Consumers Fear for Their Online Privacy

A report from Forrester Research confirms what most people already believed to be true: privacy fears are holding back Web shopping.

According to the Technographics® Report from Forrester, concern over the privacy of information passed over the Internet is affecting the amount of time and money people spend online. Only a small percentage of Web users with serious concerns shop online, while consumers with moderate concerns spend 21 percent less than their more at ease counterparts.

“Nearly 90 percent of online consumers want the right to control how their personal information is used after it is collected,” said Christopher M. Kelley, associate analyst in Forrester’s Technographics Data & Analysis. “This desire for online anonymity cuts across consumers from a broad range of demographic backgrounds, including gender, income, and age. Surprisingly, these concerns change very little as consumers spend more time online.”

Forrester’s research found that online shoppers are most concerned about how much personal information they give and who sees it. Web users worry that the information they share online will produce unsolicited email or telemarketing calls. As a result, 80 percent of Internet users support a policy that prohibits the sale of data to third parties, and half of online customers are willing to contact the government to regulate online privacy.

Consumers prefer to give out personal information when they receive specific benefits for sharing it, including the chance to win free goods through sweepstakes and promotions. In addition, 30 percent of online shoppers will give out some data to their favorite retailers even when they are not buying. Though less important, access to members-only sections of Web sites get approximately 20 percent of Web users to share private information.

Forrester has created a four-tier privacy model to help companies develop richer customer relationships while delivering a more rewarding experience to Internet users. At Level 1, visitors choose anonymity, deliberately forgoing the additional benefits offered by personalization and premium content. Retailers build trust by promising not to collect data or use cookies.

With the addition of convenient, targeted content or additional site access, consumers enter Level 2, a one-way communication relationship whereby merchants promise not to initiate contact with the shopper or disseminate personal information to third parties.

In Level 3, consumers agree to two-way communication with retailers. At this stage, visitors share more personally identifying information in exchange for proactive notifications of specials from the retailer. With 83 percent of online households wanting email from preferred retailers, companies are able to unlock the power of email marketing to drive site traffic and repeat purchases.

Level 4 is considered a trusting relationship, whereby shoppers seek advice and active solicitations from their merchants, including deals offered by established partners.

“A coherent privacy model gives retailers the ability to monitor how their consumers feel about them. The first step is to advertise privacy policies boldly and in plain English,” Kelley said. “With 11 million households shopping online for the first time in 2000, it will become critical for merchants to build customer trust and loyalty in order to remain competitive in a proliferating marketplace.”

For its Technographics report, Forrester surveyed nearly 100,000 American and Canadian members of NPD’s consumer mail panel and 10,000 online households from the NPD study on privacy issues and e-commerce attitudes and behavior.

While privacy issues may be stopping some Internet users from shopping online, Internet users with more experience recognize data collection, and have embraced it in some respects. The “e-Customer 2000 Internet Consumer Survey” from Primary Knowledge and Greenfield Online found that online consumers are more receptive to basic data collection requests at Web sites, and are increasingly willing to share personal information with e-marketers.

Net Users Would Provide
Personal Information For:
Incentive programs 76%
Members-only
discounts
73%
Giveaways or
sweepstakes
62%
Coupons 54%
Source: Primary Knowledge/Greenfield Online

The study found that today’s online consumer understands the “quid-pro-quo” of providing registration data, and 76 percent of those consumers believed Web sites track information about them they do not voluntarily provide, such as click stream and visitation. Only 8 percent of respondents say this has an impact on their use of the Internet or their choice of sites. Two-thirds report being accurate and truthful when asked for personal information.

Consumers are not the unwilling victims of targeting and Internet technology, the Greenfield study also found. Sixty-four percent of online consumers choose to comparison shop at multiple sites, evaluating factors such as price, instead of returning to a small group of sites. When asked whether the government should step in to regulate data collection, 59 percent said no. Rather, similar to the Forrester study, the Greenfield study found that new online consumers would prefer to have control over their personal data, such as the ability to remove their name from a Web site customer list (80 percent), or the ability to view a secure page containing the exact information the site has collected about them (77 percent).

One reason customers share personal information about themselves with Web sites is to allow for personalization. According to the Greenfield study, 71 percent of the respondents have personalized a Web site, and two-thirds of that group believe personalization is important or very important. Consumers are more likely to supply data such as birthday, household composition, or phone numbers when the data is used to create personalized content and pages.

More than three-quarters (76 percent) of the respondents would provide additional personal information in exchange for participation in incentive programs such as miles or points; 73 percent proved responsive to members-only discounts; 62 percent believed the data was worth inclusion in giveaways or sweepstakes; and 54 percent would deliver information in exchange for coupons.

“Online shoppers are increasingly responsive to interactive marketing,” said Rudy Nadillo, CEO of Greenfield Online. “Overall it means superior targeting — and opportunities — for e-business worldwide.”

Another indication of growing acceptance of interactivity and data collection is the consumers’ first choice method for contacting customer support: 42 percent prefer to contact the Internet retailer by email, closely followed by 36 percent who prefer a toll-free phone number.

The e-Customer survey profiled approximately 2,000 consumers with at least 18 months Internet usage, as well as regular online purchasing patterns, an average of 7.5 buys in the last six months.

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