I recently received a gift card to a popular coffee shop – score, right? When I tried to add it to the app to take advantage of the power and convenience of technology, it required my home address! Why would it need to know where I live in order to let me use a gift card I already had? No explanation, but it’s just another example of the kinds of data retailers are gathering. Maybe in the past I would have simply gone along, but like many other consumers, I’m increasingly skeptical of requests for data. This is making it harder for retailers, but also presents an opportunity to build a brand advantage.
Consumer privacy concerns rise right behind PII data collection
Retailers and CPG companies can do amazing things for customers with data. At the Snowflake Retail and CPG Data Analytics Forum, I heard how companies can use hurricane forecasts to predict peanut butter purchases – I'm sure buyers making the trip to the store ahead of the storm appreciate having enough jars for everyone! I also heard how values-driven MOD Pizza used Snowflake, Tableau and a focus on privacy to enable their shift to new order channels, support employees, and deliver data-driven family and bundle offers to customers during the COVID-19 pandemic. Collecting and utilizing data to provide better service to customers can build affinity for the brand and deliver a powerful competitive advantage.
But after the increasing number of consumer data breaches in the headlines in recent years, personal data collection can also raise customer privacy alarms. In an eye-opening 2019 Pew Research Center study, 81% of Americans said that the potential risks they face because of data collection by companies outweigh the benefits. This might be because 72% say they personally benefit very little or not at all from the data companies gather about them. Additionally, 79% of adults are not confident that companies will admit mistakes and take responsibility if they misuse or compromise personal information, and 70% say their personal data is less secure than it was five years ago.
A recent McKinsey survey showed that consumers are more likely to trust companies that only ask for information relevant to the transaction and react quickly to hacks and breaches or actively disclose incidents. Consumers had a higher level of trust for industries with a history of handling sensitive data – financial and healthcare – but lower in other industries including retail.
Some retailers don’t quite realize the risk, or the opportunity. A separate McKinsey survey showed that 64 percent of retail marketing leaders don’t think regulations will limit current practices, and 51 percent said they don’t think consumers will limit access to their data. This has already been disproven with Virginia and Colorado rolling out state-level privacy regulations in 2021 and proposed federal data protection laws bubbling back up. And Apple’s recent deployment of privacy features including App Tracking Transparency empower consumers to control what information apps gather about them on their phones.
4 ways to build trust, strengthen customer relationships, and reduce risk by safeguarding personal data
It’s clear that retailers can’t continue to gather data at will with no consequences – consumers are awake to the risks now and demanding more. This gives retailers a chance to strengthen the relationship with their customers by meeting and exceeding their expectations around privacy.
If personalization creates a bond with customers, imagine how much more powerful that will be if consumers also trust you.
Luckily, based on the surveys and studies above we have insights into what customers want and how you can deliver that:
- Apply stricter privacy guidelines: Follow the lead of industries experienced in handling and protecting personal data: healthcare and financial. Adopt the stricter privacy guidelines these industries are already required to follow. It’s clearly working to gain customer trust.
- Gather only the minimum necessary information: Collect just the information necessary to carry out the specific activity or transaction the consumer requests. In other words, don’t require my home address in order to use a gift card. This also lowers your company’s risk by limiting the amount of data you are responsible for.
- Be open and transparent: Inform consumers and the public when data is misused or leaked. All 50 states have security breach notification laws with guidelines around notifications when personally identifiable information (PII) is leaked, but go beyond what is required by law to show customers and consumers you make their privacy a priority.
- Implement a complete Data Governance solution: this needs to include data intelligence, discovery, and classification; automated access controls; consumption visibility, thresholds and alerts; and tokenization of critically sensitive data in order to be complete. This will help retailers ensure that they’re not only meeting privacy regulations, but going the extra to mile to minimize the possibility of data leakage, exposure or theft—reducing risk to your customers and your business. And, if you’re using Snowflake Data Cloud to deliver data-driven insights, streamline efficiencies across your company, or create real-time, personalized customer experiences, you can easily add ALTR’s complete Data Governance solution natively to your database.
Reduce your risk and protect the value you’ve created
McKinsey asks the critical question: “How are you managing your data to derive value-creating analytic insight from personalization without causing value-destroying financial or operational loss due to privacy or security incidents?”
This isn’t just about consumer feelings or preferences – this is about risk to your business. All the value created by utilizing data for personalization can be wiped out in a second with one data incident. Make sure you’re prepared to minimize that risk and actually move your brand forward by building trust with your customers.