We all know that customer retention is essential to business success – so how can the somewhat discredited world of data security and data privacy help to boost customer trust, loyalty and retention?
Consumers are becoming more and more aware that companies collect data about them, and the stream of highly-publicised failures in data security and the use of personal data have led to an increasing lack of trust – even to the extent that governments have felt obliged to step in to regulate these practices.
The introduction of legislation such as GDPR (General Data Protection Regulation) in the EU has helped to stem the tide of consumer dissatisfaction, but although a recent Cisco report shows that the vast majority (86%) of consumers care about data privacy, almost half (46%) still feel unable to protect their data effectively; and of these, three quarters (76%) stated that it was too hard to understand what companies were doing with their data.
What can companies do to improve consumer trust?
Today, many consumers face a complex dichotomy. On the one hand, they’re not comfortable sharing personal data with companies due to a lack of trust, but on the other, they recognise that their best experiences, particularly in an online retail environment, are provided when a company can tailor exactly what’s offered to them. According to Ipsos Global Trends, 9 in 10 internet users aged 16-74 say they’re more likely to shop with brands that provide offers and recommendations that are relevant to them.
So, if we can resolve the issue of trust, we can encourage consumers to engage in deeper relationships with their retailers of choice.
Good data privacy means more than compliance alone
All organisations now have a legal minimal obligation to protect private data, so simply being compliant is not enough to differentiate a company.
Trust needs to be earned through a commitment to giving customers control of their own data. That sounds easy, but the reality is that although customers want to be in control, they often don’t know how to do that – due to the perceived complexity of the options offered to them by the companies that they engage with.
So to build consumer trust, it’s essential that they feel truly in control, which means offering them tools they can use, in a language they understand. Transparency is key: customers want to know what data is being collected, what it will be used for and what benefits they’ll see for making that commitment of trust.
Alongside a customer’s ability to make their own decisions, communication is also an important factor.
In a new survey from Google and Ipsos, three of the key data privacy practices that customers highlighted as offering feelings of increased control were:
- Being asked how (and how often) they wanted to be reminded about their preferences (14%)
- Being sent a regular email privacy digest (9%)
- Being asked for consent to be presented with a personalised website
Interestingly, when merged as part of a broader privacy toolset, these three best practice offerings actually generated a combined 37% increase in a feeling of control. This is a figure greater than the sum of its parts, which shows how a comprehensive approach to data security and privacy can increase consumer trust and actually become a USP.
We can now see that the apparently mundane subject of data privacy can, in fact, create a virtuous circle of customer retention and business development…
- Offering a transparent and user friendly approach to data privacy increases trust
- Increased trust encourages consumers to share more data
- Better data enables more tailored and subsequently improved consumer experiences
- Better consumer experiences create more loyal customers, improving retention
- Retained customers will spend more and provide more word-of-mouth recommendations