Privacy Policies Promote Purchases

By Michel Fortin
Posted Thursday, August 26, 2004

Today, one of the most important aspects of doing business online is the ability to build a certain trust among the people with whom you do business. Scams, snake oils and get-rich-quick schemes have somewhat found a niche on the web, and people are understandably cautious as well as leery of making a purchase online.

A recent article on Internet Day (http://www.InternetDay.com) revealed an interesting statistic. It explained that 64% of online orders are abandoned at some point before being processed. In other words, people will visit a site, decide that they want what it offers, proceed to the ordering page, and provide all the relevant details. But over half will abruptly end their purchase the moment they are confronted with the dreaded "submit" button.

Concerns about security and privacy are definitely at the root, for people fear that their information will be shared or misused. It is therefore exceedingly vital for an online business to not only communicate a certain level of credibility but also an assurance that potential clients are not abused in any way. Some statistics prove this undeniable truth.

According to a recent survey by AT&T Laboratories, research suggests that "a combination of privacy policies and 'seals of approval' significantly raise people's confidence" (see (http://www.research.att.com/projects/privacystudy/)).

It also found that people are willing to provide simple information such as their names and even their email addresses to a certain extent. But when it comes to unique identifying information such as their age, phone numbers, postal addresses, credit card numbers, and social security numbers (or social insurance numbers for us Canadians), they run away.

AT&T's Lorrie Faith Cranor, the author of the study, mentioned that people are willing to give information -- although with a certain degree of trepidation. But what concerns them the most is the sharing of that information. More precisely, knowing what a site will do with one's information is at the heart of the issue. She wrote: "Information to be shared with other companies or organizations is more sensitive. While respondents were concerned about the kind of information they provided to a web site, how it would be used, and whether it would identify them, the most important factor was whether it would be shared with others."

The crux of the survey is the fact that people felt most pessimistic about a site's use of "cookies," which are pieces of data that a web site uses to "brand" a user's computer in order to identify them throughout the site let alone other sites on the Internet. "52% said they were concerned about cookies," Cranor points out. "And most people said they had changed their browser settings to something other than accepting all cookies without warning."

In comparison to an earlier study conducted in 1998, the numbers have increased significantly. While the percentage of consumers online have tripled in less than a year, concerns about threats to their personal online privacy rose to an astonishing 87%.

In a comparable Georgia Tech study, called the GVU or "Graphics, Visualization, and Usability" survey (http://www.gvu.gatech.edu/user_surveys), researchers found that 62% of respondents valued privacy over convenience when in comes to buying online. In other words, they found that privacy is a key determinant in the number of online purchases.

According to the TRUSTe organization (http://www.etrust.org), the Internet privacy gurus, consumers' fears about privacy impede online sales and therefore limit ecommerce growth. In fact, they mention a recent BCG Consumer survey, which found that 70% of respondents worry about making purchases online and that, if their privacy concerns are successfully addressed, the likelihood that they will buy will multiply immensely.

Consequently, having a clear, straightforward privacy statement on one's web site is undoubtedly becoming an essential component of continued online commerce success. A user's proclivity to buy online increases dramatically when a site describes what information is being collected, how it is collected, and how that information is being used.

Here are a few guidelines to follow when developing your privacy policy. By simply looking at the "what," "why," "who," "where," "when," and "how," you can start defining the necessary elements of an effective privacy pledge. For instance, here are some the questions that your privacy statement should answer (keep in mind that this is an example and not 'the' example):

1) WHAT information is being collected

- Do you gather IP addresses, browser tags, and user origins?
- Do you collect demographic data (e.g., age, income level, etc)?
- And do you retrieve contact information (such as addresses)?
- If so, what is being collected without the user's consent?

2) WHY the information is being collected

- Do you need the data to administer your site?
- Do you use it to customize the user's experience?
- And do you keep it in order to communicate with the user?
- If so, how exactly is it being, and will it be, used?

3) WHEN that information is being collected

- Do you collect the information through online forms?
- Do you use cookies or any other persistent identifiers?
- And do you gather the data in specific locations?
- If so, where specifically is the data retrieved?

4) WHO will be using that information

- Will you sell, lease, or share the information gathered?
- Will partners, affiliates, or suppliers have access to it?
- And do you supplement it with data from third parties?
- If so, who precisely is sharing or will share the information?

5) WHERE the information is actually stored

- Is the information kept onsite or on any other server?
- Is it sent by email or maintained on a certain database?
- And are there any security measures in place to protect it?
- If so, for how long is the information kept?

6) HOW to remove or modify that information

- Can a one manage, modify, or update one's information?
- Can one opt-out of any future communications or services?
- And does one have a say in how that information is used?
- If so, what options does one have in doing so?

For added convenience, you can have it done for you with a neat wizard supplied by TRUSTe at (http://www.etrust.com/wizard/). And if you would like to use specific tools to enhance your site's privacy practices, The Privacy Page at (http://www.privacy.org/) offers many online tools, such as web, email, telnet, and data encryption resources.

Ultimately, your goal as an Internet marketer is to increase your online sales. And the way to do so is to ease your prospect's buying experience. By catering to their privacy needs, you will likely increase not only your sales but your repeat and referral sales as well.

In short, make a privacy pledge and they will take the purchasing plunge.

About the Author
Michel Fortin is an author, speaker and Internet marketing consultant dedicated to turning businesses into powerful magnets. Visit (http://SuccessDoctor.com). He is also the editor of the "Internet Marketing Chronicles" ezine delivered weekly to 100,000 subscribers -- subscribe free at (http://SuccessDoctor.com/IMC/).