Privacy concerns stop customers from buying

Petra Mlada
Written by
Petra Mlada
May 21, 2021

Privacy concerns about data on social media, google accounts, and e-commerce websites are growing exponentially. The Facebook-Cambridge Analytica scandal set in motion the distribution of fines for data privacy violations. Such scandal and million-dollar fines nurture the privacy concerns on the internet. Today privacy concerns regarding Google are only the cheery on top of a cake full of consumer mistrust in companies, media outlets, and big data use.

What are privacy concerns?

Privacy concerns include selling to third parties, storing, re-using, and publicly displaying personal information without valid consent, not applying sufficient security measures. Naturally, not all companies misuse their customers’ data, and much fewer companies do so willingly. But the amount of information about companies can collect in today’s modern world is incomparable with the past decades. In only a few years, companies have learned to collect and process information of their customers so efficiently that everything from R&D through marketing to sales is a matter of well-calculated decisions. On the other side of this equation, the customers enjoy constant efficiency and convenience with only a small price to pay - privacy concerns.

Consumers have rather quickly realized their information is being collected, sold, and used, and they are viewing it as troublesome. Articles and posts about the negative effect of data processing are flooding the news. A good example is the official news website for Harvard University, which has been publishing articles with titles as Why your online data isn’t safe and On internet privacy, be very afraid. It seems as if personal space is being violated every time a consumer opens a website, buys a pair of shoes online, or scrolls through social media.

privacy concerns

It becomes obvious why consumers are increasingly concerned with their data privacy and suspicious data processes. And these are not isolated feelings. KMPG study from 2016 shows that 55% of consumers surveyed globally said they had decided against buying something online due to privacy concerns. Can you imagine the number in 2021, after the Facebook-Cambridge Analytica scandal and data privacy authorities fining Google over 50milion euros for security data branches?

Examples of Privacy Concerns

Privacy concerns can be influenced by everything from GDPR breaches to unclear privacy policies and can take on many forms. A current privacy concern regarding Google is one of the most prevalent. User tracking is a standard process that leads to personalized content, but when users enter ‘private mode,’ no data is supposed to be collected.

Yet, in 2020 Google was sued for violating the ‘privacy mode’ promises. Without the knowledge, third-party cookies tracked users in ‘Incognito’ modes for quite some time. But privacy concerns regarding Google spread often and fast, and while Google can afford to pay imposed fines with ease, the popularity of new search engines, which do not track its users, is on the rise. DuckDuckGo, one of the most popular non-tracking search engines, has increased its traffic by more than 60% in 2020 because more and more people seek privacy over personalized content.

Other widespread privacy concerns are about social media. Facebook privacy concerns are at the top of the mind when it comes to questionable data practices. Facebook is currently known for maltitude of privacy breaches that concern its users, from data breaches caused by lack of security measures, through violating the GDPR, to a massive ‘mood manipulation’ experiment.

Facebook’s response to these privacy violations was mere apologies and an occasional re-evaluation of its current processes. Privacy concerns affect all types of businesses. No matter the size or industry of a company, consumers are concerned with how companies treat their data. The list of privacy concerns goes on and on, but they all tell the same story.

Consumers on Privacy & Convenience

Respondents of the KMPG study further reinforce the idea that having control over data privacy is more important than convenience in most countries. The tables are turning; what used to be the most customer-friendly strategy in the 2010s is now perceived with distrust. Some consumers are taking the matter into their own hands.

Approximately 50% of consumers are deleting browser cookies and adjusting privacy settings on social media applications. One in four consumers uses encryption to protect their data, and almost two-thirds use modes, such as ‘do not track’ or incognito for web browsing. However, most consumers rely on businesses whose websites they visit to ensure their personal data is safe and secure.

privacy concerns

It seems paradoxical that while collecting vast amounts of data from customers, companies have failed to determine what consumers think about the process itself. Companies would have found out that globally, less than 10% of consumers believe they have complete control over their data. But rather than focusing on the way companies fail to make consumers feel in control, let us focus on the opportunity that arises from this situation. The increasing confusion about the legal landscape of privacy laws and regulations comes with an opportunity to gain an advantage, where others fail.

With consumer concerns growing by the day and authorities on the lookout, legal compliance with privacy laws and regulations can become a competitive advantage in the hands of the right companies. The KMPG survey showed that 56% of consumers are concerned/extremely concerned about how firms treat and use their personal data. But the studies indicate that when customers trust companies, they tend to share more information.

In other words, transparency leads to higher data accumulation as opposed to ambiguous privacy notices. Showing your customers, you care about their privacy and data security with a simple badge, or understandable information can be the difference between losing and winning a deal. With the focus being on the consumers, we haven’t even mentioned the astonishing frequency and size of fines, which can reach up to 4% of the company’s global turnover, being imposed for non-compliance. Moreover, the consequences of unpleasant PR can have lost-lasting effects.

privacy concerns

The future of privacy concerns

Experienced marketers might tell you that you can persuade consumers to favor personalization over privacy control with the right marketing strategies. And while such a strategy might prove to be efficient initially, it won’t last in the long run.

Authorities are becoming more and more aware of the ways companies are trying to outsmart laws and regulations, and they are learning from it. Regulators are starting to understand how consumers can be influenced and manipulated in ways they might not realize themselves. Overall, there is little to no hope for companies trying to outplay the authorities in the long run.

The future provides an even more obvious reason for treating data privacy as a focal point of daily operations. Consumers are tired of reading lengthy privacy notices and double-checking information that companies provide. Consumers are looking for easy ways to determine how companies will use their data. Hence, new, better systems for determining whether a company treats consumer data with respect are bound to appear soon.

These new systems could take on forms as simple as traffic light systems - where red is associated with irresponsible data processing, yellow with good intentions, and green with transparent and fair processes. The likeliness of such systems becoming popular is high. When the new solutions hit the market and consumers will be able to determine whether a company is using their data in unfair ways in a matter of seconds, companies will have no place to hide.

privacy concerns

With the rising number of consumer concerns over data privacy, it is safe to assume companies have become GDPR compliant and go even further to live up to consumer expectations. However, becoming compliant is not only a legal requirement but also an advantage. A Gartner Inc. report shows that companies that become GDPR compliant and build trust with their customers by 2023 can expect 30% more profits than their competitors from selling online. The advantages of becoming legally compliant with privacy laws and regulations seem to be more evident each day. And you can expect data privacy to be the topic of the day for many more days to come.

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