[BreachExchange] The three Ts of handling consumer data

[Destry Winant]

https://www.strategy-business.com/blog/The-three-Ts-of-handling-consumer-data

When consumers get to the cash register or checkout screen, they are
increasingly asked to disclose personal information. Studies show that
even people who harbor privacy concerns are willing to provide
personal details to a company.

Indeed, most consumers realize they’re being tracked when they surf
corporate websites, research shows, believing it’s just a part of
doing business online. A large survey in 2015 of consumers in the
U.S., the U.K., Canada, France, and India found that 75 percent of
respondents were willing to hand over personal details to a company in
exchange for a product or service they valued, especially if they
trusted the brand.

However, several more recent high-profile security breaches have
rattled some consumers and lawmakers, triggering calls for stricter
legislation on how consumer information is used and stored.

In an era in which good customer data offers a clear business
advantage, how should firms communicate with customers whose data they
seek? The authors of a new study set out to answer that question. They
reviewed research on consumer privacy issues, legislation, and best
practices at firms around the world, looking at mistakes made and
lessons learned. The study concluded that successfully handling client
data comes down to three Ts: trust, transparency, and type of data.

Trust. The more consumers trust a firm, the less they worry about
sharing private data with it. As with interpersonal relationships,
trust between a customer and brand is complex. And as trust becomes a
more important part of doing business, the authors write, firms must
view the trust they engender among consumers as an essential asset.

The more consumers trust a firm, the less they worry about sharing
private data with it.

Transparency. When companies request personal data, they must be
transparent about why they want it and what they plan to do with it.
Indeed, transparency is a cornerstone of recent data laws. When
disclosing data usage policies, firms must communicate in a friendly,
straightforward manner, the authors write, and not bury the
notifications in fine print or legalese. Firms should be up-front
about data processing and third-party involvement, which many
consumers are suspicious of.

Type of data. It’s important to be selective when requesting customer
data. In the U.S. and E.U., particularly, people tend to be guarded
about giving up identifying information. Firms should consider the
context of transactions and then be careful not to ask for data beyond
that scope. Most people wouldn’t give a second thought to providing
their address when buying something online but would balk at filling
out a form requesting shopping preferences or detailed demographic
information. Firms must keep the type of data they collect pertinent
to the transaction.

Access to customer data is a powerful business advantage. Companies
that stick to the three Ts can continue to collect this information
and use it to drive growth. Firms that flout the guidelines risk
seeing their customers — and that coveted personal information —
defect to competitors.