Jodi Daniels is a privacy consultant and Founder/CEO of Red Clover Advisors, one of the few Women’s Business Enterprises focused on privacy.
While it is not explicitly stated in the constitution, the Supreme Court has ruled that the First, Third, Fourth, Fifth and Ninth Amendments, taken together, create “zones of privacy.” Many Americans consider the right to privacy imperative in their day-to-day lives, whether it’s privacy from the government or privacy from commercial enterprises.
Consumers believe that they should be able to control who has access to their personal information, and how that information is used.
And while consumers value trust, modern business practices regarding the use and abuse of consumer data has created a divide between many companies and the individuals they serve.
This fact is borne out by statistics: 72% of Americans are reluctant to share personal data with businesses, and 73% of customers “would spend significantly less” for products or services from a business that lost their trust. CEOs know this; 57% of business leaders report a positive correlation between consumer trust and revenue growth.
In short: with modern consumers’ concerns regarding data privacy at an all-time high, trust is becoming an essential currency in our society.
Data privacy and transparency is the new normal.
Gone are the days of buying third-party email lists or selling data on consumers without their consent.
In the past decade, gross overreaches regarding the collection and distribution of consumer data led to the enacting of landmark data privacy regulations around the world, starting with the EU’s General Data Protection Regulations (GDPR) in 2016. Since then, countries around the world have followed suit and created regulations to protect consumer data privacy rights.
While no federal data privacy legislation exists in the United States, every year, more states (California, Colorado, Virginia, Utah, Connecticut, Iowa, Texas, Montana, Tennessee, Indiana, Oregon and Delaware) are developing their own data privacy regulations, often modeled after aspects of the GDPR.
In addition to government regulations, consumers expect transparent data privacy practices from businesses they support. According to a McKinsey survey, 84% of consumers agree that it’s important to know a company’s data privacy policy before purchasing.
Opaque privacy policies are bad for business.
Smoke and mirrors may be fun at a magic show, but when it comes to data privacy, transparency is key.
Consider these facts:
• 86% of consumers say data privacy is a growing concern for them.
• 40% of people report having switched brands after learning that a business didn’t properly protect customer data.
• In the past year, 14% of consumers stopped doing business with a company because they disagreed with perceived company ethics,
Just as losing trust can be catastrophic for companies, building consumer trust makes a real difference in a business’s bottom line.
• Nine out of ten people say they would buy more from a company that gained their trust.
• 39% of consumers say that data transparency is the best way to build trust regarding the use and collection of personal data.
• Companies that establish themselves as leaders in digital trust are more likely to see their revenue grow by at least 10% annually.
So if we know that data privacy is good for business, we then have to look at how companies can build the right data privacy policy for them and contribute to building consumer trust at the same time.
How to build consumer trust.
While adopting data privacy policies can be overwhelming, the benefits of protecting your company and consumer data privacy outweigh the potential costs of implementing new operational procedures.
To build consumer trust, businesses have to both “walk the walk” and “talk the talk.”
First, businesses actually have to build a data privacy policy that aligns with consumer expectations and government regulations.
To build a sustainable, long-term privacy policy, it’s critical to build your program with the intent to protect data based on industry best practices, rather than playing a game of regulatory dodgeball. A policy based on best practices positions companies to adjust their operations to stay at the forefront of data privacy and maintain consumer trust.
Privacy programs can be complex to implement, but businesses can take the pressure off of team members by employing a cross-functional approach.
Engaging team members from different departments not only encourages internal transparency, but also ensures that privacy insights aren’t siloed. As a result, it’s easier to build impactful training programs and encourage regulatory conversations about the interplay between privacy practices and individual jobs.
Second, align your privacy principles with privacy requirements.
When you create new products, design them with privacy in mind. If you’re conceptualizing a new marketing initiative, placing a new pixel on the site or collecting or using personal data in a new way, consider their privacy impact.
Make privacy the default setting and give your customers control over their data. (We’ve talked ad nauseam about the benefits of a preference center when it comes to this!) Not only do these measures allow you to put your privacy principles to work, but they also can keep your business better aligned with privacy requirements.
Finally, to build and maintain consumer trust, businesses have to empower and educate their consumers regarding their data privacy rights.
People don’t trust what they don’t understand. Rather than adopting a confusing privacy notice filled with legal jargon, create a clear privacy notice that lays out what consumers can expect from your company. Make it easy for customers to opt-out of data collection, or control what data you collect; consider implementing user-friendly design techniques like clear, easily visible graphics and icons, or videos to help them accomplish this. Yes, it’s the law to make this information accessible, but it’s also just good business to put your commitment to consumer privacy front and center.
The more control you provide your customers, the more likely they are to feel that you have their best interests at heart. And the more they trust your business, the more loyalty they have to your brand.
In a world where customers can switch to a competitor with the click of a button, trust and loyalty are the ultimate currencies.
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