Data Privacy as a Greatest Competitive Advantage

Written by
Aušra Mažutavičienė
from
Trustpilot
-
September 5, 2022

Data privacy is constantly evolving, but one thing is clear - it is here to stay.

Consumers are well aware of the value of their personal data and growing more skeptical of business’ data collection principles - demanding that their personal data is handled securely and transparently. Equally, businesses are increasingly under pressure to protect consumer data and ensure it is used responsibly.

As fines for non-compliant data use continue to escalate (think of €746 million fine to Amazon or more recent and ‘less significant’ fines, such as €150 million fine to Google and €60 million fine to Facebook) no wonder that privacy has become a top priority for many businesses over the past few years. Data privacy is often seen as a legal requirement and the typical motivator for businesses is to avoid the financial consequences of non-compliance.

While this may be a reasonable commercial approach, many businesses fail to realize that by embracing robust, transparent data privacy practices they do more than merely comply with legal obligations; they establish consumer trust, which is a massive competitive advantage. Likewise, breaches of trust and unmet consumer privacy expectations open up opportunities for competitors.

The UK's Information Commissioner's Office puts it this way: "Proactively respecting people’s privacy can give you a competitive advantage by increasing the confidence of the public, regulators and business partners. Being open and honest about what you do with personal data will support contracting and data sharing with third parties.”

So how exactly businesses can gain trust with consumers and build their competitive differentiation? There are a few things to consider.

Transparent data collection is paramount.

Start by implementing robust data collection flows informing your consumers why, when and how their data is collected and what it will be used for. For many years it’s been common for businesses to collect personal data they have no immediate use for, reasoning that it might be valuable in the future. This approach is not only non-compliant, it’s also shortsigted.

Businesses that are transparent about the information they gather and give customers control of their personal data will be trusted and will earn ongoing and even expanded access to data, which in itself is an ever-growing source of competitive advantage. Those that are not transparent about data use, stand to lose both: consumer trust and access to their data.

User-friendly privacy policy.

Consumers are confronted with privacy policies all the time. Privacy laws requiring these policies aim to ensure that consumers can make informed decisions, but most privacy policies fail to deliver. The key to turning privacy policies into something useful for consumers is to rethink their purpose. Consumers are not lawyers (at least in most cases) and likely will not understand legal concepts.

If I was asked to give advice when it comes to privacy policies, I’d say - simplify, simplify, simplify. Privacy policy should always be written in clear, uncomplicated language. Consider using multiple layers, bullet points, short sentences. And of course - be transparent about the data you collect and the ways you process it.

Building awareness.

Any business that thinks it’s sufficient to simply present consumers with the privacy policy at sign-up is missing the point. While this may address regulatory requirements, it does little if anything to help your consumers learn about how their data is being used. To make an informed decision and give their trust, consumers should be educated about the use of their personal data.

Think of selecting relevant communication platforms that ensure customers are clear on your position on data use, how the data will be protected and the risks of not. It’s important to interact with consumers not only at the point of data collection, but also at other key touchpoints within their journey to drive awareness and consideration. After all, if you’re doing the right thing - why not share it with your consumers?

Offering the best price, the best product or the best customer service may no longer be enough for brands that aren’t transparent about their use of data, as consumers will likely shy away from businesses they can’t trust.

Transparent data collection does not mean you’ll lose access to data, quite the opposite - the more trusted a brand is, the more willing consumers are to share their data. Looking forward to transparent and responsible use of personal data becoming central to business success.