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How to manage customer data in an era of privacy concerns
How to manage customer data in an era of privacy concerns
The world runs on customer data. In fact, many thought leaders call data “the new oil” because of its value and potential. But customer data management comes with a growing number of risks and challenges.
As data breaches become more common, worried consumers are more discerning about who they share their information with. McKinsey research suggests 87 percent of consumers won’t conduct business with an organization if they have concerns about its data privacy management. Many consumers are also switching to privacy-first browsers and search engines like DuckDuckGo and Brave.
They’re not alone in their worries: Grassroots and nonprofit privacy rights organizations are raising awareness and lobbying governments for better protection. Legacy social justice organizations like the American Civil Liberties Union are also focusing on consumer data as it emerges as a civil rights issue.
Europe once stood alone as a leader in enforcing data protection policies, but now Australia and other countries have stepped up their efforts. The U.S. is primarily taking action at the state level, and policymakers in California continue to refine their regulations.
To reduce risk and increase trust, you need a comprehensive, three-pronged approach to data: educate employees about regional and global laws, create a technology and data management strategy, and foster a customer-first mentality. Over the next few chapters, we’ll provide an overview of how to do this and share best practices for implementing technology to make the most of the data you collect.
How to future-proof your organization’s customer data management policies
Most organizations already have policies and solutions to safely store, report on, and erase customer data in compliance with regulations. But since regulations constantly evolve, you need a strategy to mitigate future risks.
Responding to changes as they come up will be more time-consuming than staying ahead of them. Ensuring your customer data privacy system is future-proof saves time and money and makes it easier to navigate the changing data landscape. But revamping your existing policy, or building a new one from scratch, requires careful research and planning.
What do futureproof customer data management policies look like?
Many organizations have already overcome the strategy hurdles that defined the early days of customer data governance, including identifying what information they need, how to get it, and how to store it. Next, organizations focused on improving accuracy and eliminating data silos and storage of unnecessary information to maximize and streamline the use of customer data. Now, compliance with data privacy regulations and consumer trust are becoming issues that impact profitability.
Here’s what a future-proof policy looks like.
Designed for global standards
Even if your organization operates in a limited market, you should design your policy to match the highest standards in the world. Many municipalities look to others for guidance on how to draft their own data privacy legislation, so the laws of one land could soon become the laws of yours.
Failure to adopt a global mindset could also hinder your organizational growth. You may decide to expand into a new market or additional regions. If those new areas are governed by data privacy regulations you neglected to incorporate into your policy, your organization will have to start from square one.
All-encompassing
A modern data management policy needs more than input from legal and IT — it also needs to engage stakeholders and unify departments to enforce compliance. Customer data can end up in the hands of marketing, sales, customer service, accounting, and other departments. Sharing data between these departments helps provide a better customer experience, but it also creates more risks. With data privacy policies increasingly influencing consumer behavior, organizations need to treat their responsibility for data protection as a revenue-enabler rather than an expense.
Uniform
A future-proof data management policy is the same for each department and employee. Uniformity streamlines training. If an employee moves from one department to another, they won’t have to learn a new set of data privacy policies to function in their new role. Having one universal policy may even allow you to create organization-wide data management training.
Transparent
Consumers want to know exactly what information an organization collects and why. A future-proof customer data management policy details exactly when and how to share this information with customers. Transparency is not a one-time action but an ongoing practice that needs to be enshrined in protocol.
Flexible and scalable
A future-proof customer data management policy adapts to changing regulations, as well as the needs of a growing organization. Every aspect of the policy is expandable without making drastic, structural changes, even when new laws go into effect. You can update your data management policy seamlessly when it’s powered by the right software.
Developing a future-proof data management policy
The guidelines above clarify the goals of your customer data management policy, but putting them into action is a different matter.
Developing a new policy begins with researching current data privacy laws. Find the laws that govern your market and the regulations influencing the global business community. Search government web pages for the full texts of their compliance rules or other resources that simplify the language. The European Union has a checklist for how to establish GDPR compliance. Organizations like Digital Impact offer toolkits to help nonprofits improve their data privacy compliance.
The next step is auditing your organization’s current policy to identify how it fails to comply with global standards. List everything you need to change and how you’ll update it.
This audit is also an opportunity for stakeholders to flag any potential challenges of enforcing global standards. Get input on drafts of the policy from experts in the department involved in customer data management. They will have more insight into challenges than IT or legal. Partnering with them early in the process will improve buy-in and aid rollout and implementation.
Finally, train all employees who handle sensitive customer data on your organization’s new policy. This training should educate employees on the following:
- The protocols they should follow to comply with the new policy. Highlight the changes from your previous policy.
- The dangers of data breaches. Mention fines that result from non-compliance and the impact data leaks could have on customers.
Create an internal chain of command that outlines who enforces the customer data management policy, as well as who will amend it as regulations evolve. Establish a line of communication for employees who may have questions after training.
