It seems nary a quarter goes by without news breaking of a major data security breach that exposes personal and financial customer information. Consumer frustrations surrounding these breaches – as well as questions about suspicious privacy policies and shady data usage – ultimately led to the passage of The EU’s General Data Protection Regulation (GDPR). GDPR and increased global scrutiny of privacy and security have helped ease concerns but compliance has been a bit of a hassle. For many American companies, they’ve had to invest in major changes when doing business with customers in the EU. However, companies that reframe their approach to security investments, which are typically seen as cost mitigation against a breach, can find a new competitive advantage.
Leveraging Data Privacy and Security To Drive Value
Do customers really care about data privacy when they are looking to spend money? Yes. According to a global survey of 6,000 customers, strong security increases overall customer satisfaction from 13% to 40%, and customers have shown they are willing to spend more with companies they trust to protect their privacy and data.
How important are privacy and security? When customers were asked to rank the criteria by which they choose a primary retailer, product quality, availability, and price were always important. When consumers were also asked about cybersecurity and privacy, those factors actually outranked price and even brand recognition. Overall, security was the third most important factor when consumers choose a primary retailer, and enhanced security and data privacy protections are estimated to lift revenue by as much as 5% annually.
Trust-Building Actions Customers Want From Retailers
The terms “security” and “privacy” can be a bit vague. So what, exactly, are shoppers looking for when they say they want stronger security and privacy? Surveyed consumers were asked how much they would increase online spend if a retailer assured them their information was safe, if they provided transparency when making those claims and if they explained how personal and financial data would be used.
Around 40% of consumers surveyed said they would be willing to increase their online spend by 20% or more if the retailer provided assurances and built trust. Consumers also indicated that they are not getting the assurances they are looking for from retailers, and they feel most retailers are reluctant to share breaches, that they hide their policies and fail to own up to mistakes.
This disparity between what customers want to see and what they feel they are getting means there is tremendous opportunity for retailers to strengthen current customer relationships and attract new customers by focusing on data security, privacy and transparency around those policies.
Soon, Change May Not Be Voluntary
Time is of the essence to make data privacy and security a differentiator because soon, it will be status quo. States across the country are introducing legislation to provide consumers with more control over their information in the wake of The EU’s General Data Protection Regulation (GDPR).
Recently, the California Consumer Privacy Act (CCPA) passed the state legislature and Nevada passed a similar law. Nine states have followed suit, introducing bills that would require companies to provide notice of the type of data they collect and the third parties they share that data with. The bills give individuals the right to access their data or to opt-out of the sale of their personal information. Several bills also give individuals the right to request that their information be removed, and many propose a private right of action for violations.
States currently considering such bills include New Mexico, New York, Massachusetts, North Dakota, Hawaii, Washington, Rhode Island and Maryland. It won’t matter where a company is based, it matters where the customers live, which means retailers will have to shore up their privacy and security policies to meet differing standards across the country.
Trust Builds Long-Term Relationships
All great relationships are built on trust, whether personal or business. Retail is no exception. When companies are fighting it out for every dollar, trust can be a major differentiator as customers are willing to spend more with companies that they trust to protect their information. Now is the time to make security a priority, so when it becomes the law of the land, trust is already baked into the customer experience.