Profiling consumer profiling

“Consumer profiling” is a concept long since taken for granted by the users and gurus of marketing. Yet in that familiar way 21st century culture so often does, the complexity of a once simply-defined concept has obfuscated its simpler meaning, say, something like “The process of building profiles of consumers based on their purchases. Consumer profiles contain both demographic data and product preferences.”

Today’s marketing world has developed entire schools of thought on the meaning of consumer profiling, the data that should be accentuated within consumer profiling programs, and the boundaries of personal privacy while profiling.

There are two kinds of people…

…those who classify in two kinds and those that don’t, goes the new/old witticism. Under this premise, Jim Novo, author of Drilling Down: Turning Customer Data Into Profits With A Spreadsheet” and major espouser of best practices in CRM, would be in the former group.

Be sure to read the preview four pages at Amazon.com; there’s a great Platonic dialogue-like bit wherein Novo manages to realize that:

“No wonder nobody knows how to sell more to current customers while reducing costs. All customers are customers for life – unless they tell you they aren’t anymore. Sometimes it seems as if today’s marketing people have no sense of reality. They are thinking every person or business that ever transacted with them is still a customer!”

In consumer profiling, Novo sees profiles as being either essentially demographic-based or behavior-based. Novo appears to a huge advocate of the second mode, describing behavior-based consumer profiling as “involving what the customer is actually doing.”

Novo emphatically believes that “Customer behavior is a much stronger predictor of your future relationship with a customer than demographic information ever will be,” and it’s apparently not an obvious point. After all, without behavioral profiling, how can you accurate predict sales on erratically-buying customers or rainy-weather buyers?

Behavioral profiling may also be useful in determining customer awareness, particularly in the e-commerce sphere. You can’t make sales from that snazzy new website redesign if one-time customers don’t hear about it or aren’t compelled to return.

Privacy: not exactly mainstream

Professor Roger Clarke once wrote (and has seen been oft-quoted) that “Customer profiling appears to be regarded by marketers as a mainstream technique, [but] there are enormous dangers to consumers, that the public is increasingly aware of and concerned about those dangers, and that marketers who fail to appreciate the dangers will suffer.”

This is an increasingly salient point in these days of security-consciousness and awareness (perhaps overawareness) of threats to personal data: The most eager of eager consumers may be absolutely thrilled to be pitched at, but few would like their financial numbers in unknown databases.

Clarke further divides consumer profiling into “abstract” and “personal” varieties, with the latter representing the potentially paranoia inducing: “This is the accumulation, acquisition and cross-referencing of data about individuals, sometimes combined with geo-demographic data; followed by its use for various micromarketing purposes.”

Further, “personal profiling,” as Clarke sees it, can be subdivided into “applicant qualification” and “consumer marketing.” In both types, however, profilers are “flying in the teeth of the gale of public concern about privacy-invasive practices, and snowballing efforts by advocates and policy-makers to impose regulation on private sector use of personal data.”

Of course, the federal government addressed such regulations most notably in 1997 with the “Framework for Global Electronic Commerce, the Clinton Administration,” a document which “supports private sector efforts to implement meaningful, consumer-friendly, self-regulatory regimes to protect privacy.”

However, this appears to be a classic Clintonesque bit of regulation as the broad working includes the traditional “liberal” demands on “self-regulation,” and government regulations in this area of e-commerce haven’t gone far beyond.

Figure on tighter controls in the future. And remember, too, that in the post-Patriot Act world, the feds may well already have a pretty clear profile on you…