Imagine that you had to explain to customers what you were doing with your personal information. Would you feel embarrassed? Would you try and hide or skip certain activities? If so, it might be time to review your data privacy policies.
Today, data is at the heart of any brand’s effective marketing strategy. It holds many advantages – from shaping new product designs to driving inclusion and diversity initiatives. In essence, it helps a company’s customers get a better experience, which in turn creates loyalty and helps the company grow.
However, in the race to maximize their profits and competitor advantage, brands can easily overreach ethical data boundary lines. There is a pervading perception that, given the free choice, customers are unwilling to share their personal information. As a result, businesses use underhanded manipulation, nudge theory, or outright misuse to attain quick, short-term results.
On the less serious side, this encompasses jargon-filled website cookie notifications that portray a bright, green ‘accept’ next to a small, dull ‘reject.’ Customers are unlikely to have much of a concept of what they agree to with one quick tap. On the heavier side, it can include buying and selling vast swathes of customer data to enhance mailing lists without customer consent.
Brands must see the competitive advantage of being proactive and transparent with private communication.
When companies mislead customers or misuse their data, they invite risk. If customers feel a brand is unethical, they will lose trust. And, as we have recently written about in detail, brand trust is essential to business growth.
Customers use a business’s ethical principles to signal a brand’s trustworthiness. For example, a 2020 survey by McKinsey & Company found that shoppers were most likely to trust a company that asked only for information relevant to its products or limited the amount of information requested. As McKinsey says: “These markers apparently signal to consumers that a company is taking a thoughtful approach to data management.”
A fully consented brand-customer relationship will generate the most brand trust and hold up to current and future regulations. In addition, adopting ethical privacy policies that are open, honest, and transparent has the potential to create richer customer data sets and improve personalized experiences.
Asking for customer consent to use personal data is at the heart of a transparent data policy. With third-party cookies on the way out, there is a renewed focus on first-party data being the ethical option – but even this can be ethically questionable. Website behavior and purchase history are two examples of first-party data. However, the customer doesn’t have control over whether their website behavior is tracked or purchase history is used to inform future product recommendations.
So how are brands foster trust while learning their audience’s motivation, interest, or intent? They just need to ask.
Ethical privacy practices put the customer in control of their information and marketing preferences. As Hubspot’s Nicholas Knoop says: “Data is not owned by the companies that process it; rather, data is owned by the people who are represented by the data.” Making marketing preferences easy to access and change is a huge business benefit.
Like humans, personal information and preferences are constantly changing and growing. Analyzing behavioral data and purchase history shows what customers were interested in. It shows preferences they used to have. Unfortunately, it doesn’t show their future interests, motivations, or intent. Therefore, brands must ask for new information to provide the most relevant customer experience.
Whenever brands ask for personal data, the benefit of providing that data should be obvious to the customer. Creating and delivering an effective value exchange is a complex topic that we have covered in greater detail here. However, this is about building trust through transparency and encouraging greater information sharing.
Imagine if company website privacy policies were written like loyalty scheme introductions. Creating jargon-filled and hard-to-read policies is another method of nudging customers away from talking about privacy. Conversely, brands that make privacy communications accessible, relevant and engaging will likely see increased brand trust and greater information sharing.