Customer data. It’s perhaps the most important aspect of your business. It helps shape your future business and can help you curate a unique experience for each customer. Some of this data is gathered via your organization’s own efforts, while other data is offered via the customer themselves.
When a customer chooses to interact with your business by making a purchase, there is a certain level of trust that has been developed. To safeguard this trust and to continue building your relationship with the customer, pursuing customer data privacy and security is a good business strategy.
What Exactly is Customer Data
Customer data can be defined as all of the information a customer provides when interacting with your business. This can be in the physical store, online, via an app, through marketing efforts and surveys, social media, etc.
Different information is collected throughout the customer’s interaction with the business. Some of the information collected is identifying information. Identifiable information includes:
● Name and address
● Email address
● Login information
● Credit/Debit card details
● Date of birth
● Phone number
Meanwhile, other collected information is non-identifiable, such as:
● IP address
● Device IDs
● Cookies
Other information is also valuable to organizations including engagement, behavioral, and attitudinal data. Because this information is valuable, organizations also collect information on:
● Social media engagement
● Email engagement
● Customer complaints
● Most viewed pages
● Purchase details
● Cart abandonment data
● Preferences
● Customer satisfaction
All of this information is used to better the customer experience and help the organization move forward. Based on this data, organizations can create customized experiences for the most loyal of customers. Additionally, organizations can provide better services and products based on the data collected.
Why Consumer Privacy and Security is Important
While businesses take the pain and effort to collect and analyze this information, it is equally important that this consumer data be kept private and secure. This is especially important for personally identifying information (PII). An unauthorized use of an individual’s identifying information with the intent to obtain goods or services is considered a felony and is called a grand theft.
The use of credit cards, debit cards, and digital payments have taken over retail, accounting for nearly 69% of all sales. This is only expected to grow, with cash having less foothold, as e-commerce grows, which is forecasted to surpass $740billion by 2023. However, this means that organizations have that much more responsibility to keep PII of their customers safe.
Failure to provide privacy and security for consumer data can easily result in a loss for their customers (and their own organizations) via identity theft. In 2018, 14.4 million people fell victim to identity fraud and consumers and businesses have lost billions of dollars every year due to stolen identities and fraudulent purchases.
Businesses, as well as governments, are realizing the importance of protecting consumer data. As a result, legislation is being discussed and passed to limit what organizations can do with customer data. This is intended to protect consumers and their PII. The largest scale legislation that has been seen regarding consumer data, so far, is GDPR in Europe. However, many individual states are also moving to implement consumer privacy laws to further protect consumers.
Governments are stepping in because when a business fails to protect their customer data, their customers are at risk of having their identity stolen and their finances upturned. This can wreak havoc in the lives of consumers.
From a business perspective, consumer data theft can be problematic for several reasons. Failure to protect customer data may result in both financial and legal repercussions. However, an even bigger problem for businesses is that the trust that customers have with a brand is broken down. This broken trust may result in loss of repeat, loyal customers as they pull back from the brand, choosing to make their purchases elsewhere.
Why It Makes Good Business Sense
Protecting consumer data by providing privacy and security is a continuous effort as hackers are constantly looking to take advantage of loopholes and ways of trick existing security systems. However, by proactively pursuing privacy and security for your customer data you are able to provide better protection and security for your customers.
Additionally, this can help minimize the impact of any new regulatory requirements for protecting consumer data. By already having a system in place, it can simply be tweaked to comply with new regulations as opposed to needing to put in an entirely new system.
The most important reason for embracing customer data privacy and security as a business strategy, however, is that it focuses on maintaining the trust that has been developed with customers. By taking the necessary measures to protect customers from identity theft, consumers will continue to reward organizations by continuing their relationship with them.
These efforts may also gain customers in the long run as well, as consumers lose faith and trust in other brands that have not offered as much protection for their data. Therefore, by embracing customer data privacy and security as a business strategy, an organization is working to strengthen their organization and their relationship with customers.
