Business Intelligence And Privacy

In December of last year, when I wrote about data capture as part of the business intelligence data life cycle, I gave the example of a store clerk asking you for your postal code when you make a purchase. This week, the Supreme Court of the US state of California has ruled that this practice violates that state's consumer privacy law. One's Zip code is "personal privacy information" according to the Court. Unless knowing the postal code is absolutely necessary to complete the transaction (in order to know where to ship goods, for example) it is off limits to the seller.

California has a huge economic footprint; if it were a separate country it would currently have the eighth largest economy in the world, according to The Economist magazine. Thus the ramifications of this ruling are huge as well. In addition, California has long been considered a bellwether for other US states going back to the days of John Naisbitt's Megatrends books. As I pointed out in my December article, retailers use the postal code data they gather (among other things) to target mail advertising. If retailers no longer have the option of asking buyers for location data, is there an alternative?

Look for accelerated growth in loyalty programs. Retailers are increasingly instituting such programs, where customers who are willing to voluntarily give up some personal information can receive preferred treatment and/or discount pricing. This is particularly advantageous to companies with warehouse club membership business models, such as Costco.

As loyalty programs grow in number, watch for the rise of loyalty networks. After all, one can only have so many loyalty cards on one's key chain or in one's wallet. It doesn't take much imagination to see the value added by consolidating all of those loyalty cards on a single network card, or even in a smartphone app that can interface to each retailer. Travel and tourism businesses have been moving in this direction for some time. Websites are springing up to work the retail angle, including RewardPal and One Loyalty Network.