After Facebook’s breach of 87 million users’ data this year, Amazon’s Echo silently recording a family’s personal conversations and sending them to random contacts, and more, already-skeptical customers are becoming even less willing to shell out their personal information to just anyone — a trend that’s negatively impacting both businesses and customers. It’s a catch 22: Until businesses can prove that they’re a secure and trustworthy place for data to live, customers will continue to withhold their information. The less businesses know about customers, the less they’ll be able to give customers the kind of personalized experiences they seek.
In response to waning trust, many businesses are transitioning toward becoming more transparent with customer data on their own terms — even those not affected by the EU’s recent data regulations.
Recovering From Years of Data Breaches
Have you ever shared private information with somebody you trust, only to find out later that the person couldn’t keep a secret? This is how many consumers are feeling after being burned by record numbers of data breaches and leaks so far in 2017 and, for those personally affected, the distrust won’t just pass.
A study by Gemalto revealed that “nearly two-thirds (64%) of customers would be likely to end their relationship with a company if financial or sensitive information was stolen.”
Customers everywhere are growing increasingly hesitant to shell out their personal information, and after the recent Equifax breach releasing more than 2.5 million Americans’ social security numbers, credit card numbers and other private information, CNet says even U.S. lawmakers are “working to pass bills that would make Equifax and other companies like it more accountable to regular people like you and me, whose data they collect for profit.”
Privacy Rights Clearinghouse Director of Policy Paul Stephens says the effects of the Equifax data breach will be felt for “essentially a hundred years, until everybody is dead that was exposed by this breach.”
The lasting impact on customers is setting the tone for the way businesses collect customer data all over the world.
Consumers’ trust in data protection is waning, and business owners are listening: According to a Forbes article by security solutions expert Neil Campbell, “Gone are the days when companies could pass the headaches of cyber security to the IT department, as it has become more of a business issue too.”
Respecting and protecting customer data is officially “in,” and the reward for following the trend is trust, loyalty and, in many cases, repeat business.
According to McKinsey, “Already, many corporations are conducting simulated cyberattacks to identify unexpected vulnerabilities and develop organizational muscles for managing breaches. Some have built sophisticated capabilities to aggregate and analyze massive amounts of operational data (such as email headers and IP traffic) to uncover emerging threats.”
Why Is Collecting Data So Important?
The high number of data security threats out there leave many wondering why businesses collect data at all. Wouldn’t it be easier if there wasn’t data to steal? Not exactly. While customers won’t stay with a business that can’t respect or protect their personal data, they also won’t stay with a business that doesn’t know enough about them to build a relationship.
Data collection doesn’t only help businesses; when done right, it benefits the customer just as much. It allows businesses to segment their customer base and hyper-target each contact with only the most relevant and useful information.
Have you ever gotten a completely irrelevant offer in your inbox that left you feeling irritated? It’s because the marketer didn’t collect or use data to properly target you. Customers notice when brands put in the time and effort to get to know them, and they’re willing to shell out their personal data for convenience and a better experience.
For example, the online pet food and supply company Chewy’s data collection has made shopping with them so convenient that it’s actually easier to auto-subscribe to orders of your pet’s food and medicine than stopping at the local pet store down the street. If Chewy made you re-enter your payment info and address every time you made a purchase, would you still find it more convenient than stopping at the store? Probably not.
The same goes for customer support experiences. Have you ever called a company’s support line only to find that they don’t know anything about your history with their business? You could be one of their most loyal, high-paying customers and still get transferred to 10 different reps before someone knows something about your issue. Bottom line: It’s all in the data.
How Can Businesses Improve?
Because businesses can’t just stop collecting data altogether without forfeiting quality in the customer experience, the solution is to improve how they collect, store and handle data. To earn and maintain a trustworthy reputation with customers, it’s becoming increasingly important for businesses of all sizes to follow data security best practices and demonstrate a genuine respect for customer data.
“The basics of this are pretty straightforward,” says Ontraport Lead Systems Administrator Tim Weidner. “Let people know you are collecting information on them; tell them what you are collecting and how you intend to use it, and allow them the option to choose whether or not they agree.”