To conduct business and cater to customers, companies have always collected data. Back when data was securely tucked away in locked filing cabinets, privacy concerns were much less complicated.
Customer data, a broad term, encompasses any information gleaned from those interacting with a business. This data includes not just the personal details, like names and email addresses, but also behavioral patterns and demographics used for purposes such as marketing. At its core lies personally identifiable information (PII) – the critical pieces of information that can be directly linked back to an individual, like payment details or mailing addresses.
In today’s digital environment, where breaches are a reality, the way a business stores customer data has become a paramount issue, and rightly so: 68% of consumers are either somewhat or very concerned about their online privacy, according to the 2023 Privacy and Consumer Trust Report prepared by the International Association of Privacy Professionals (IAPP), which surveyed 4,750 individuals across 19 countries.
The Evolving Imperative of Customer Data Privacy
Digital connectedness continues to increase, with no signs of stopping, as does the need for diligent due practices surrounding data privacy. While data privacy has always been important, 15-20 years ago the topic wasn’t at the center of company conversations and initiatives like it is today.
This urgency can be attributed, in part, to the dramatic proliferation of technology, including the ubiquity of smartphones, apps, and other services that rely on personal data. Once upon a time, businesses focused on safeguarding physical locations and maintaining secure off-site backups. Today, challenges can be multifaceted and ever evolving. Various digital threats, from the integrity of online systems to the security of payment gateways and email communications, can pose a range of potential vulnerabilities.
Additionally, consumer data privacy legislation, like the California Consumer Privacy Act and other state-level laws, have highlighted the legal imperatives of data protection, further emphasizing the necessity for businesses to prioritize data privacy.
The Importance of Protecting Customer Data
Thanks to the digital revolution, access to the internet, social sharing, and even the proliferation of AI and other emerging technologies, today’s ultra-savvy consumers tend to expect digital privacy. According to the same 2023 IAPP report, 67% of respondents opted out of making an online purchase over the last year due to privacy concerns, while 57% view the use of AI in collecting and processing personal data as a significant threat to privacy.
In theory, it can take a company multiple interactions to build trust with customers, but even one negatively perceived interaction can create mistrust. In today's digital age, where many businesses interact online with customers, trust plays an even more integral role, as protecting digital data becomes central to the success of a business.
Consider recent history: Major companies have faced significant public backlash and legal consequences due to data breaches and scandals. These incidents don’t just result in hefty fines and legal fees – they can erode public trust to the point of jeopardizing a company’s future. In fact, 80% percent of IAPP respondents said they are likely to stop doing business with companies that have been victims of cyberattacks.
While European nations have made strides in enacting comprehensive data protection laws, like the General Data Protection Regulation, the U.S. landscape remains fragmented. Although state-level customer data protection laws are on the rise, not all states have such provisions. In this vacuum, the onus can increasingly be on businesses to lead the charge in data protection, not just to comply with disparate state laws but to defend the trust and loyalty of their customers.
"Digital connectedness continues to increase, with no signs of stopping, as does the need for diligent due practices surrounding data privacy."
5 Steps to Ensure Data Privacy
Given how vital data protection is to your company, it’s important to take the necessary steps to protect customer data. These five guidelines can help you learn how to protect customer data.
1. Limit and protect the information you collect on customers.
The more sensitive the information stored, the more attractive your business can become to potential cyberthreats. To reduce the chances of becoming a target, consider adopting protective strategies, like:
- Offering login credentials based on usernames and unique passwords rather than on sensitive personal identifiers, like Social Security numbers or driver’s license details.
- Regularly assessing the type of information you collect. If something isn't essential for your business, you can avoid storing it.
By being judicious about what you gather, you can not only safeguard your customers but also reduce potential risks associated with data breaches.
2. Use state-of-the-art encryption methods.
Encryption is the process of converting information or data into a coded form to make sure only those with the correct decryption key can read it. In other words, it transforms readable data (known as plaintext) into an unreadable format (ciphertext), using complex algorithms. This helps keep data confidential and protected from unauthorized access.
