It’s crucial that companies accurately assess whether they are handling customer information in a sound way.
Companies know more about their customers than ever before. In the last 24 hours, the company you may work for has probably amassed more information about customers than was conceivable a decade or two ago. Everything from the groceries we buy to how we got to work this morning is being monitored, measured and benchmarked to understand consumer behaviour more closely and create opportunities for business development.
As consumers, we benefit from this closeness. The fitness apps that tracks our steps, the messaging apps we use to send pictures to loved ones at Christmas, or the telematics technology in our cars that lowers our insurance premiums – all work towards enhancing and enriching our everyday lives. When we use such technology – whether it’s via a computer, smartphone or a connected car – there is often an assumed understanding: we’ll give you our information in exchange for the service or product that makes our lives easier, richer and sometimes cheaper.
This is the trade-off at the heart of the data economy. But there are limits to this trade-off. People are increasingly aware that organisations are collecting, using, retaining and disclosing their information, including buying and selling it and we know they are growing uneasy, begging the question: ‘when does ‘helpfully close’ cross the line to become ‘creepy and intrusive’?’
A recent survey by KPMG found that 55 per cent of consumers around the globe have decided against buying something online due to concerns over their personal privacy. The report highlights that while consumers are willing to embrace technology in order to improve their lives, many are becoming increasingly wary of organisations which collect and retain their information. Research shows that Irish consumers pay less attention to privacy policies when downloading software such as a mobile app (18 per cent), setting up a social media profile (14 per cent) and making an online transaction (12 per cent).
Unsurprisingly, people draw the line in dramatically different places: one person’s ‘creepy’ is another person’s ‘cool’. Gender, age, wealth, nationality and education all intervene and often in surprising ways. Over half of the survey respondents are willing to share their gender, education or ethnicity online, for example, whereas less than 20 percent are willing to share their income, location, medical records or address.
Despite these concerns, 57 per cent of people fail to read, or only skim, privacy policies. In fact, Irish consumers read privacy policies most thoroughly when entering a website (27 per cent), followed by joining a mailing list or subscription (22 per cent) and submitting an online form (21 per cent). Asian countries such as India and Malaysia, appear to be more receptive than Scandinavian countries to the idea of personalised advertisements while Japanese consumers seem to have a much lower level of trust in organisations handling personal data than consumers in India, but at the same time are the least likely to take precautions to protect their personal data.
It’s crucial that companies accurately assess whether they are handling customer information in a sound way. Failure to address this issue can seriously damage a business, as both customers and regulators are paying an increasing amount of attention to how organisations collect, store and use personal data. Consumers will always value privacy over convenience so companies which are seeking to use personal data to personalise marketing, build brand loyalty and develop better products, need to be acutely aware of this.
Society has barely begun to address the moral and legal questions of what is private and what is public in the era of big data. This is not a philosophical debate that companies should ignore. Falling foul of regulations or misjudging consumer attitudes not only risks significant financial penalty in key markets, it also threatens a loss of trust and mass switch-offs from consumers who feel their privacy is being violated. Share prices, earnings and even the survival of some companies will likely rest on a more intelligent and sophisticated approach. Very few companies are asking themselves whether they are handling customer information in a morally and legally sound way. It is time they did.
Michael Daughton is a Partner in Risk Consulting at KPMG in Ireland.