Customer privacy's not as big as trust -- trust me

As the recent Facebook snafus have shown, keeping customer information private is not a given. What's key, columnist Paul Greenberg says, is mutual value -- and trust.

Who doesn't love Facebook? Raise your hand. Oh, c'mon. I can't actually see you. I'm being metaphorical.

But the fact that nearly 400 million people use Facebook for communications and interactions with peers and now more frequently with companies that interest them is no metaphor. The number keeps growing and the interest increasing.

But you already know that, don't you? What you also know, but don't think about much, is an inconvenient fact -- Facebook isn't just a social network aka hangout for you and your buds, it's a business that needs to satisfy shareholders of one kind or another. That's as irrefutable a fact as the existence of capitalism. While there is no doubt that Facebook is a feature rich, constantly improving social location that lets you interact with friends -- both those who are close and those nine-times removed from your life -- it also has an unquenchable need to make money and commercialize what it does. It's not there for your personal satisfaction only -- though Facebook's ability to achieve this will clearly affect how it collects capital.

 

In order for Facebook to be a successful capitalist institution, it needs a few things. First, a revenue model -- not the subject of this column. It also needs assets -- and a model on how to handle them. That is the subject of this column because it goes to the heart of how customers and a company need to interact in the 21st century -- and probably into the 22nd century. To translate, that means the trust between a company and a customer.

The asset is you

The most valuable asset that Facebook has is your personal profile. If you think about it, it not only captures "classic" customer data like name, address, email and phone number, but rich histories of interactions -- in fact, every single activity that you carry out, not only via your internal Facebook page, but via Facebook Connect, which ties to external applications and other locations. This could mean more or less static data like marital status, personal interests and political beliefs. Or it could mean more dynamic activities, like postings on other people's walls, tweets that are connected to my Facebook account, games I'm playing, pages I'm visiting within Facebook, or my own pithy comments and hot photos.

This is a staggering amount of extraordinarily important data -- to businesses and other institutions. For example, this gives a political campaign enough information to do micro-targeting, which uses lifestyle choices to predict election behavior. Businesses live for this kind of personalized knowledge.

Facebook, needless to say, is acutely aware of this. All of your personal information is its core asset.

Unfortunately, Facebook's historic approach to commercializing these assets is a consummate example of how not to deal with customers.

After its Beacon fiasco in 2007, when Facebook advertised using users' personal information without their permission (Beacon died a quiet, justified death in late 2009), it once again did something stupid enough to violate its members trust in the use of their information. It added this clause to the terms of service in reference to users' profiles and activities on Facebook:

"[we take an]…irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute…."

This was a total shock, and what it did was violate the expectation of trust that members had in Facebook. The members expected an equitable use of their information in exchange for their membership. Instead, Facebook decided that it could use your data for its own purposes whether you retained your membership with them or not.

But, before you go off on this, let me make a few things clear to members/customers of Facebook.

As badly as Facebook handled these things, you shouldn't get riled up because of some wildly exaggerated expectation of privacy. This is a social network and a business. You have to pay a price for membership in Facebook. It is providing you with products, services, experiences, tools, activities. In return, it expects, according to the terms of service (TOS), to be allowed to use your data reasonably for some commercial purpose. That is a fair exchange of value for value.

The key word is "reasonable." You have a reduced expectation of privacy because of your participation, which is visible to all you've permitted and to those whose apps you're using and to Facebook Connect, etc. -- legally. Now, what is it about the word "social" you're not getting?

Even though you have the ability to control how your information is presented to your network and beyond via the Facebook privacy controls, your participation in a community of any kind will reduce your actual privacy, like it or not. "Reasonable use" of that information for commercial purposes implies trust in the administrator of the "reasonableness." That has been Facebook's "gotcha!" for a long time, as we see with Beacon and the 2009 TOS snafu.

Trust me

Facebook's TOS was the most egregious example of how to screw up customer management. Think about it. Even though it never said "own," you could easily interpret the terms to mean "own" or take it at its face as a "perpetual license to use" regardless of your own participation. This violates the fundamental principle of CRM and social CRM when it comes to customers. That would be "value given, and in return, value received." The outcry was huge and public. Yet Facebook still has to satisfy shareholders. If it understood that the shareholders were not just companies like Microsoft but -- as Peppers and Rogers made clear, generally, at least, in Return on Customer -- were customers too, they might have had a different perspective. Trust is the fundamental value that drives good customer-to-company interactions and relationships. Privacy is important, but trust trumps it. If I trust you to use my personal information wisely and appropriately, privacy never becomes an issue, and I stay a loyal customer.

That's what you want, isn't it?

Trust me, it is.

 

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