Customer Privacy and Database Marketing

Abstract

Probably the single most important aspect of the legal environment pertaining to database marketing is customer privacy. We examine this issue in depth. Privacy is a multidimensional issue for customers, and we begin by reviewing the nature and potential consequences of these several dimensions. We discuss the evidence regarding the impact of customers' concerns for privacy on their behavior — there is some although not definitive evidence for example that privacy concerns hinder e-commerce. We discuss current firm practices regarding privacy, as well as some of the major laws regarding customer privacy. We conclude with a review of potential solutions to privacy concerns, including regulation, permission-based marketing, and a strategic focus on trust.