Safeguarding customer data requires deploying the latest encryption techniques. This is crucial not just for data in transit – like when it’s being sent over the internet – but also for stored data. When choosing storage solutions, you can prioritize platforms known for robust security features, like those that use decentralized databases combined with industry-standard encryption techniques. For instance, time-tested algorithms with 256-bit key lengths can significantly reduce the risk of unauthorized access and instill greater trust.
3. Focus on building trust for the long term.
A company’s actions can build trust, but that trust can only be developed over time. Longer-term relationships are typically built on multiple successful transactions.
Trust tends to be reciprocal. For example, a company may extend its trust to customers by offering something, such as friendly warranties, discounts, or extended service programs. In doing so – authentically investing in customers – that business can prove to customers they're in it for the long haul.
To establish and nurture long-term trust, it can be crucial to be transparent about how you collect and use customer data. This includes clearly written privacy policies and immediate notification of any data breaches. Whatever the required privacy disclosure for your industry, you can make sure it's visibly displayed up front and center for your customers.
In addition, the following can nurture a trusting relationship:
- Consider regularly reviewing and updating your security measures to ensure customer data protection.
- Try to continue to deliver consistent, excellent customer service. A helpful and responsive customer service team can go a long way in solidifying trust.
4. Make it convenient for your customers.
When it comes to data privacy, clarity and accessibility can be key; an informed customer can be a more trusting customer. To inform your customers of your company’s data privacy policies, you can focus on omnichannel formats. In other words, consider providing the full privacy policy on initial contact, and then provide in easy-to-access summarized versions during various touch points. For instance, have telephone customer service personnel share a brief summary and include a FAQs section on your website.
In addition, you can:
- Try to make sure your privacy policy and related materials are accessible and readable on mobile devices.
- Consider adding a chatbot to your site that can guide customers to the specific answers they’re looking for about data privacy.
- Try to cater to all segments of your customer base by providing translations of your privacy policies and related documents.
- Consider encouraging customers to provide feedback on your products, services, and any data-related concerns. Then, you can show them you’re acting on that feedback.
5. Train employees regarding data privacy.
While privacy is an important part of all businesses, it’s even more crucial in certain industries. Take health care, for instance. Patient information is both intimate and personal, and breaches can lead to severe consequences in terms of trust and legal implications. Laws like the Health Insurance Portability and Accountability Act (HIPAA), violations of which can trigger severe civil or criminal penalties, underscore the need for rigorous data protection. In turn, companies often implement rigorous training programs to ensure all new employees understand the importance of HIPAA and data privacy – a practice that’s relevant to any industry.
Moreover, with the rise of mobile technology, safeguarding data on portable devices has become a pressing concern. Mobile accessibility is increasingly becoming a requirement for many employees, which can introduce potential vulnerabilities. Portable devices are not limited to specialized equipment, but often include everyday items, such as cellphones.
For a robust data privacy approach, you can consider:
- Periodically training all staff, not just new hires, on the latest data privacy regulations and best practices.
- Accounting for all portable technology devices at the start and end of shifts. Try to ensure they are securely stored and updated with the latest security patches.
- Implementing security measures specifically for mobile devices, such as two-factor authentication, encrypted communications, and remote-wipe capabilities, in case of loss or theft.
- Ensuring employees who access company data remotely are aware of the risks and follow best practices, such as using secure, encrypted connections and avoiding public Wi-Fi for sensitive tasks.
By keeping employees informed and updated about the importance of data privacy and the specific measures needed to protect it, businesses can significantly reduce the risk of accidental breaches or leaks.
The Takeaway
Consumer trust can hinge on businesses’ support of effective data privacy and cybersecurity practices. Given the fragmented regulatory landscape, especially in the U.S., businesses themselves can proactively champion and prioritize customer data protection. By doing so, they can safeguard their reputation and foster long-lasting customer relationships built on trust.
A version of this article was originally published on January 25, 2019.
Photo: Getty Images
