Luxury Institute meta-research from across the globe indicates that the post-COVID-19 landscape for consumer brands, and especially for luxury goods and services brands, is a potential minefield due to rapidly escalating consumer concerns for personal data privacy. Consumers are becoming activists on many social issues, and all surveys conducted in 2019-2020 by institutions such as Pew, Ipsos and Microsoft clearly identify privacy as a sizzling hot issue across all demographics.
By Milton Pedraza
Luxury Institute’s own 2020 global research shows that the affluent and wealthy globally share deep concerns for personal data issues. In the most recent survey conducted by Transcend, a data privacy infrastructure company, with 1,000 American consumers, a whopping 98% agree that data privacy is important in their lives. The results were similar across all demographics (98% males, 98% females, 95% Gen Z and Millennials, 99% Gen X, 99% Boomers). Income figures had a similar dispersion, dispelling the persistent myth that only older, wealthier people care about privacy. All segments of American consumers agree that data privacy will be even more critical in the next five years (94%). The pandemic has only accelerated those concerns.
Most luxury consumer brands, and many mass brands, are trying to be good citizens by approaching data privacy with a deliberate approach to implementation. However, that is wholly insufficient. Currently, legal privacy compliance has been delegated to lawyers and IT executives. These are well-intentioned domain experts, but they are not consumer experience or brand equity experts. They are not the brand stewards responsible for financial performance. Lawyers and IT executives play only defense. With privacy, they are playing not to lose, instead of to win. They fail to serve the best interests of the brand by advising that brands play the short-term, privacy fortress game. That approach puts the long-term reputation of the brand, and its survival, at risk in the digital era.
In the Transcend survey, three in five (59%) of American consumers admit they don’t understand a great deal about the ins and outs of privacy. Nine out of 10 (88%) are frustrated that they have no control over their personal data online. When some consumers have tried to get legal access to their data from companies, they have found the process outdated (73%), time-consuming and difficult. These are massive goodwill and brand reputation-building opportunities. They are not problems, or opportunities to deceive customers. Since 88% of Americans feel they ultimately own the data they give to companies, the lack of transparency in privacy policies, and the lack of access to their own data, makes them distrust the brands that are creating the obstacles. This perceived disingenuous brand approach has consequences. Americans describe brands that frustrate the process as untrustworthy (59%) and unethical (44%).
When brands stop playing defense on privacy, they will dramatically enhance their reputation and increase sales. American consumers state unequivocally (93%) that they will switch to a company that prioritizes data privacy. They prefer to buy from companies that always provide them easy access to their data (91%). And 39% will spend more (yes, more) with companies that allow instant access to control their personal data.
Brands need to give trust to earn trust. Americans may want transparency and control over their personal data, but they are not naive or obstructionist. This is a grave misperception of consumer attitudes. Consumers have experienced enough to know that data sharing can lead to major value creation opportunities for both parties when there is mutual trust. While 65% of all consumers want transparency, and 65% want to choose what they will share with companies, 40% would even be willing to update the information. The 43% of all consumers who want to delete the information, and here Boomers do outnumber Millennials and Gen Z (47% to 38%), do so because they have no clear visibility and have zero trust in how their data is being secured and used. That trend can be easily reversed. In fact, Boomers lead all generations in stating that brands that provide instant access to, and control of, personal data to a consumer are trustworthy (67%), care about consumers (68%), and are worthy of spending more (34%).
Consumers have experienced enough to know that data sharing can lead to major value creation opportunities for both parties when there is mutual trust.
Play offense, not just defense, with consumer data privacy
About Luxury Institute and the Global Luxury Expert Network (GLEN)
Luxury Institute is the world’s most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry.
Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system, Luxcelerate, that dramatically improves brand culture and financial performance.