of that decision making process. Increased credibility on these sites can increase that piece’s relative importance in the decision process.