Vintage open sign on old wooden door showing the need for data transparency for customer loyalty
Beyond Legislation: Building and Retaining Customer Loyalty with Data Transparency by Sweeney Williams, Senior Director of Security, Privacy & Compliance and Privacy Officer at Vision Critical

Beyond Legislation: Building and Retaining Customer Loyalty with Data Transparency

In the post-Cambridge Analytica world, privacy is top of mind for consumers, law makers, and brands alike. Legislation is being enacted that supports individual privacy rights and carries hefty fines for violations, sending a clear message that the days of treating personal information solely as a commodity are coming to an end. Both the California Consumer Privacy Act and proposed regulations for Facebook and other social media networks are putting the power back in the hands of consumers as did GDPR, which recently went into effect.

Taking these new sanctions into account, companies that want to continue to thrive must employ a transparent approach to data collection, storage and sharing – which consumers have come to not only value, but expect. In fact, a recent study on consumer attitudes towards personal information found that only 17 percent of respondents are comfortable with brands using information acquired indirectly for personalization efforts, and 42 percent would be more comfortable sharing personal information if they had the opportunity to change or delete the data stored. This suggests that beyond remaining compliant with new regulations, companies need to listen to customer concerns and take a more transparent approach during the collection, usage, and storage of data.

Execute people-first methods of collection

Brands need to approach data collection with a customer-first mentality. In combination with the potential costs associated with non-compliance, brands that aren’t honest about data collection and usage are at risk of losing something even more important: the trust and respect of their customers. The aforementioned study found that two-thirds of consumers would comfortably share personal information if brands were open about its use, underscoring the expectation consumers have to be kept in the loop when it comes to their personal information.

Beyond retaining the integrity of the relationships themselves, brands need to recognize the connection between the level of transparency they provide to customers and the quality of data they receive. The best, most actionable data is that which is gathered from customers who are comfortable with a brand and therefore can be honest, which is less likely if they feel their data will be used against them in some way.

The takeaway? It is key for companies to convey transparency to their customers as it’s a central tenet of data privacy, and not just because regulators are forcing their hand. While much of what is included in recent legislation is familiar to enterprise companies (extraterritorial reach, large fines, strengthened rights of individuals to control their data, etc.), updating privacy policies to align with the latest and greatest laws simply isn’t enough. Rather than worrying about staying compliant in accordance with what’s enumerated in legislation, organizations should be guided by an underlying principle: put customers (and their safety) first – and see better data as a by-product.

Eliminate the element of surprise

Secondly, brands must eliminate any unwanted surprises when it comes to data use. I’m a firm believer that when it comes to personal information, it is essential to be an open book. If a customer is surprised by how a brand uses and shares their information, they will react negatively – even if what was done was neither illegal nor immoral. While securely obtaining and storing data is an obvious must for companies (though many fail to allocate adequate resources to effectively do it), it’s often overlooked and underestimated how a lack of transparency can affect their customer’s experience – and likely their loyalty to the brand.

Brands can build stronger relationships with consumers by using first party data collection techniques that require informed permission. This often leads to an increase in trust and response rates and helps foster a relationship primed for greater information sharing in exchange for positive benefits. Customers want a personalized experience and will share data to get it, but only if they’re completely in the know.

Stronger focus needed on data #privacy for customer loyalty, which consumers have now come to not only value, but expect.Click to Tweet

Ultimately, treating your customers like people rather than data points will pay dividends when it comes to long-term loyalty. While it is still too early to determine what future legislation might look like surrounding data privacy, my hope is that it will contain less reliance on country-specific legislation and instead support principles and practices that adhere to a higher standard for building and maintaining customer relationships.