Dealing with Online Customers Is a Balancing Act

PALM DESERT, CALIF. (06/21/2000) - Companies selling to consumers via the Internet may be relying too much on data and too little on knowledge as they try to get closer to online consumers and still protect people's right to privacy. And it's up to information technology managers to set the balance straight.

That was one of the key conclusions of a panel that discussed the perils of "Walking the E-Customer Tightrope" Tuesday at the Computerworld Premier 100 IT Leaders conference here.

In the rush to accumulate information about customers, companies often mistake data for knowledge, said Manoj Tripathi, CIO at Jamba Juice Co., a San Francisco-based chain of fruit-smoothie stores. "It used to be basic - talk to customers and find out what they're saying," Tripathi said. "Now, (companies) try to mine the data and cut and slice and dice and try to figure out what customers want."

The result, he said, is that companies rely too much on the data they gather, which may tell them how customers are behaving but not what they really want.

"Pressing the flesh is going away," Tripathi said. "And we are getting careless."

Steve F. Schuckenbrock, senior vice president and CIO at PepsiCo Inc. in Purchase, New York, noted that different customers have different needs, and IT's challenge is to support all the ways customers want to relate to a company.

Robert Rubin, former CIO at Elf Atochem North America Inc. in Philadelphia and now head of consulting firm Valley Management Consultants LLC in Huntingdon Valley, Pennsylvania, agreed with Schuckenbrock. "We talk like we control a lot, but we don't really control the customer relationship," Rubin said. "We participate in it, but the customer ultimately drives."

Tripathi said successful electronic-customer service depends on winning the trust of consumers. But many projects billed as "getting close to the customer" - such as giving them online access to information about the status of their orders - really are cost-reduction exercises for companies. In such cases, "there will definitely be disconnects," Tripathi said. "Are you meeting customer needs or cutting costs?"

In a quick poll of the audience attending the panel session, half agreed with Tripathi's contention that online customer service efforts are often cost-cutting in disguise.

Tripathi also noted that the current controversies about Internet privacy have arisen because some companies have broken trust with their online customers by selling private information to other businesses.

Schuckenbrock agreed. What's ultimately going to matter in electronic business, he said, "is service, quality, that you kept your word, were sincere, provided value to (customers) and not just to yourself - that you use information (about people) to change them for the better as opposed to just changing you for the better."

Established companies have an advantage in e-commerce because they already enjoy the trust that newer businesses have to build, Schuckenbrock said. The older companies should do all they can to leverage that advantage while it lasts, he said.

Despite the admonitions from the panelists, 75 percent of the audience said in another quick poll that companies must collect even more information than they do now to provide the increasing levels of service customers demand. But Tripathi demurred. "Do you really think we need more information to do a better job of customer service?" he asked in disbelief. "Or should we just do better customer service?"

John Plummer, IT division manager at Corning Inc. in Corning, New York, suggested that a better question might be whether companies need to make better use of the information they already have. The audience agreed, with 87 percent saying in a third quick poll that their companies don't use existing customer information effectively.

Several speakers raised the specter of increased government regulation of Internet privacy. While Tripathi allowed that some guidelines might be useful, panel members said they oppose government intervention. "Business is aware of the danger of alienating the customer, and too much regulation is a bad thing," Plummer said.

Rubin raised the possibility that the government might require companies to aggregate customer information from various divisions in order to show consumers what their records contain. If so, he said, it would inadvertently create an irresistible target for malicious hackers. "The government may talk about that being helpful to the consumer, but I call that a road map," he said.

"It's a hacker's dream."

Rubin added that the simplest way to approach privacy issues is to ask consumers what they're willing to share with your company and then to tell them what you'll do in return to protect the information. "Just let people know what you're collecting and don't do anything you wouldn't want published in a newspaper," he advised.

One attendee questioned whether privacy issues are really within the purview of IT, suggesting that setting such policies are CEO-level decisions. But the panel unanimously agreed that IT does indeed have a responsibility to help shape privacy policies. "Nobody knows better than you," said Schuckenbrock.

"This is one of those areas where you earn your way to the table based on the quality of the advice you give."

"Everyone has data, (but IT leaders) have knowledge and understanding," Tripathi said. "The minimum the IT person has to do is make sure the knowledge and understanding is put in front of people and (that) you are a part of the decision-making process."

Another attendee questioned whether people are overly concerned about privacy issues, pointing out that throughout history most people have known a lot about their neighbor's business and personal affairs. But back then, "we knew who knew," Rubin said. "Today, consumers don't know who knows what about them, and this is causing the discomfort."

In the end, the consensus seemed to be that in time online customers will trade privacy for convenience and, left alone, the market will regulate itself.

"Things that don't provide value to consumers will be rejected because consumers vote with their feet," Schuckenbrock said.

"In the world of cyberspace, there are no true secrets," Plummer said. "That's just the nature of the information age."

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