Three Ways Data Privacy Strategies Are Good For Business
In the age of digital technology, consumers are constantly engaging with businesses, supplying data on everything from behaviors to personally identifiable information. This data offers immense value to companies, so they regularly capture and analyze these large data sets on their consumer base – and some companies may even build their business model around their consumer data. Many organizations, for example, use that data to better understand the consumer’s pain points or needs. Insights derived from data analysis also aids in the development of new products and services, personalized advertising, improvements in customer experience, and predicting leading business indicators. Clearly, consumer data is transforming business and it’s a perfect time to leverage the rising customer concerns and make data privacy good for your business.
Data Privacy and Data Usage Prompts Privacy Governance And Opportunities For Business Advantage
So much consumer data is captured and analyzed, in fact, that governments are creating strict data and privacy regulations to give consumers some control over how their data is used. In the United States, data privacy laws are seen in the California Consumer Privacy Act (CCPA), providing legal obligations to protect consumers’ data. Europe is governed by the EU’s General Data Privacy Regulation (GDPR) that gives consumers certain rights over their data and places security obligations on companies holding their data. Regardless of what country the data is managed, consumers are concerned about how that data is used, the risk of how data breaches will affect them, and the trust they place in the businesses they choose.
Often data’s impact on businesses is viewed from a narrow lens that includes gaining customer insights or the detrimental effects of big tech companies making negative headlines. Obviously, data mishandling can be an organization’s greatest liability, and businesses that ensure data privacy for their customers are mitigating tremendous financial risks for themselves and their customers. But the conversation around data privacy is evolving to consider a whole new aspect to the business and customer relationship that goes beyond merely checking a box. Since data is at the foundation of every business, there are tremendous opportunities to revolutionize the industry and drive future growth opportunities. Leading companies see data protection and privacy as a business advantage that sends a critical message that the company’s policies and ethics are fit for today’s online culture. Because the stakes are so high the way companies handle data and data privacy is a point of differentiation and even the source of competitive advantage in the marketplace because data privacy impacts how customers perceive the brand, how prospective and current employees view their workplace, and even how the media treats a company.
Why Is Data Privacy So Important For Your Business?
As mentioned, data privacy can play a leading role in how your brand is perceived. The same way people check a business’s sustainability profile, they seek to buy from companies that value their safety and security in demonstratable and responsible measures. If you want to play in the same league as business leaders, now is a great time to take a look at your data security approach and consider the following three benefits for your business.
1. Preventing Security Breaches
Once every 30 seconds a hacker attack occurs. A data breach can lead to a massive violation of user privacy if personal details are leaked. Attackers continue to refine their techniques to cause breaches because let’s face it, consumer data is valuable. Preventing security breaches with strong security safeguards, firewalls, policies, and procedures to secure data shows that the organization prioritizes personal data. In addition, implementing security features for data protection will reduce the incidents that result in privacy breaches in the first place. No breach means your business doesn’t lose customer trust.
Data breaches can also cost on average $3.86 million worldwide. In the United States, a data breach averages $8.64 million. Companies impacted must act quickly with recovery steps to respond to a breach, yet much of the damage is already done and the average recovery period to contain a breach is 280 days. The better bet for companies is to avoid data breaches altogether with a top-to-bottom data security strategy that provides protection against threats. To build a preventative plan to secure data throughout an enterprise, this first requires an understanding of where all their customer data is collected, stored, processed, accessed, transmitted, shared, and disposed of. Risk mitigation can further include steps to improve security such as restricted access, better architectures, firewalls, VPNs, traffic monitoring, and routine updates. Training your employees can make a huge impact on reducing security incidents since 88% of data breaches can be attributable to human errors made by employees. Lastly, it is important to audit and reevaluate the policies in place to prevent breaches. Employees drift and technology changes – staying current delivers a far better defense.
2. Regulatory Compliance
Consumer trust is critical. When business breaches and hacks make headlines featuring millions of exposed customers and damaged business reputations, this contributes to growing consumer insecurity. The simplest answer to avoid such devastating risks lies in compliance. A business that adheres to full compliance with privacy laws and takes comprehensive efforts to de-identify data shows privacy is core to their business model, not just a tagline. Prioritizing the customer relationship with adherence to security compliance mandates such as PCI, HIPPA, and more, as well as adherence to privacy laws also allows your organization to be perceived as a trusted source for products, services, and information. Furthermore, businesses that fail to implement privacy protection generally face huge fines in the tens of millions of dollars and irreversible brand reputational fallout.
Ensuring full compliance with relevant data privacy laws may be complicated, as technology and privacy is evolving constantly. But there are things that businesses can do to get started immediately. Start with a data audit to understand what data your organization collects, from whom, under what circumstances, and how that data is stored, used, and shared. From there businesses must become familiar with relevant privacy laws, aiming beyond current local and state laws but including comprehensive compliance for new laws being passed. Compliance as you know is not a one-and-done endeavor but adherence to rigorous standards and regular evaluation put customer concerns at the front of your business model.
3. Ethics & Transparency
Companies around the world have unprecedented access to consumers’ personal data as part of their normal operations. Yet, data privacy cannot just be a legal matter, it is an ethical one. The powerful nature of data is enticing, yet it must be used judiciously. There are real people behind each data point and their identities and lives can be at risk or adversely affected if sensitive data ends up in the wrong hands. These individuals are also the ones left cleaning up the mess in their personal accounts and personal lives when a business mishandles their data. Taking precautions seriously and including transparency in your business model is well worth the effort. Customers go from being a product to a partner and those companies that use data responsibly will gain their customer’s loyalty and trust.
On the alternate side, there is plenty of evidence that companies continually in the spotlight for misuse of consumer data lead consumers to question the businesses that they share personal data with and the platforms they subscribe to. Ultimately the public scrutiny showcasing major data breaches is increasing awareness and consumers are becoming savvier about what data they share and with which companies they want to engage. Consumer-centric companies have an opportunity to differentiate themselves from existing industry players by considering several approaches to their data, such as implementing best practices for data collection, defining clear purposes for data collection, publically disclosing their purpose for collecting this information, and developing robust ongoing data management strategies to monitor and track all data collection to guarantee it is protected with certainly rise above their competitors.
Data Privacy Demands Responsible Businesses
Gone are the days when companies should seek to gather all the data they can on their customers. Businesses would do better to think of it as a two-way conversation where they show consumers why the data is needed and how it is going to be used in transparent and ethical ways to deliver the service as promised. Experian reports that 70% of consumers surveyed would share data if they understood a perceived benefit to them. Honoring and respecting the individual’s privacy better positions organizations to walk the walk when it comes to their data privacy initiatives. This two-way conversation viewpoint also changes how companies view data collection. Instead of focusing solely on selling more products or services, businesses can collect data that allows for more tailored experiences that will truly enhance the customer experience while staying true to the trust the consumer places in the business. By implementing effective data management practices and ensuring that all data is located and secure across your organization, businesses can build trust, loyalty, ensure compliance, reduce the incidence of breaches, and build competitive advantage by showing that they can change the way customers are treated.
