U.S. operator Verizon Wireless is launching a nationwide program this week called Smart Rewards, in which postpaid customers will receive points for every dollar they spend on the operator’s mobile service and smartphone upgrades. These points can be used to get discounts on goods and services from a variety of participating businesses. In order to get Smart Rewards, subscribers need to also enroll in Verizon Selects, a marketing program begun in 2012 that tracks data about subscriber location, web browsing habits and mobile app usage—some of which the operator shares with third parties. Based on this data, ads and marketing messages will then be targeted to subscribers via Verizon’s services. After signing up, subscribers can choose to opt out of Verizon Selects and still remain in Smart Rewards.

Tarifica’s Take

Despite privacy concerns on the part of many consumers, the mining and sharing of data for marketing purposes is a fast-growing trend that is here to stay. The question for mobile operators and many other kinds of companies is not whether to do it but how to do it without making customers feel that their privacy has been invaded. Verizon, the number-one U.S. operator, with a subscriber base of over 120 million, is clearly a potent partner for any company, retail or otherwise, that wants access to information about the habits and demographics of possible customers. For Verizon, Smart Rewards and Selects together could be a very good way of boosting customer retention as well as fostering profitable relationships with the businesses that join the operator’s list.

Verizon is doing two things here to keep customers comfortable with regard to the data collection and targeted marketing. First, it has announced that no data will be shared with a third party that would cause any subscriber to be personally identifiable. The full set of data will be available only to Verizon itself. Second, the operator is offering an opt-out clause while still allowing subscribers to reap the full benefits of the rewards program. In essence, Verizon is using the launch of Smart Rewards as a way to promote a pre-existing data-sharing program and test its subscribers’ comfort level and degree of interest in this kind of marketing. That seems to us a wise course of action.