“Organizations with more mature privacy practices are getting higher business benefits than average and are much better equipped to handle new and evolving privacy regulations around the world”– Cisco Consumer Privacy Survey, 2021
Data is the new gold rush, but not at the cost of consumer privacy
The greatest modern commodity is no longer gold or oil, it is data. Today’s technology has enabled companies to collect and store massive amounts of consumer data. While there are many benefits and rewards to collecting and monetizing data, there are just as many risks and responsibilities when it comes to handling consumers’ personal information. Historically, most consumers have operated under the impression that privacy isn’t essential, that is, until they are personally a target of a cyber-attack or identity fraud. However, recent events involving large-scale data breaches, ransomware attacks, and privacy violations by big tech companies have caused a growing concern over how businesses handle consumers’ personal information. Data can be a powerful tool to improve a product or service; however, to truly reap the benefits of data, businesses need to collect, store, and use it responsibly. Otherwise, corporations will lose customers’ trust and, ultimately, their business.
Consumers care about data privacy and security
Data privacy is no longer just a concern; consumers have started to become proactive when it comes to their data. The number of “Privacy Actives” is steadily increasing, as nearly one-third of consumers have reported that they stopped doing business with companies based on data privacy concerns.[i]
When the option to protect consumer data is presented clearly and easily, even more consumers will jump at the chance to keep their data private. The response to the recent IOS 14.5 update for iPhones can demonstrate this yearning for data privacy and security. This update provided users with a simple pop-up when they open an app, asking the user if they wanted the app to track them. According to Flurry Analytics, a Verizon-owned company, a resounding 96% of iPhone users have chosen to keep their data private when presented with a simple choice.
This desire for better data protection and choice can also be seen in recent consumer-focused legislation in America. California, Virginia, and Colorado have passed data privacy laws, with many more states working on similar laws. California’s CCPA/CPRA, Virginia’s CDPA, and Colorado’s CPA create additional requirements for businesses to adopt data security programs and be upfront and honest with consumers about what data they are collecting, which consumers want to know.
Poor privacy can hurt sales and reputation
Insufficiently protecting and collecting consumer data can have catastrophic consequences. Facebook, which has been under scrutiny over privacy concerns, has seen a massive hit to its user base. According to the Verge 2020 Tech Survey, 15 million users have left the platform since 2017. When asked why, around half of the respondents replied that privacy concerns drove them away from the social network. Another Facebook property, WhatsApp, has also seen a mass exodus of users leaving after updating its privacy terms to include ways of sharing user data with Facebook. A 2021 study conducted by CyberMedia Research (CMR) reported that 28% of users had left the popular messaging app, with a reported 79% of users considering a switch to a more secure messaging service.
A company’s reputation is also at stake; according to a 2020 survey of 1,000 consumers conducted by Transcend, a business that prioritized data privacy was called “trustworthy” (62%) and “seen to care about their customers” (60%). However, companies with insufficient data privacy practices were called “untrustworthy” (59%), “unethical” (44%), and nearly one in five said “lazy” (16%).
Consumers opting for a “Privacy-First” approach
A recent shift to a “privacy-first” approach has seen various businesses advertise data privacy as a way to set themselves apart from the competition. The Brave browser, a web browser dedicated to protecting the data of its users, has seen a 130% user increase in 2020. Brave went from 8.7 million monthly active users to 20.5 million monthly users from 2019 to 2020.[iii] Signal, a privacy-focused messaging service, has increased its user base by 4000% in the past year and a half, going from .5 million in December 2019 to 40 million users by the end of January 2021.[iv]
Established tech companies have also adopted a privacy-first approach. Consumer tech giant Apple has recently shifted its marketing strategy to demonstrate strong ties to consumer privacy. Creating an image that a company cares about how customers’ data is collected, shared, and protected is a simple yet effective way to gain consumer trust.
Consumers trusting a privacy practice is crucial
Having consumers’ trust is a powerful tool in a business owner’s arsenal, with the Edelman Trust Barometer reporting that “81% of consumers say they need to trust a brand to buy from them.” Also, once a customer’s trust is secured, they will be willing to pay more for a product. Studies show 50% of consumers are willing to pay a premium for products/services that protect personal information.[v] If a business plans to collect and use consumer data, it remains true that honesty is the best policy. According to Deloitte’s 2019 US retail privacy survey, “73% of consumers are more likely to be open to or neutral about sharing data if they are satisfied with privacy policies explaining how their data is used.”
While investment in data privacy and security may seem costly, nearly half of all companies that invested in robust data management programs have seen a 200% return on this investment (Cisco Consumer Privacy Survey, 2020). Adopting a data privacy and security program is more than just checking off a box; it is a powerful tool to gain consumer trust and increase sales.
Ardent Privacy is an “Enterprise Data Minimization and Privacy Technology” solutions provider based in the Maryland/DC region of the United States. Ardent harnesses the power of AI to enable companies with comprehensive data management and automated compliance with CDPA (Virginia), CCPA (California), HIPAA/HITECH (Healthcare), FISMA, GDPR (Europe), and other global regulations by taking a data-driven approach. Ardent Privacy’s solution utilizes machine learning and artificial intelligence to skillfully identify, inventory, map, minimize, and securely delete data in enterprises to reduce privacy, functional, and legal liability in their digital transformation and journey to the cloud.
Ardent Privacy articles should not be considered as legal or technical advice on data privacy regulations, or any specific facts or circumstances. This article is written to express the opinion of the writer and nothing else.