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Manufacturing customer data should be handled with care, experts say

Manufacturers can learn a lot from personal customer data, but handling this sensitive information correctly is essential.

Manufacturers can stand to learn a lot from their customers -- the age brackets, annual incomes, where they live, even what they like. A wealth of manufacturing customer data is available to help companies better understand the people who buy their products. Knowing how to use and, more importantly, how to respect personal consumer data can mean the difference between creating loyal customers and creating PR nightmares, experts say.

There are two major challenges when it comes to examining customer data, says Kimberly Knickle, practice director at IDC Manufacturing Insights in Framingham, Mass.: collecting it and knowing what to do with it "What I have found is that, even pre-Internet, people tend to overestimate what should be private and underestimate what is publicly available," she said. "We -- manufacturers and consumers -- are all in a learning process with how we look at the data we want without crossing into identity theft or other issues. We need to be sensitive to the information used. We don't know the boundaries yet from an ethical or legal perspective."

Manufacturing customer data collection options

Manufacturers typically collect consumer data in three ways: from retailers, from social networking sites and from the consumers themselves, said Cindy Jutras, principal of Windham, N.H.-based ERP consultancy Mint Jutras. "Most manufacturers sell through retailers, who are likely to collect data," she said. "There could be some concerns if the retailer shares this consumer data with manufacturers without customer consent." Consent is obtained when customers register their products -- either on a mail-in card or online -- to secure warranties or extended support, Jutras explained.

This method rarely presents ethical concerns, as the customer provides the data, thereby giving them complete control over what information the manufacturer will have access to. The downside is that companies must rely entirely on the consumers to provide any information at all, Jutras said. "The old card that you send in, how often do you actually fill it out? Many electronic devices ask customers to register the device, but manufacturers don't get much data from those," she said. Beyond the usual name, address, email, and perhaps telephone number, a manufacturer might be able to ask additional questions during product registration, such as income, sex and interests, but those more personal questions have to be optional," Jutras added.

For manufacturers that are savvy with new technology, social media can provide valuable consumer data, according to Laurie McCabe, partner at SMB Group, a market research company based in Northborough, Mass. "I think right now we're at a point where manufacturers who are using social media are the outliers," she said. "The tech manufacturers are further ahead. Dell, for example, has a social media listening center. You can see on a map where people are talking about Dell and whether what they're saying is positive or negative."

"Anybody who's in B2B or B2C should be keeping a pulse on social media," McCabe said. Being tapped into social media can help manufacturers notice widespread customer dissatisfaction and respond quickly to remedy it, she added.

Some consumers might cry foul at the idea of businesses tapping into their social media chatter, but Jutras points out that it's rarely a matter of targeting individual customers. "I don't necessarily think that using social media for that is really breaking down privacy, because it's not being used on an individual basis, but to see trends and aggravate buying patterns," she said.

Getting the most out of consumer data

All the manufacturing customer data in the world is useless if companies don't know how to examine it, experts agree. "Manufacturers have got to get a handle on [this data],” McCabe said. She recommends feeding the data into a customer relationship management (CRM) system to analyze it and, in an ideal situation, sell customers products they don't even know they need yet.

"If I bought a new Dell and didn't like the screen size and said so online, would Dell look at that post, contact me and sell me a bigger monitor? Or, on the competitor's side, would HP see that and try to sell me an HP product?" she posed. "You could make the case that the more info manufacturers know about the customers and their preferences and demographics, the better job they can do to serve those customers."

Knickle points out that while wading through so much customer data may seem daunting, it can be worth the effort, especially for consumer goods manufacturers -- apparel, food and beverage, and electronics, mainly -- that rely on repeat, loyal customers. "Today, manufacturers are overwhelmed with data and don't know what to do with it. But with the advent of big data, we're getting to a place where we can make use of that information and downstream data," she said. "And I think consumers will grow to enjoy the fact that coupons or offers can be personalized for them by using manufacturing customer data. When people have a passion for what they're buying, they're willing to share more information."

Should manufacturing customers expect data privacy?

With Facebook, Twitter and other social networks now a major part of how we communicate, it's becoming increasingly difficult to distinguish between public and private information -- to the point that some might say privacy is a thing of the past. "As consumers, our data isn't safe anywhere. The genie is out of that bottle," McCabe said. "Yes, there are safeguards as far as laws and regulations, but we see credit card information being compromised all the time. Fortunately, from a statistical standpoint, the odds of being the person whose info is stolen are low."

McCabe stresses that manufacturers should approach customer data with a "do no evil" mantra. "Make vows to not share info without customer consent," she said. "If you're a manufacturer who violates that, well, talk about a social media nightmare."

"As a consumer, the rule of thumb if a company is asking for something you don't want to give, don't give it. If they don't want to do business with you because of that, well, you can probably get what you want from someone else," McCabe said.

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