Online grab for customer data sparks privacy warning for SMEs

Online retailers need to avoid overwhelming consumers with questions, experts say, after the Privacy Commissioner said local companies demand too much information from their customers.

According to Privacy Commissioner Timothy Pilgrim, Australian companies ask their customers for too much personal information in order to complete simple online transactions.

Speaking at Privacy Awareness Week, Pilgrim said people are becoming increasingly suspicious of the motives of firms that ask for too many details, and have begun to enter false details.

Pilgrim said this poses a problem for companies that rely on accurate and “usable” information.

“People are now becoming reluctant to give organisations information and are… finding ways to give incorrect information,” Pilgrim said.

“If we just look at social media, for example, I question how much of the information on there is actually reliable when you look at things such as dates of birth.”

“[Consumers are] looking at doing that increasingly with other organisations.”

Michael Fox, co-founder of online retailer Shoes of Prey, which lets consumers design their own shoes, says retail start-ups should try to limit the amount of compulsory information required.

“That makes sense from a conversion perspective. Asking for too much information could mean the customer puts in fake information or gives up in making a purchase,” Fox says.

Fox admits collecting customers’ personal information is necessary, but says it needs to be done in a way that engages them.

“It helps our business in providing the right products to our consumers if we can find out more information about them,” he says.

“We conduct customer surveys to try to find out more information about who’s buying from us. For example, if we know a customer is looking for wedding shoes, we can provide a better service [if we know that].”

However, Fox stresses there needs to be a balance between catering to consumers’ preferences – based on the information they provide – and respecting their privacy.

“I think it helps to explain what you’re doing the survey for, [but] you don’t want to write an essay about the logic behind it,” he says.

“Say, ‘We want to improve the product, we’re committed to that, and we’d love to hear your thoughts’.”

But retail guru Debra Templar, of The Templar Group, says a constant stream of questions online is not only “jolly irritating” for consumers, but a copout.

“Why aren’t you physically talking to your customers rather than using your online presence? Personal interactions seem to have disappeared,” Templar says.

“I think we’ve got it wrong – we’re using technology as a way to avoid that personal interaction with customers.”

This article first appeared on StartUpSmart.