Hashed Data Protects Consumer Privacy

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Consumer data should be sacrosanct. And in this age of digital marketing, there is a balance to be maintained in communicating effectively with customers while protecting their privacy and, at the same time, complying with privacy regulations. In today’s data-driven world, a goal for marketers should be to choose tools that help them to prioritize privacy. Hashing algorithms are one way to do that.

Hashing is the process of generating a value from a text input using a one-way cryptographic algorithm that enables the security of consumer information and data. That one-way function means that personally identifiable information (PII) – any data that could potentially identify a specific individual – is not visible based on the hash code. As a result, the raw data or PII associated with a consumer remains private, as it should be. The consequences of not ensuring consumer privacy are not only an erosion of trust in the brand, there is a quantifiable impact to a business’ bottom line. According to one study, 48% of consumers stopped buying from a company over privacy concerns.

Building trust through technology

Brands that take consumer privacy seriously have more satisfied customers and deeper loyalty. With that in mind, here are some practical steps a company can take to honor the privacy of their customers and their partners.

Provide clear guidelines on PII.
Provide consumers with more control over their data. Request permission to use consumer data for a specific purpose and only use it for that purpose.
Allow consumers to remove themselves from your database (stipulated in the CCPA for CA residents, but a good practice in every state).
Invest in data and security solutions that will protect your brand and your customers.
Apply “The Golden Rule of Data” in every case. In other words, use customer data only as you would want your own data to be used.

The next step is applying an effective layer of security. In addition to increasing consumer trust by being 100% transparent about data usage, companies that deploy hashing technology can ensure optimal levels of security. The hash code that results from a hashing algorithm is like a message fingerprint of the text input. It has a fixed length and will vary widely with small variations in input. Because these algorithms are one-way functions, it becomes nearly impossible to determine the original input based only on the hash code. Hashing algorithms power the security behind such services as internet banking, enabling the providers to receive data in a way that protects consumer privacy.

Honoring consumer privacy and understanding consumer preferences are the most critical parts of providing an exceptional customer experience. When a business chooses tools that protect customer privacy, they are also securing the trust that their customers have put in them. Alternately, ignoring the privacy concerns of customers has been shown to be costly, with 87% of consumers taking their business elsewhere if they don’t trust a company is handling their data responsibly

Honoring consumer privacy with data vigilance

Responsible companies view consumer privacy and data security from both sides of the equation: as a business and a customer. If the customer wins, the company wins.. And that is no easy feat for a company trying to stay ahead of regulations and navigate today’s increasingly stringent standards. As we wrote in Customer Think earlier this year, not only can there be significant penalties for not complying with privacy regulations, but studies have shown that consumers are becoming more concerned about how their data is being used.

And the General Data Protection Regulation that was enacted by the European Union (EU) in 2018 is becoming a model for behavior in the United States (US). In his first week in office, President Biden appointed Christopher Hoff as deputy secretary to the US Department of Commerce to negotiate with the EU on how data is moved between Europe and the US. The onus is clearly on digital marketers to structure their strategies in a way that prioritizes consumer privacy and consent.

With more stringent regulations in place, businesses need to be hyper aware of how they manage data and where it comes from. In an age of business when increased collaboration through partnerships has become the norm, it’s critical to understand how partners gather, store and link data to ensure that it aligns with company privacy policies and regulations. It all boils down to the need for a level of vigilance that’s only possible with the strategic use of technologies like hashing.

Collaborating for consumer privacy across the partner landscape

The same level of transparency that companies establish with customers should be extended across partnerships. Partners who contribute their data to help brands and their customers achieve the best consumer experiences will be amenable because they know the value of those partnerships. Examples of data contributors include:

Lead Generators
Comparison Shopping Services
Identity Resolution Providers
Customer Interests and Market Research Firms

To maintain that standard of consumer trust that I mentioned earlier, it is crucial for companies to have agreements among partners to keep consumer data protected. Simply consider it a natural extension of the “Golden Rule of Data.” With the right technology in place, data from both customers and partners can be treated with the same care and respect.

Hashing algorithms offer a process that can mitigate the risk of partnership sharing from the beginning. Hashing goes beyond encryption because it is a one-direction process. Encryption turns data into a series of unreadable characters that aren’t of a fixed length. Encrypted strings can be reversed back into their original decrypted form if you have the right key. Essentially, encryption is a reversible process, whereas hashed data cannot be “decrypted.”

When all data is handled with the same advanced hashing algorithms that, for example, large financial institutions use (a function accessible to companies that leverage hashing algorithms), the benefits are clear: Derive data insights based on aggregate counts, calculations, and scores while ensuring an ultimate goal to bring more value to the customer.

Protecting consumer privacy should be simple: it’s about never capturing, storing, or sharing raw PII. With that awareness, a company can activate the right data to provide timely and relevant outreach that best meets the needs of the customer, throughout their shopping journey. It’s about creating a better experience in a secure environment. When a company makes it a mission to deal only with data that’s connected to protected, non-sensitive records, everybody wins.

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