In this guest post, executive director of data & analytics at Arq Group, Justin Parcell, discusses how companies can ethically use data in a tightly regulated environment.
Recently, the world’s largest social media platform celebrated its 15th birthday. As opposed to commemorating the various ways in which Facebook has progressively helped to globalise the world, majority of conversations were laser focused on the company’s misuse of personal user data.
Consumers have never been more aware and informed of the impact of data privacy on their personal lives. They are increasingly coming to understand the role data has to play in business, and they are demanding that organisations be transparent about what they are doing with the data they are collecting.
This is further amplified by the rise of data protection rules such as the General Data Protection Regulation, which is underpinned by the principles of accountability and consent.
In the retail sector for example, the concept of personalisation lies in delivering highly relevant communications and offerings to the right people, at the right time.
To achieve this, businesses need to collect a full spectrum of data, which could include your name, address, email, IP address, sexual orientation, religious beliefs and political views, amongst others.
Effective, yes. Efficient, yes. Ethical? Questionable.
At a time when consumers are more spoilt for choice than ever and where the concept of brand loyalty is slowly diminishing, businesses must be able to demonstrate transparent and responsible data practices in order to build and maintain consumer trust over time.
A recent Customer Loyalty 2019 Report by Gemalto found that retailers (62 per cent) are most at risk of suffering the consequences of data misuse, with Australian consumers prepared to avoid their business in future.
Australian consumers are also more likely than their global counterparts to walk away from a company (retail, financial, healthcare) that has experienced a data breach or are found to be misusing personal data, with over two thirds (70 per cent) admitting they would look elsewhere if the date collected from them was stolen.
Take for example Facebook, whose continual breach of consumer trust over the misuse of their personal data saw a decrease in users across all age categories and demographics in 2018.
The good news is, while consumers are quick to walk away from a company due to its track record with unethical data usage, they are also far more willing to have brands they trust consume and utilise their data to effectively market to them.
In fact, not only will responsible data storage and management improve consumer trust and strengthen a brand’s corporate reputation, it also has the power to bolster consumer engagement with a brand and in turn, help drive sales.
Ensuring that data storage and management is by design that recognises the consumer’s rights to that data and the privilege and responsibility that businesses have and take on is critical to establishing the appropriate processes and safeguards for its use.
Engaging consumers in a way that has been agreed to isn’t enough. Experiences need to continually demonstrate that businesses understand the consumer and deliver value to them. Granular access controls, clear accountability and robust processes that govern use are critical.
Ultimately, businesses see compliance regulations as an enabler rather than an inhibitor. If brands are compliant with all regulatory requirements and can demonstrate their commitment to transparent and responsible data practices, it will enable them to effectively take advantage of the consumer data available whilst upholding brand reputation.
Using and storing data responsibly and harnessing it as a building block for personalisation, could provide the opportunity for businesses to increase customer loyalty through a more streamlined, targeted experience for consumers. What’s more, proper data management will help streamline business processes and avoid unnecessary misuse of stock, staff and finances.