The Internet of Things has opened a data floodgate. When it comes to privacy, the fate of that flood might be in the hands of consumers.
Everyday, 2.5 exabytes of data are produced on the internet. That’s equivalent to 250,000 Libraries of Congress. What’s more? 90% of available data today was generated in the past two years. With more than two and a half billion people online, it’s safe to say that big data has become a staple of B2C interactions and economic growth. The online advertising industry alone is worth $120 billion. With this influx of data (and dollars) comes a crucial conversation for tech companies, one that is just beginning to be had: how educated is your customer about what you do with their private data?
Most products and services in the digital space enjoy the luxury of a multiplied transaction.Not only are consumers paying (one way or another), but they are also providing increasingly valuable data for the company to leverage. The model is simple: the more you know about your customer – their shopping habits, their favourite foods, their lifestyle choices – the easierit is to sell directly to them. Digital engagement has allowed for this model to exist behind a fog of lengthy privacy policies that promote absent-minded consumer consent. For successful corporations, this is where the issue of transparency presents itself.
A 2015 Columbia Business School study found that consumers base the value of their personal data on how sweet their side of the deal is. 75% of respondents said sharing data is no problem, as long as it’s in exchange for a product they love from a company they trust. 80% said special offers and rewards could sway their decision to dish out private information.
But the overall majority of respondents felt strongly about one key factor: knowledge. If they know where their data is going and how it is being used, consumers can recognize the potential return on their data investment.
Marriott is a brand that has mastered a mutually beneficial system of data use. The hotel company’s Marriott Mobile app, launched in early 2017, responds dynamically to the user’s needs and interests. If a customer opts in to share their location and preferences, they receive personalized content before, during and after their stay. In this relationship, the consumer understands that sharing their data will benefit them in the future.
TD Bank has managed the same model. TD for Me, a feature of the bank’s mobile app, personalizes digital content and services based on the user’s location and interests. They receive relevant information about community events, special offers, financial tips,reminders and more. TD Bank is leveraging data to truly understand and proactivelyrespond to customer needs.
No matter the potential for a returned benefit, the level of comfort associated with data sharing always depends on externalfactors, like age, industry, and brand reputation. Millennials, having grown up in a digital world, are more likely to share data than Baby Boomers. The financial industry, with its long standing tradition of information sharing, might have an easier time retrieving consumer data than companies in the retail industry. And if a consumer has been with the same bank for 10 years because their parents have been with it for 20, their trust in that bank is likely strong enough to share personal data. If brands expect a healthy dose of private information from customers, they first have to understand the detailed demographics of their target market.
Once you truly know your customer, you then have a base for building trust. But as suggested by Flybits CEO Hossein Rahnama, brand loyalty in data sharing requires more than simply the consideration of privacy standards. Tech companies should be incorporating privacy functions into their initial product designs and corporate structures, from the ground up. Once the consumer understands that they have the power to comprehend and control the privacy of their own data, brand trust is established and data is more willingly passed along.
For data sharing companies, the bottomline is this: lay your intentions on the table. Tell your customer how their personal information is being obtained and – more importantly – how it will be repurposed for their benefit. Your customer will appreciate not only the honesty, but the promise of a seriously sweet deal.