Data transparency: What is it and how to ensure it?

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Businesses and organizations are increasingly using the term “data transparency” in everyday work, but its meaning is not always clear. That’s because it is a relatively new concept and one that is still evolving.

At its most basic, data transparency refers to the ability of individuals to access information about themselves that has been collected by others. This information might include everything from financial records and health data to social media posts and purchasing habits.
But that’s just the starting point.

Data transparency is a complex term that impacts your relationship with clients and customers. They demand more data transparency, so let’s see how the whole process works and what you can do to improve it.

What is data transparency?

You can find many definitions of data transparency online, but we picked the one that seems to be very clear and accurate. According to Gatekeeper, data transparency is the characteristic of data being used with integrity, lawfully, fairly, and traceably, for valid purposes. We can put it even simpler, explaining what customers need to know about data:

  • What is being gathered: Customers have to know what type of data is being collected about them.
  • How is it being used: They also have the right to understand why this data is being collected and how it will be used.
  • With whom it is shared: Users need to know with whom this data will be shared, both now and in the future.
  • How to access information: Customers must be able to view, change, or delete their data if they wish.
  • How long it is stored: They also need to know that the data you collect will not be kept for longer than necessary.

Although it sounds simple, data transparency is not always easy to achieve. This is particularly the case with large organizations with complex data structures. A study shows that only 43% of organizations inform their customers about the way their teams use data when clients sign up for any given service.

And here’s a significant stat that should convince you to focus on data transparency – almost 75% of internet users in the US are more concerned with their online privacy than they’ve ever been.

How to ensure greater data transparency

Now that you understand the problem, it’s time to see how you can improve data transparency in your organization. We identified a few steps that can greatly improve the way you handle user information.

1. Education comes first

The first and most important step is to educate your team. All employees who work with data need to understand the importance of data transparency and what it means in practice. After all, these are the people who will be responsible for ensuring that your company complies with data transparency regulations.

They need to know about the relevant laws and regulations, such as GDPR and CCPA, which establish strict rules about data handling. The General Data Protection Regulation (GDPR) is a great example. This regulation, which came into effect in 2018, requires companies to get explicit consent from users before collecting, using or sharing their personal data.

Your job is to make sure that your employees are aware of these regulations and know how to comply with them. You can do this by providing training, setting up clear policies and procedures, documenting this information in your team’s wiki, and appointing someone to oversee compliance.

2. Be transparent about data collection

The next step is to be transparent about the data you collect and why you need it. This means being clear about what data you collect, how you use it, and with whom you share it. You also need to provide a way for users to access their data and exercise their rights under the GDPR, such as the right to access, change or delete their data.

This might seem like a lot of work, but it’s necessary to ensure data transparency. And the good news is that there are programs that can help you, such as data discovery tools and data mapping tools. These tools can help you understand what data you have, where it’s stored, and how it’s used.

3. Get customer feedback

Another way to ensure data transparency is to get feedback from your customers. This can be done through surveys, customer interviews, or focus groups. This feedback enables you to understand what customers want to know about the data you collect and how they want to be able to access it.

It can also help you identify any areas where you need to improve your data transparency. Simply put, customer feedback will give you all the information you need on how to enhance your company’s data transparency processes.

What do you get from being more transparent?

Data transparency is not just for your customers. On the contrary, it can also have a positive impact on your business. There are quite a few business benefits of being more open and clear about the way you use client-related information.

The percentage of organizations saying they receive significant business benefits from privacy has grown to over 70%. Let’s see how transparency can help your company.

Build trust and reputation

First of all, you can build trust with your customers by being more transparent about the data you collect. This is especially important if you’re handling sensitive data, such as health data.

Organizations that are transparent about how they use this data and provide customers with a way to access it prove they take user privacy seriously. This, in turn, can help you build a strong reputation as a company that cares about its customers. It will gradually lead to increased customer satisfaction and trust.

Improve customer loyalty and retention

Another benefit of data transparency is that it can help you improve customer loyalty and retention. Customers who trust you are more likely to do business with you and recommend you to others.

Over 90 percent of consumers say transparency by a brand is important to their purchase decisions. That should be more than enough reason for you to focus on being more transparent with your audience.

Generate new leads and sales

Last but not least, data transparency can also help you generate new leads and sales. Customers who trust you are more likely to give you their contact information and recommend you to others. Brands that prioritize data transparency, utilizing the services of data management companies, can expect to grow their customer base and increase their sales in the long run.

Data transparency is not an option anymore

Data transparency is no longer an option for businesses. It’s a necessity if you want to stay competitive and build trust with your customers. The good news is that there are many ways to improve your company’s data transparency.

You just need to find the right approach for your business and start implementing it today. Can you make it all work out well?

Henry Bell
Henry Bell is the Head of Product at Vendorland. He is a business technologist driving transformative growth through digital technology strategies. Henry is a highly analytical and collaborative problem solver with outstanding cross-functional skills in product leadership, application management, and data analytics.

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