Loyalty Programs and Privacy
Sharing private information isn’t necessarily a bad thing and for some professions it is necessary. If your doctor has any chance of healing you, he must understand certain aspects of your lifestyle and medical history. An attorney must also rely on your private information, as it relates to the matter at hand, in order to offer the best advice or represent you properly. That said, keeping such information confidential and private is part of the professional standards and ethics for doctors and lawyers. Attorney-Client privilege or Doctor-Patient confidentiality can be enforced by the professional bodies, and in some jurisdictions, under the law. Nevertheless, if you do not trust a doctor or attorney to keep your secrets, you’re not going to retain them.
What about other types of information that is implicitly shared while doing business with an organisation. Take a supermarket for example. Do you remember the days of Gold Bond Stamps from Supercentre Supermarkets? This was a loyalty program where customers received a quantity of ‘stamps’ based on their total spend each time they shopped. The stamps were then stuck in a book, which when filled, could be redeemed for appliances, food, gifts, and a bunch of other stuff. The more you spent and the more often you shopped at Supercentre, the faster you would fill enough Gold Bond books to get some really valuable items. The thing to note is that there were no real issues of privacy. The technology was not available, at least not cheaply, where every transaction of all customers could be tracked. It was all anonymous when receiving and redeeming Gold Bond stamps.
Today the situation is very different. Supermarket point of sale systems capture every detail of a customer’s transaction. Storing what you buy and when. But Artificial Intelligence (AI) allows for a deep analysis to find patterns, and when implemented correctly, make recommendations. This is not necessarily a bad thing and can save consumers time in deciphering what products they should try, while saving the supermarkets money on useless inventory purchases or scattered advertising spend. However, supermarkets have a duty to be responsible in how they store, analyse, and use this data.
A few years ago, I built a system for a supermarket client that would recommend to shoppers products they should try. It used an AI method called Market Basket Analysis (MBA) and over 18 million transactional data point. MBA looks for patterns into what products or brands tend to be purchased together, on what days, the time of day, and by what kind of customer. In the first phase of the project a clear pattern showed that chocolates and female sanitary products were often purchased together. Market Basket Analysis does not show why an associate occurs, only that it does. When presenting this finding, among others, to the management team, the females in the room declared that it made sense. But here was the ethical quandary. Should we, through the loyalty program, offer digital coupons for chocolates and sweets to women when their period was due, or at least close to their scheduled purchase of sanitary products? We opted not to do this. In fact, it led me to develop a unique way to anonymise transactional data and special offers in order to maintain the privacy of loyalty members.
The reality is that we live in a world where technology allows us to store and find patterns in massive amounts of personal data. Legislation may, to some degree, regulate this. But I believe that it is incumbent upon organisations who are capturing any sort of personal data to proactively develop a privacy charter based on standards of ethics, for the storage and use of this data. This charter must be clearly communicated internally, as well as to customers, and articulate how the data will never be used. The time is coming where people will only do business with those who responsibly manage personal data, and this includes something as seemingly mundane as their shopping basket. As in all relationships, trust will be the key.
Find out more about using point of sale transactions to increase revenue and loyalty, with a best-in-class privacy framework, here
