Editor’s Note: What is your benchmark for customer data privacy? Maybe a better question is, what is your customer’s benchmark? Understanding and managing to those thresholds is both critical and challenging. And matching your customer engagement efforts to your customers’ is almost a matter of marketing life and death.
Until recently, there has been little compelling reason for companies to embed privacy considerations deeply into their larger business strategies. While consumers say they care about privacy, few have placed any real value on protecting their data. Further, while many privacy laws call for severe penalties, it appears that actual fines will be considerably lower and only the worst offenders will be impacted. The costs to fully meet all privacy requirements can also be quite high for most companies.
By Thomas C. Redman and Robert M. Waitman
On the other side of the ledger, sharing consumer data or using it in targeted marketing campaigns, to train algorithms, and so forth offers outsized potential. Indeed, not exploiting customer data when your competitors are doing so can put you at a significant disadvantage.
Netting it all out, one sound privacy strategy is “maintain a low profile.” Name data protection officers, ask customers for consent (as called for by the General Data Protection Regulation, or GDPR), and provide roughly the same levels of privacy protections as your competitors, at the minimum possible cost.
That approach may soon prove short-sighted. A 2019 survey conducted by Cisco of 2,601 adults worldwide examined the actions, not just attitudes, of consumers with respect to their data privacy. (Robert led the work, Tom advised.) The survey reveals an important new group of people — 32% of respondents — who said they care about privacy, are willing to act, and have done so by switching companies or providers over data or data-sharing policies. We call this group privacy actives and, to our best knowledge, this is the first time such a group has been identified.
The notion that significant numbers of privacy actives even exist should raise antennae at all companies. By understanding this unique group of individuals, whose feelings about privacy are multifaceted and complex, companies can shape their own data and customer privacy practices and better engage, retain, and work with these customers. This will take some effort.
Based on the survey, privacy actives tend to be younger, more affluent, and shop more online — a segment of the population that is especially attractive to most companies. They are more than twice as likely (27% vs 11%) to view themselves as early tech adopters, and they are more frequent users of social media.
Privacy actives see respect for privacy as core to the brands of the companies with whom they do business: 90% believe the ways their data is treated reflects how they are treated as customers. Not surprisingly, they also say they will not buy from companies if they don’t trust how their data is used.
Data privacy is as much about customer experience as it is about privacy itself.
But the survey also reveals some counterintuitive findings about privacy actives. The Cisco survey presented multiple scenarios involving respondents’ levels of comfort with sharing their data in exchange for more personalized products or other benefits. Surprisingly, privacy actives were more comfortable with these trade-offs compared to their non-active counterparts. For instance, when asked if individuals were willing to provide their purchase history in exchange for personalized products and services, 62% of privacy actives were comfortable with the trade-off versus 32% of non-privacy actives. When asked if individuals were willing to share information from smart home speakers in exchange for health and safety warnings for the entire family, 44% of privacy actives were comfortable versus only 17% of non-privacy actives. Across the board, privacy actives were twice as likely to be comfortable when faced with sharing their information in exchange for a personal or public benefit.
So how should you put these findings to work?
First, these findings indicate that data privacy is as much about customer experience as it is about privacy itself. So get the right people involved. We find it telling that companies routinely seek consumers’ feedback regarding their products and services, yet neither one of us can recall ever being asked about privacy. Go directly to your customers to get to know your privacy actives — how many there are, their views on your privacy policies, their openness to your new ideas, and what they view as fair compensation for your use of their data. A good way to start might involve extending current survey vehicles to these questions.
Second, use your newfound knowledge to engage privacy actives as you explore new ways to use data. They are simultaneously more receptive to new ideas that will help you build your business and to raise the caution flags that will keep you from making big mistakes. And keep in mind that as you’re engaging these customers, another 29% of respondents are concerned about privacy, are willing to act, but haven’t done so yet — they’re only one step away from becoming privacy actives themselves. Consider reaching out to these folks now, before they make a change.
Third, address the transparency gap that privacy actives have called out. Simplify and shorten your privacy policies so people can access, read, and understand them quickly — in no more than two minutes. Clarify the compensation customers and users may expect in exchange for their data, whether in money, discounts, or services, and make it easier to opt in or out.
Finally, while we expect the privacy landscape to change rapidly and chaotically over the next several years, now is a good time to think long-term. Years ago, when Tom worked at Bell Labs, an unknown prognosticator noted that “privacy will be to the Information Age as product safety was to the Industrial Age.” This individual observed that, over time, societies came to expect companies to produce safe products. Both legal and market pressures came to bear. In some cases, these protections may have gone too far — is it really necessary to warn coffee drinkers, “Caution, contents may be hot”? But right or wrong, that is how society “voted.”
So ask yourself these questions: Do you think there is wisdom in the prediction? Do you have a different one? Finally, how do you want to position your company and its brand with respect to privacy over the long-term? As you puzzle through these questions, we think you will see many opportunities in embracing data privacy.