WHARTON CALLS FOR A DATA DIET. I STILL SAY CONSUMER CONTROL IS THE ANSWER

Knowledge at Wharton, which is part of the University of Pennsylvania, published a good article recently, except that I don’t agree with some of it. It’s good because it points out the problems faced today by data collectors on just what to keep, and what to delete from their databases. In case you don’t know, this is a “data pack rat” society starting with the individual consumer and probably going right to the President’s office. We are scared to death that the very piece of information we discard will be the one that we need most next week, next month, or even next year. In part, that could be true.

Wharton mentions recent data breaches by credit card processor Heartland Payment Systems where up to 100 million personal records could have been exposed to crooks. The article says the problem has become critical, and suggests that companies might consider cutting down the amount of data they keep. So far so good. And then comes the disagreement.

Two of Wharton’s marketing professors, Eric Bradlow and Peter Fader, recommend that companies should decide what data is necessary to keep competitive, and “purge the rest.” That’s where they lost me. They obviously have never been intimate with a junk mailer’s database. Many junk mail companies keep records until the person has been in the grave longer than Bradlow and Fader would probably consider appropriate for the normal storage period. And that is not exaggeration. To junk mailers, data is forever.

The main reason given by Wharton to screen out and get rid of unnecessary data is the cost of a data breach in 2008: $202 per lost record. That is up 2.5 percent from 2007. And the point is made of the uncalled-for risk taken by companies who hoard this information which could come back to haunt their customers and competitors. During the current downturn in the economy, you’d think more attention would be given to data security. However, in a 2009 Javelin Strategy & Research report, one of the major findings for 2008 was that, “Traditional Access to Private Data Continues to Be Commonplace.”

Another suggestion by Fader and Bradlow is to use predictive modeling to identify its best customers and then “throw away original data.” An excellent point and one I espoused as a junk mail data broker for twenty years. However, many with the old kitchen table, entrepreneurial spirit thought they could be a better “decider” than a technologically advanced piece of software that employed artificial intelligence to do the job. But this should be done only at an aggregate household level, not individual, in order to protect our privacy. This also comes with a cost, but this is usually offset by the savings of not mailing to a population that doesn’t want the mail. Another big plus.

No matter what perspective you approach this from, the only workable answer is control. In my 35 years as a data broker, I can tell you that the only way to solve the identity crisis is to give consumers control over their names and personal data, and compensate them when it is sold to encourage taking on this new responsibility.