Throughout this process, leverage data privacy consultants, lawyers, or other experts to ensure your policy is compliant and easy to update. No organization has to handle this challenge alone.
The importance of a scalable customer data management system
Customer data management policies are useless unless enforced. A customer data management system or platform serves as a dashboard for all your customer information and the central tool of privacy policy enforcement. This technology needs to be as scalable and future-proof as your policy.
A data management system should enable your organization to follow whatever privacy policy you want. Beyond your policy, the management platform you choose needs to follow specific compliance protocols on the backend. For example, even if you draft a policy that doesn’t fully comply with GDPR, your platform should comply with it in case you want to expand into Europe later. Otherwise, you will have to find a new technology solution in addition to updating your policy.
Using globally compliant technology right off the bat reduces the risk of compliance gaps and helps your organization align with your industry’s highest standards. This lays the foundation for trust with your community, customers, and prospects, as we’ll cover in the next chapter.
Trust is the #2 most important factor in the decision to buy from a new brand.
Source: Edelman
TRUST SECOND ONLY TO PRICE
FOR PURCHASE AND LOYALTYPercent who say they focus most on each brand attribute
Source: Edelman
How to take ownership of customer data
In many ways, new data privacy regulations are forming at the perfect time. Organizations have never been more vulnerable to data leaks. Tightening regulations and organizational compliance is the perfect way to protect customers, restore trust, and safeguard the future of the digital economy.
However, more complex privacy policies also put organizations at higher risk of compliance breaches — a major liability, even if it doesn’t result in a data leak. Compliance breaches have three primary causes:
- Human error. Sometimes, employees entrusted with sensitive customer information make mistakes that result in a breach, exposing your organization to fines. Examples include storing information incorrectly or accidentally sharing information with unauthorized parties.
- Remote/hybrid work. Data breaches increased by 17 percent in 2021 because of the increase in remote work. Remote employees could expose information to hackers if they don’t follow proper security protocols — especially if they connect to open Wi-Fi networks at coffee shops or cafés. Plus, remote work has actually raised the cost of data breaches.
- Using non-compliant, third-party software. To be more productive, many workers use third-party software to manage information. If your employee uploads sensitive customer data to an unsafe app or software, your organization is liable for the risk, even if it’s not sanctioned by your organization.
Workers need to know the difference between compliant and non-compliant third-party apps, and your organization needs to educate them on the difference.
Taking a proactive approach to customer data management
Without proper guidance or support, your employees will inevitably do something to put customer data at risk. Facing this reality is the only way to protect your organization and your customers.
Educate employees about data privacy compliance, and support them with compliant third-party solutions. A comprehensive data management strategy also improves their customer experience delivery.
Deloitte’s 2022 Global Marketing Trends report overwhelmingly promotes one message: Put your customers first. With access to so many apps and digital services, consumers are used to a highly personalized customer experience and expect it from any organization. Marrying customer experience with a data management policy is the perfect way to put customers first. But doing so requires full control of your organization’s data.
Becoming a first-party data organization
For the past few decades, organizations have learned about their customers through cookies that track people across websites and social platforms. But in the wake of scandals like Cambridge Analytica, consumers are increasingly wary of companies tracking their web activities. Companies like Google are phasing out cookies entirely, while the GDPR demands that users grant tracking permission to websites that use cookies.
In a cookie-less world, organizations will become increasingly responsible for gathering customer data themselves. Organizations that use first-party data can customize exactly what data is collected — and the channels it’s gathered through — to solidify data privacy compliance.
Surprisingly, business leaders are finding that switching to first-party data is a major driver of growth. In fact, 61 percent of brands in a high-growth phase are moving to first-party data, compared to only 40 percent of shrinking companies. Organizations need a scalable, open API solution to do this effectively and continue growing.
61 percent of high-growth brands are switching to first-party data, compared to only 40 percent of brands on decline.
Customer data management systems to the rescue
The right customer data management system is essential to using first-party data as it can help optimize your use of high volumes of data. So, what are the benefits of a comprehensive data management system?
Deeper analytics
Go beyond merely storing data to actually parsing it for a deeper understanding of customer relationships. Analysts can leverage data for actionable insight into improving customer experience, offering more personalization and launching new products or features.
Dedicated storage for proprietary data
Without cookies, organizations need more storage space for the information they collect. Having a dedicated system and server unifies information to create a single, secure source of truth for all of your customer data.
Integration with first-party apps
A central database makes it easier to create first-party apps. You can design the interface to be compatible with your data management platform, with fewer chances of API or other compatibility issues that arise when using multiple solutions.
Higher security with third-party apps
Just as data management platforms improve compliance, they also improve security with third- party apps they integrate with — including Single Sign-On (SSO) integration capabilities and SOC 2 compliance. Many platforms provide higher visibility into what customer data is being shared with each app, with options to limit sharing. They can also detect and alert users when a third-party app seems dangerous to integrate with.