In this post, we will explain exactly why customer data is valuable and why it is so important for businesses to protect. Specifically, we'll take a look at the kinds of data businesses collect, various vulnerabilities in systems, and what businesses can do to ensure that they put customers first.
Customer privacy, or consumer privacy, refers to the protection of personal data held by businesses about individuals and their transactions. As ecommerce has become a standard way of buying goods and services, consumers have become more aware of the risks of online activity and the value of their data.
Most businesses use several methods to collect customer data, and they must ensure that a) they have a lawful reason for doing so and b) the customer is fully informed of what information is being recorded (and why). Here are some common examples of how customer data is collected:
Knowledge is power. And knowledge of personal information gives anyone who possesses it power: the power to take control of online accounts, to withdraw money from your bank account, or to enter restricted areas protected by passwords or codes. As such, it has been essential for organizations to protect their customers’ data.
With the birth and proliferation of the internet, the amount of personal data collected, stored, and used by businesses has grown exponentially. This has made enterprises a prime target for cybercriminals.
Additionally, your customers have the right to know exactly how their data is stored, used, and shared. You wouldn’t be comfortable with people sharing your private information in person without your knowledge, so why accept it on an online network?
By analyzing customer data, you can provide a better service, product, or experience by more accurately understanding their demands, needs, interests, and behaviors. Knowing your customer demographics can often be derived from date of birth, transactional history, social media activity, customer preferences, and behavioral patterns. Businesses will often also store email addresses and bank details.
While data can be extremely valuable to your business, keep in mind that not every customer wants a tailored product or experience. Many people prefer their relationship with a company to be purely transaction-based. Giving people this choice ensures that you will retain the respect and trust of your customers.
As businesses are known for storing bank details, passwords and codes, and email addresses, they become the target of criminals. Protecting customer privacy prevents this sensitive information from being misused for fraudulent or criminal activity.
However, while it’s your moral responsibility to safely store all this data, it’s also your legal obligation – most countries have some kind of data protection legislation.
Within the EU, the GDPR law is in place to protect consumer data, while Australia introduced the CDR to similarly give consumers greater access to and control over their data. In the U.S., different states implement different rules – California, for example, follows the CCPA.
You should also consider your reputation as a business. The reputational damage of having a data breach could cost you more than the breach itself. More than two-thirds of consumers believe that privacy practices are related to a company’s trustworthiness, only marginally outranked by a company’s dependability and pricing. As such, earning and maintaining the trust of customers is more important than ever with news of data breaches and cybercrime making headlines. Fail to earn consumer trust and you’ll fail to grow your business.
Consumers are growing increasingly concerned about the data collected on them, its value, and how to protect their privacy. Cisco reports that 84% of consumers want more control over how their data is used and 90% believe the ways their data is treated reflects how they are treated as customers. This group will fundamentally not make purchases from companies if they don’t trust how their data is used.
Cisco also revealed that around 32% of consumers are so concerned about their privacy that they’re willing to act by switching companies or providers due to their data-sharing policies.
So, now you know the importance of protecting your customers’ data, we need to discuss the best ways to protect that information.
The less data you have, the less you can lose. Using this logic, you should only be collecting and storing the data that your business requires. For example, if your web page does not offer to store your customers’ payment details for future purchases, do not store their bank details. Not only will this make you less vulnerable, but it will also limit the damage caused if there is a data breach.
By limiting the access you grant to the personal data that you store, you are limiting the risk of exposure. If few employees have access, you are reducing your chances of an internal breach and creating fewer targets for external breaches. This may also make it easier to detect the cause of the breach if a criminal has accessed your databases.
Password management tools can do a lot of the security work for you. Rather than using basic passwords that are easy to hack, having complex passwords that you are regularly forgetting, or having all your company passwords located in one shared document, utilizing a password manager will allow you to use hard-to-crack passwords with ease.
While you are putting your faith in an external business, you can read online reviews about the different password managers available and find one that suits your business, budget, and security standards.
Data silos can cause issues within your business – often a lack of transparency and trust. Rather than isolating data within one department of your enterprise, ensure you invest in the most efficient and integrated technology that will allow all relevant departments to access the data they need securely. This way, you can maintain good oversight of who has access to what and avoid duplication of datasets, and thus, multiplication of potential vulnerabilities.
After conducting a data protection audit, it’s a good idea to find the vulnerabilities in your business and set some security standards. While these are standards that the whole business should abide by, some regulations may only apply to certain people with additional access or specific roles that focus on IT.
For example, you may set standards on who can access what, how passwords are stored, or where data is accessed from.
While specific web-based laws have not always been around to protect consumers, over the past decade, nations have been introducing legislation that protects how consumer data is used, stored, and shared.
A few of these laws include the following:
While details vary, the EU’s GDPR gives a good gauge of the nature of these laws. For example:
Keep in mind that data protection laws protect all kinds of personal data, not just consumer data – employee privacy should also be a priority for your business.
While the repercussions will vary depending on the specific regional policy, many businesses will be subject to fines if they refuse or fail to comply with data legislation.
For example, GDPR states that:
Here are some examples of consumer privacy violations:
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