Why data privacy is key to long-term business success

Why data privacy is key to long-term business success

In the current economic climate, characterised by inflation, uncertainty and a surging cost of living crisis, businesses are quite rightly looking to re-invest and improve their customer experience (CX). Nurturing long-term relationships with existing customers is a far more cost-effective and less labour-intensive strategy to maintaining stability and thriving during a turbulent business climate.  

However, customer expectations can shift with new trends and technological advancements in areas like AI and Business Intelligence. One of the latest trends which is affecting how businesses should adapt their CX, is focused around data privacy.

With data leaks, cyber attacks and major data usage scandals making national media headlines over the past few years, consumers are more concerned than ever about how their data is being harvested and exploited by the services they use. Recent research revealed that young people are the most afraid of their personal information being sold online.This makes sense considering nearly one in five young adults in the UK have personally been a victim of identity fraud in the last 12 months. 

With more consumers now aware of  how valuable their data can be, and how it can be misused by seemingly ‘trustworthy’ online services, a business’s data usage policy can mean the difference between a retained or a lost customer. A reckless or morally dubious data usage policy can even lead to a severe breach of data, an irreparably damaged brand reputation, and significant fines from regulators. 

How not to use customer data

Data can be used to identify and anticipate trends, predict outcomes, create a personalised experience for returning customers, and avert risk. These are just a few use cases. Customer data can be an extremely powerful tool to help inform marketing efforts, direct product development teams and enhance a platform’s CX.

However, it is in the finer details that many businesses slip-up on their data usage policies. Many social media sites and search engines, for example, engage in the morally duplicitous activity known as ‘adjunct surveillance’, which is where they allow third-party services to track user activity, harvesting their data and preferences for the purpose of selling on to interested parties. 

Often this data is sold to advertisers, but it has been known to end up on the black market for malicious parties to buy, and use, as part of sophisticated phishing and ransomware attack campaigns.

The same study referenced earlier revealed that 41% of 18 to 24 year olds are confident that their personal information, such as name, bank details and contact information, is currently available for to criminals on the internet. The chances sadly are, that they are right in thinking this.

Older age groups are less likely to be concerned about how their data is being used, which is more concerning. It makes them far more likely to accept terms & conditions, marketing preferences and act carelessly with their personal data in general, with no thought on what the trade-off is when using these ‘free’ online services.

Fortunately, public awareness towards the value of data is increasing, making it critical for businesses to assess their data usage practices now. If they are caught in a scandal, or just generally have an undesirable data privacy policy, they could soon find that the trade-off is losing the trust of their long-term customers, or losing them completely to competitors. 

What to do now

Businesses must reflect on their data practices now, and ensure consumers are aware of and given options on how their data is collected and used. 

Building a positive customer experience does not have to rely solely on analysing customers’ every move and drawing on every possible piece of information organisations can get. Allowing consumers choice in the data they provide will not only build a reputable and trustworthy brand but will also create a customer experience that consumers truly appreciate, and in turn can drive positive brand values that encourage retention and even advocacy. 

For businesses who really value their customers, trust should be at the forefront of business decisions. As awareness about data privacy and unscrupulous commercial exploitation of personal data grows, there has never been a better time for companies to assess if they are behaving in the best way for their customers, rather than solely for their short term profits. After all, long-term customer relationships are ones which create business stability and increasing gains over time. With the right strategy, businesses can be commercially successful and a valued and trusted partner to customers.

Sridhar Iyengar
Sridhar Iyengar

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