Target can tell when its shoppers are pregnant. Facebook conducts social experiments on us to see if we are emotionally vulnerable.

How?

Data intelligence! All this is possible because we share detailed information about ourselves with companies in almost every aspect of our life.

• When we browse on the internet, we leave behind a trail of our online activity that companies utilize to improve our browsing experiences and offer recommendations based on our interests.
• When we shop, we give information about our consumption patterns through loyalty cards as well as credit and debit cards. Sudden shifts in these patterns are not regular but when they occur, retailers can deduce changes in our life such as marriage, child expectancy and so on.
• Our phones and tablets can keep track of our movements with geolocation and can maintain a historical list of all the places that you have been to as the IPhone 4 famously did.

Companies collect this data so that they can boost their revenues or increase customer loyalty and thereby customer lifetime value by giving customers what they need. Most customers hardly think twice about giving away this data as this allows them to avail discounts or makes their life easier, especially online. However this potentially win-win situation sometimes crosses certain boundaries.

Target got embroiled in a controversy by mailing coupons for expectant mothers to a high school girl even before the father of the girl knew about it. And when he received these coupons, he was naturally angered. Although this prediction based on their internal algorithms was indeed correct, the promotion was insensitive and similar marketing by Target led to other expectant parents finding this creepy. Since then they have addressed this issue by mixing such coupons with other completely irrelevant coupons so that the user does not feel like that they are being actively targeted.

Recently, Facebook created a huge uproar by manipulating nearly 700,000 users’ news feeds by hiding certain emotional words to see if and how these users would be emotionally affected. While it is a given that most websites do perform experiments on users, this became an issue because people were subjected to an emotionally harmful experiment without informed consent.

Learning

Organizations can learn a lot about their customers from the data available and make important decisions. While collecting customer data and analyzing them well is more often than not the difference between success and failure, this can sometimes creep out customers and give them the idea that they are constantly being monitored. Also, the predictions may not always be correct and sometimes these mistakes have real consequences.

Companies should build trust by clearly indicating the data that they would collect and for what purposes. They must establish processes to ensure that their employees are sensitive and sensible in handling and using this information. While the solution was as simple as mixing up coupons for Target, it varies from case to case and common sense should be applied in choosing the right approach.

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Harsha Hegde currently works at MResult where he focuses on the company’s goal of maximizing business results for clients. He got his MBA from Carnegie Mellon University, USA and prior to that worked as a software developer for 6 years at companies including Oracle. He is passionate about the different ways in which technology can have a positive impact on our lives.

(Image Credit: Richard Matthews)