Sharing Customer Data: How You Can Minimize the Risk and Maximize the Reward

Using and sharing data has both risks and rewards, so be careful not to be too intrusive with your customers’ personal information, writes Thomas Noyes, Founder and CEO of Commerce Signals.

Companies have been collecting, using, and sharing marketing data with partners for years. It can increase sales and help your customers have a better buying experience. But the fact that “everybody’s doing it” won’t help you much if your company is the next one in the news for all the wrong reasons.

Many companies share a full copy of their customer relationship management (CRM) data with agencies, demand-side platforms, and advertising partners such as Google and Facebook. Reasons range from targeting to measurement. Brands often feel like they have no choice given the state of the digital marketing ecosystem. They must “go where their customers are.” That may be true, but sharing your internal data expands your unique customer relationship to include another party.

The problem with sharing this way is that partners don’t always monitor and control the data like you do. While you might use data for customers’ benefit, your partners might use it for their own. The misuse of data also exposes an organization to additional risks, especially as data breaches become more prevalentOpens a new window .

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But there is a different route. A more secure way is to share marketing insights instead of the full CRM file. Look at your data, and tell your partner only what it needs to know. This enables your partner to act while you maintain full control over the data.

Marketing data can be a double-edged sword. Although it can help you reach your customers, it can be misused and have the opposite effect. To avoid the downside of data collection and use, here are some things to keep in mind:

1. You’re responsible for the misuse of data that originated with you. 

It’s a common misconception that deidentifying data before you share it protects you from liability in the event of misuse. Unfortunately, individual-level data can often be reidentifiedOpens a new window , and you can be on the hook for it. For example, when more than 3 million peopleOpens a new window  took a personality quiz on Facebook, the supposedly anonymous results were actually linked to status updates for about 150,000 users. With this additional information, it would have been easy for someone to determine who the results belonged to, even though the information had been uncoupled from a specific username.

Before sharing data, ask yourself how your business would fare if that data ended up in the hands of your competitors. If the answer is “poorly,” you might want to avoid sharing it at all. And if you’re sharing data with a partner, you should have a plan in place for when that data-sharing agreement ends. When the deal between Facebook and Cambridge Analytica ended, for example, the social platform had no way of knowing whether the data had actually been deleted, which ended up hurting the social network later on.

It’s OK to say no to sharing. My company has done it many times. We provide marketing measurement services to retailers using payment transaction data in a privacy-centric way. A couple years ago, a hedge fund contacted me asking for access to this data. It hoped to get intel on retailer sales performance before that information was made publicly available. Of course, I said no. As a rule, we require any data use to be approved in writing by both the retailer and the payment data company.

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What Is Customer Data? Definition, Types, Collection, Validation and AnalysisOpens a new window

2. Creepy overpersonalization alienates consumers. 

Consumers are becoming more accustomed to ad targeting based on their individual online behavior, but in some circumstances, this targeting can cross the line. For example, even though Netflix insists it only determines homepage imagery based on user behavior, the company was recently accused of changing the thumbnails of movies and shows based on the race of the viewer.

When you’re personalizing ads, think of your customers as your friends. Would you recommend a certain product to them based on what you know about them? If so, you’re probably making an appropriate recommendation. But would you recommend a product to them based on something you saw while snooping through their internet search history? Probably not. While our devices probably aren’t listening to us (mostly because they don’t need to), a hyperspecific level of personalization can still be alienating.

3. What you collect can come back to haunt you. 

It’s easy for marketers to assume that data security is someone else’s job. After all, marketers just collect data; IT protects it, right? Wrong. Unfortunately, even major corporations with massive cybersecurity budgets fall victim to hackers. If you’re a small business, your defenses are probably fairly weak, and the more personally identifiable information (PII) you collect, the more likely it is that the information will leak out.

To guide your data collection, consider what consumer permissions you have. Even if you have technical permission to gather data, ask yourself whether it’s reasonable to assume your customers are actually aware they gave you this permission. If it’s buried deep within the terms of use they agreed to without reading, the decision won’t earn you much love from customers (even though you might be clear from a legal standpoint). Keep in mind that the definition of PII has continued to expand to include gender, ZIP code, and other such data that can be used to identify an individual.

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Using and sharing data has both risks and rewards. Be careful not to be too intrusive with your customers’ personal information. And instead of sharing a full copy of data with partners, just share relevant insights. You’ll give your partners the information they need to succeed while insulating your own organization from the kinds of risks that can turn you into the next data breach headline.