Companies who show they care about your data have a huge advantage

(You should leave those who don’t care)

Research by business consultants McKinsey shows that consumers respond well to companies that treat personal data carefully – and that trust translates to valuable brand loyalty.  

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Every business wants to gather as much data as they can on their customers to improve their products and services.  It is natural that they should track how changes to their website resulted in people staying longer, and buying more, on that website, but it is the personal information tied to each identifiable individual where the debate on corporate behaviour rages.  The topic of customer data and personal data breaches is never far away from headlines in the media, and that means awareness has never been so high (and trust never been so low) amongst consumers.  Widespread knowledge that millions/billions of records have been leaked on the dark web resulted in some startling findings from the survey of 1,000 consumers in the US and Canada:

  • 87% said they would not do business with a company if they had concerns about its security practices.
  • 71% said they would stop doing business with a company if it gave away sensitive data without permission.
  • Approximately 50% said they are more likely ‘to trust a company that asks only for information relevant to its products or that limits the amount of personal information requested’. (It makes us believe the company is being careful)
  • 50% are more likely ‘to trust companies that react quickly to hacks and breaches or actively disclose such incidents to the public’. (Transparency is an advantage compared to those who attempt to bury bad news).

Companies are fast realising that it is their responsibility to be more public facing and positive in sharing the efforts they take to protect personal data.  Every company invests in cyber-security defences to keep hackers out of the corporate IT and should report on that area more openly.  There is also advantages to be gained in NOT feeding the data cycle by selling/sharing that personal data without the transparent and informed consent of the consumer.

They know they have to comply with consumer friendly regulations like GDPR, but should turn that ‘defensive’ mindset into a more positive one by sharing their plans and efforts in this area and show the world that they are a good corporate citizen.  Their customers should understand when and why their data is needed by the company and the trust issue can be used positively as it becomes part of the value proposition of a company.  (‘Great service, competitive prices and respect for your personal data’.)

Insights from the survey

Customers trust in large companies is low but varies by industry.

In the chart below you will see that it is highest in Financial Services and Healthcare companies with 44% of respondents indicating they trust that sector to protect their (very sensitive) data.  It drops to 19% in the energy sector and only 10% for consumer packaged goods and media and entertainment.

Consumers in the survey said they would walk away from doing business with companies whose data-privacy practices they don’t trust, don’t agree with, or don’t understand.  But, while awareness and knowledge of consumer privacy is rising, many consumers still don’t do enough to protect themselves: with only a third changing or strengthening their passwords regularly.  Companies that choose to help educate their customers in this area will reap the rewards of adding useful value beyond their core proposition.

Companies should be trusted data stewards

Competitive business advantage for leading companies is emerging from unlikely areas.  Customers will respond well to companies making commitments like:

  • You will only store the personal information you use.  Clear policies on what you do with data improve perception of you as a clean company.
  • You will go for ‘privacy by design’ when building consumer-facing applications, with features like automatic timed logouts and strong password requirements.  Security and privacy become the default options for consumers, but they still have choices if they actively decide to make changes.
  • If one third of data breaches in recent years have come from company insiders exploiting their access to personal data, then toughen up the rules, police those rules and publish the results of your tests.
  • You will act quickly when breaches do occur, and run fire-drills to practice what you would do if (or when) a data breach occurs.  One of the highest predictors of consumer trust is the speed of company reporting and response when breaches occur. In fact, GDPR, mandates the announcement of a breach within 72 hours of its discovery.

IPS Summary

This is the new battleground for businesses and we as customers hold the power. Respect for the personal information of customers will become a new mantra for companies to survive and thrive. If you don’t like the way Company A handles your data, then you should give Company B a try who will be competing on price, customer service AND being trusted stewards of your data.

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