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FORRESTER TECHNOGRAPHICS FINDS ONLINE CONSUMER FEARFUL OF PRIVACY VIOLATIONS

November 1, 1999

      Two-thirds of online shoppers feel insecure about exchanging personal information over the Internet, affecting the amount of time and money consumers spend online. According to a new Technographics Report from Forrester Research, Inc., privacy fears hold back Web shopping. Only a small percentage of Web users with serious concerns shop online, while consumers with moderate concerns spend 21 percent less than their more at ease counterparts. As a result of these fears, Forrester recommends a privacy best-practice model to help companies gain customer trust and build brand loyalty.

      "Nearly 90 percent of online consumers want the right to control how their personal information is used after it is collected," said Christopher M. Kelley, associate analyst in Technogr aphics Data & Analysis. "This desire for online anonymity cuts across consumers from a broad range of demographic backgrounds, including gender, income, and age. Surprisingly, these concerns change very little as consumers spend more time online."

      Forrester found that online shoppers are most concerned about how much personal information they give and who sees it. Web users worry that the information they share online will produce unsolicited spam or telemarketing calls. As a result, 80 percent of Internet users support a policy that prohibits the sale of data to third parties, and half of online customers are willing to contact the government to regulate online privacy.

      Consumers prefer to give out personal information when they receive specific benefits for sharing it, including the chance to win free goods through sweepstakes and promotions. In addition, 30 percent of online shoppers will give out some data to their favorite retailers even w hen they are not buying. Though less important, access to members-only sections of a site get approximately one-fifth of Web users to share private information.

      Based on consumer concern for control over their personal data, as well as the benefits of dispensing private information, Forrester has created a four-tier privacy best practice model that helps companies develop richer customer relationships while delivering a more rewarding experience to Internet users. At Level 1, visitors choose anonymity, deliberately forgoing the additional benefits offered by personalization and premium content. Retailers build trust by promising not to collect data or use cookies. With the addition of convenient, targeted content or additional site access, consumers enter into Level 2, a one-way communication relationship whereby merchants promise not to initiate contact with the shopper or disseminate personal information to third parties.

      At Level 3, consumers agree to two-way communication with retailers. At this stage, visitors share more personally identifying data in exchange for proactive notifications of specials from the retailer. With 83 percent of online households wanting email from preferred retailers, companies are able to unlock the power of email marketing to drive site traffic and repeat purchases. Level 4 is considered a trusting relationship, whereby shoppers seek advice and active solicitations from their favorite merchants, including deals offered by established partners.

      "A coherent privacy model gives retailers the ability to monitor how their consumers feel about them. The first step is to advertise privacy policies boldly and in plain English," added Kelley. "With 11 million households shopping online for the first time in 2000, it will become critical for merchants to build customer trust and loyalty in order to remain competitive in a proliferating marketplace."

      Forrester surveyed nearly 100,000 American and Canadian members of NPD's consumer mail panel. For the Report "The Privacy Best Practice," Forrester recontacted 10,000 online households from the NPD study on privacy issues and eCommerce attitudes and behavior.




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