Who are you sharing your customer data with?

I see new products and services from large retailers and large online companies all the time. Sometimes these services can be extremely helpful to the ecommerce website owners. Services such as product reviews, facebook or social media widgets, customer feedback, additional payment methods, etc., can help small websites look more authoritative and help build visitor trust. It’s trust that gets your customers to purchase from you, just as much as the prices you sell your products at, right?

The internet and the companies that we routinely see operating on it have become such common names that most of us hardly stop to consider how these companies that we trust make money, and what they do with the information that we give them. When we’re talking about information on a personal level, the potential loses are fairly low if some company decides to use or share our data with others. Facebook, Google, MySpace, Linkedin, Twitter, Amazon, Walmart, Target, and just about any other major player on the internet uses your personal information in some manner. Most of the time, the worst thing that could come from misuse of your information is increased spam email or targeted advertising directed to get you to buy some product. When we look at the same information privacy scenario from a business perspective, the repercussions of sharing your information can be severe.

Small business owners need to be vigilant in who they share their data with!

I’ve personally talked to more than handful of website owners who watched Amazon become their biggest competitor after they launched a successful Amazon.com business. I’ve heard of elaborate buying schemes with lawyers, accountants, and capital firms, even involving publicly traded companies, just to get a crack at some successful company’s marketing and analytical data. It’s sometimes hard to see the value in data but it’s there. Facebook was valued at nearly $50B ($50,000,000,000) just a few months ago, when as a company they make less than $1B per year in revenue. Just think about that…

Unlike personal information that sellers would use to sell you products, your business’s information can be used to compete against you. It can be used to out compete you. It can be used to steal your customer and lead sources. It can be used to figure out how your SEO campaign gets links. How your PR company promotes your business. Your data may only be giving you a snapshot of how you got your customers. It will give another company a playbook on how to steal your customers.

Now, just because you currently trust one of these companies and use a service that collects data about the way your website works and the way your customers work, doesn’t mean that you are going to have a MyProducts.SomeOtherCompany.com website popping up in a week. What it means is that before you add some global script to your site like Google analytics, or Shopping.com tracking, or an affiliate tracking script, or join a product comparison site, or anything else, you should be damn sure you understand what that company is going to do with your data.

I’ve been running ecommerce websites for nearly 10 years, and something that I can tell you with 100% certainty is that the knowledge, the experience, the information and data you gain in creating a successful online business, is as important as the business itself. It’s one thing to trust a company with your personal information. It’s entirely different to trust them with your business information, especially if there’s any chance of them competing against you.

Small businesses need to be careful with whom they trust with their customer information!

A few weeks ago, there was a major breach at a massive email marketing company. Citigroup, JPMorgan Chase, U.S. Bank, Barclays Bank, Best Buy, Hilton WorldWide, Marriott International, Disney Destinations and The College Board were among the clients that lost their customer information in the data breach. While there wasn’t any loss of credit card or other highly sensitive information, there was a loss of names and email addresses. This creates huge avenues for phishing fraud, and is a huge blow to the integrity of these corporations.

The difference between these giants and the rest of us, is that they can easily withstand a data breach. They have the money and PR budget to survive and in many cases these companies are so big that their customers don’t even have a reasonable alternative to switch to. Unfortunately this is rarely the case for small businesses. A good percentage of businesses that suffer a data breach from themselves or due to a 3rd party go out of business, some are forced to sell, all suffer nearly-irreparable damages. The bottom line is that most businesses cannot afford a major data loss neither in names and email addresses nor in a more severe case like credit card or banking information.

In cases like Epsilon it’s hard to fault the companies whom had lost data. If they trusted Epsilon with their information, there’s a good chance that Epsilon was pretty secure. Business owners should nonetheless be diligent in any partner’s security practices and certifications. This would include PCI and other industry security standards and would include making sure the company you are giving data to has a solid and logical data security policy. It also should be clear if they share the data you provide with 3rd parties, for security sake and for the above reason.

Data, while intangible, may be the most important asset of your company without you even knowing it. Take a step back and make sure that you trust whomever you share it with, and make sure that you aren’t providing a new competitor with an avenue to compete or to put you out of business.

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  1. Shilo Jones 4 May, 2011

    Jamie, this is a great topic for a blog post. As the owner of SweetMetrics, a company that partners with online retailers to crunch and munch their transaction data for profitable insights, this post definitely got my attention.

    First and foremost, respect your customers and respect their data. In pursuit of building a growing profitable business don’t ever do anything to compromise your trust with your customers for the almighty dollar. Alright, been said many times, enough captain obvious for all of you.

    In the last 10 years in the world of e-commerce the thing that I am most amazed by is the proliferation of new tools and the ease of implementation of really powerful technology that can help your business. By and large, none of these companies selling these tools will ever likely be a threat to someone’s business. I think the biggest threat is that you as the operator have just another tool to manage that you aren’t getting the full value out of.

    With that said, knowing WHO you are doing business with and WHAT data you are sharing with them is important when choosing to partner with someone. It’s super popular these days for a company to have a list of their core values, I know we do. The question is, how well is the company living those values and do you believe them? Dig around and find out. It’s the people that run these companies at the end of the day that you are entrusting with your data. Do their salespeople have a habit of “inadvertently” talking about their customer’s sensitive information? If so, is that someone you can trust?

    In the end, in the acquisition-hungry tech world the company you are doing business with today isn’t likely the company you’ll be doing business with a couple of years from now, but the people have a way of sticking around in the industry so partner up with the people that genuinely want to work with you and that you genuinely want to work with.

    Again, your biggest risk is the opportunity cost on your time so choose a partners wisely.

  2. Michele Rempel 10 May, 2011

    Great and timely information. As a small business owner, I need to be mindful, as you say, about thinking of my data as a huge asset.

  3. Investigatrix 13 May, 2011

    We have common interests. I have spent some time studying your site and found it most interesting.

  4. Very interesting to see how some companies use data to thier advantage.

    Thanks for the insight to data usage. Gabz

  5. Ecommerce Development 18 May, 2011

    Large and big companies have very less or no impact but small business suffers a lot, As customers starts searching for there alternatives.

  6. Came back for another read! Magic site… keep the posts coming. regards, Gabz

  7. Kiran 23 May, 2011

    Customer data security is critical in ecommerce business.

  8. Robert 24 May, 2011

    Interesting and useful post, thanks.

  9. Reliable Web Hosting 9 Jun, 2011

    I don’t think you should share your customer’s informations or data if you really care and want to be a respectable company . Alot of people offer big money for clients databases , why should they make money and why you , as a customer should be spammed or phoned by unknown people ? it’s not fair

  10. Mark 30 Jun, 2011

    Great article. I completely agree to the statement that data is a company’s most valuable asset, and it certainly should be guarded as such.

  11. More useful info are gathered through this article. All factors should consider for Online companies..

  12. Bob Urbanowski 24 Aug, 2011

    50 BILLION?? I tried thinking about it, but my brain threatened to implode. And then I wouldn’t be able to go on facebook anymore…

  13. RJ 11 Nov, 2011

    It doesnt surprise me how businesses use customer data, but the risks inherent in losing customer data, I cant say I’d like to store the kind of info Facebook has.

  14. Duran 2 Dec, 2011

    well as a smart friend told me once… if you get it for free you are the product 🙂

  15. eDriver 20 Dec, 2011

    The bigest email companies were pioneers making this practice. we must be careful with hosting companies too.

  16. Kathy Daunt 19 Aug, 2013

    Awesome post which depicts the importance of the security of customer data. Any online shopping cart should secure the points of trustworthy so that customers might share their credit card information else the store would loose the integrity

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