Data privacy concerns tend to elicit eye rolls from corporate marketers, who see restrictions on how they collect and use customer information as infringing on their ability to customize communications and experiences. But growing evidence indicates that respecting privacy is not only the right thing to do, but also a good way to grow your business.
Not that companies have much choice anymore. Nearly 130 countries have adopted data protection and privacy legislation. Colorado recently became the third U. S. state to sign a privacy bill into law, following California and Virginia. That means that organizations doing business in those states must observe regulations about responsible data retention and disposal, including consumer requests to opt-out of data collection. Gartner predicts that 65% of the world’s population will be covered under modern privacy regulations by 2023, up from just 10% last year.
Action is revving up in the commercial world as well. Google is set to block third-party cookies from its Chrome browser and Apple recently began requiring app developers to get permission from users before harvesting their data.
Celebrate restraint
Rather than moan about these restrictions, though, how about getting out in front of them by making your organization’s approach to protect an asset? For that, you can take a cue from Zoho, a developer of cloud office productivity and systems management software. The company refuses to host third-party software on its platform and has publicly vowed to never share or sell consumer data, even if it means leaving money on the table.
“We basically gave up the idea of having any part of our business model that depended on advertising,” said Vijay Sundaram, Chief Strategy Officer at Zoho and its ManageEngine subsidiary.
Zoho doesn’t make a big deal out of its privacy practices, “but all our customers know about it,” Sundaram said. “Over time you attract like-minded people who become customers and employees. The biggest value is customer trust.” The results are hard to quibble with: The company brought in $610 million in revenue last year and doubled its year-over-year profit.
Feeling powerless
Americans feel less and less in control of their data. A 2019 Pew Research study found that 81% of citizens believe they have very little or no control over the data that’s collected about them and nearly 70% said they aren’t confident firms will use personal information responsibly.
Growing evidence suggests people are factoring transparency about privacy practices into their buying decisions. A 2018 study published in the Harvard Business Review found that when web merchants disclosed that an advertisement was delivered to them based on their on-site activity, click-through rates increased 11%, time spent viewing the advertised product rose by 34%, and revenue from product sales grew by 38%.
“Trust enhances the positive effects of using personal information in ways consumers deem acceptable,” the study authors wrote. It’s not that people are reluctant to give up personal information, they just want to know what will be done with it.
Beyond Trust
The benefits extend beyond trust. With three years of the GDPR under their belt, many European marketers are reporting that cleaning up their customer data has reduced duplication and inconsistencies while increasing response rates to email promotions. Turns out, when people’s inboxes aren’t choked with unsolicited garbage, they pay more attention to the content they choose to receive.
A number of tools can help build online trust. The Digital Advertising Alliance’s YourAdChoices, for example, offers a badge for your website that links to a dashboard where customers can specify how data is collected from them and used in advertising.
There’s also a rapidly growing category of software called data privacy management, a market that International Data Corp. estimates grew 46% last year. Vendors like OneTrust, Collibra, BigID, and TrustArc sell tools that help companies manage personal data and enable consumers to control what’s collected about them.
Earlier this year, OneTrust, which became the number one company on the Inc. 5000 last year with 48,000% growth, closed a $210 million funding round that brought its market value to $5.3 billion.
Who says respecting customer privacy isn’t good business?
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