Never Heard of Data Ethics? You Will Soon.
There’s no doubt that more proactive data governance, transparency and ethical guidelines have washed onto U.S. shores after the standards Europe recently put into law. As we’ve seen with other initiatives, the recent passing of the California Consumer Privacy Act (CCPA) means it’s likely the Golden State’s counterparts will quickly jump on the bandwagon and move to enact their own regulations on data privacy — creating many implications for retailers.
As the 2018 news cycle has proven, consumers are demanding more when it comes to the use of their data. A new DMA study, Data Privacy: What the Consumer Really Thinks, revealed that consumers are becoming more open to sharing data with brands in exchange for things like loyalty points or discounted products and services. While there’s still a general belief that this equation is tilted in the favor of the brand, there’s power in becoming more explicit with customers on value they can receive in exchange for the use of their information. Even more interesting coming from the study is the rise of those “unconcerned” about the collection and usage of their personal data, which accounts for a quarter of millennials and 31 percent of 18-24 year olds.
The survey also found that 54 percent of consumers believe trust in an organization is the most important factor influencing their willingness to share personal data. This means transparency must be at the forefront of all brand-consumer interactions in order to build trust-based relationships. Here are three steps to start building that framework:
Step 1: Start planning now.
Though the CCPA won’t go into effect until 2020, retailers need to begin preparations now as information-driven marketing continues to shift towards being more consumer friendly and data transparent. Directly, this translates to brands assessing all customer engagement and marketing strategies, encompassing every communication, outreach, channel or touchpoint involving customer data collection and data flows. It could mean new development projects or technology investments that will help manage all interactions, access, consent and choice around customer information collected and its disclosed usages.
Step 2: If you don’t have a data governance team or committee, form one.
A key component of recent privacy regulations is a more deliberate focus and ownership of data governance, yet most brands don’t have full knowledge of the existence of customer data within their enterprise. If your organization can’t locate it, or doesn’t know about it, how can you expect to govern it and ensure it complies with stated privacy policies and data use terms? This team should expect to complete initial assessments, risks and recommendations for data governance, but also keep in mind this isn't a point-in-time exercise. This is also now a board of directors-level issue, meaning effective data governance will be a new way of life. Demonstrating compliance will be paramount.
Step 3: Adopt ethical use standards today and you’ll be ahead of the curve.
With transparency becoming a key aspect of more effectively and successfully managing customer information, start thinking about easy ways to give customers insight into how their data is being used for marketing and services, such as earning points for loyalty programs or informing more relevant marketing messages. Now is also a great time to evaluate how your company welcomes new customers to the brand. Do you ask for product reviews and inundate new customers with emails even before they receive their first order? This will certainly not be a best practice moving forward given the shift in consumer sentiment. Instead, establish a customer content preference hub based on opt-ins and opt-outs. Also, manage cadence, frequency, category and volume of messaging through all channels — digital too!
With a growing number of new legislative requirements on the horizon, it’s imperative that retail brands act responsibly and adapt to a heightened sense of consent and choice by consumers. Once you’ve established a data governance and ethical data use framework, honor your promises to customers. The most critical aspect is not only asking for consent and choice (cue the "Seinfeld" episode about car rental reservations), but actually honoring them. There are still too many instances of brands disregarding even simple email opt-outs due to flawed process or lack of care towards consumer preference. Today, this results in lost customers, lost revenue and negative sentiment about your brand. Before long, large monetary penalties could also be associated with these lapses, which can result in catastrophic consequences.
Related story: GDPR: What it Means for Your E-Commerce Marketing