6 Ways to Make Data Privacy Your Competitive Advantage

Customer data holds tremendous value. It empowers businesses to target marketing campaigns, predict sales trends, and improve products and services over time.

But consumers are becoming increasingly wary of how their data is collected and used. In a study conducted by KPMG, 86 percent of respondents said they feel a growing concern about data privacy.

Data privacy laws exist all over the world to address this concern. While these laws present businesses with a plethora of challenges, they can also work to your advantage and set you apart from competitors.

Let’s dive into data privacy, why it’s important, and how to make it your competitive advantage.

What is data privacy?

Data privacy is an area of data protection that concerns the proper handling of data. Unlike data security, which focuses on protecting data from external attackers and malicious insiders, data privacy protects the rights of individuals by governing how data is collected, shared, and used.

Data privacy emphasizes the importance of ethical behavior. This includes handling personal data in a way that’s fair, transparent, and in compliance with data privacy laws and regulations.

Understanding data privacy laws

Data privacy laws specify how businesses should collect, store, and share data with third parties. Global privacy laws are multiplying, and businesses that ignore them are at serious financial and legal risk.

Privacy laws are constantly evolving to give consumers more control over how their data is collected and used. Gartner reports that by 2023, modern privacy laws and regulations will cover 65 percent of the global population’s data.

Today, the most widely discussed privacy laws include:

  • GDPR: The EU’s General Data Protection Regulation (GDPR) became enforceable in 2018 and sparked a broader conversation about data privacy around the world. This regulation now covers the processing of personal data of individuals located in the European Economic Area, as well as any enterprises who process that data, regardless of where those companies might be. It also addresses the transfer of personal data outside the EEA. Since Brexit, Britain is now operating under its own version of the GDPR, the “UK GDPR”. At the moment, this is still broadly aligned with GDPR, but the EEA and UK regimes could diverge.
  • CCPA: California passed the California Consumer Privacy Act (CCPA) in 2018, which advanced data privacy and legislation in the United States much like the GDPR did in Europe. Under this act, California residents can ask businesses what personal data exists about them, whether it has been shared with third parties, and can request the deletion of any personal data gathered within the state. CCPA has since been complemented by the California Privacy Rights Act (CPRA), which significantly amends and expands the CCPA, and will go into effect on January 1st, 2023.

Data privacy laws around the world

The United States is unique in that there is no overarching federal law, like GDPR, that protects consumer data and privacy. Instead, regulation and enforcement has been left to each individual state, or to specific economic sectors such as healthcare.

After CCPA became effective in 2020, other states followed in California’s footsteps. The Virginia Consumer Data Protection Act (VCDPA), Colorado Privacy Act (CPA), Utah Consumer Privacy Act (UCPA), and the Connecticut Data Privacy Act will become effective in 2023.

Other privacy laws exist all over the world, such as the Personal Information Protection Law (PIPL) in China, the Act on the Protection of Personal Information (APPI) in Japan, and Lei Geral de Proteção de Dados (LGPD) in Brazil, to name a few.

Which laws and regulations you need to comply with depends on where your company operates, what borders you do business across, and which industry you’re in. Non-compliance with applicable privacy laws can result in strict penalties and fines, legal action, and damage to your brand’s reputation.

The data privacy landscape is constantly shifting, and legislation will only continue to propagate. Therefore, it’s crucial to stay aware of pending laws and regulations that could affect your business. This includes doing due diligence before expanding your business into a new region. You need to be certain where the consumers you target reside because you may be subject to the data protection laws of the countries they live in.

Why you should prioritize data privacy

There are many reasons why data privacy should be a top priority for your business. Data privacy is essential when it comes to:

  • Improving marketing performance. When GDPR was introduced, it extended the application of many established marketing best practices. As tighter consent, greater transparency, and more choice became the norm, engagement increased significantly. Complying with data privacy laws is a surefire way to improve your campaign performance.
  • Protecting your business in case of a data breach. When a data breach occurs, personal data can be misused. Complying with data privacy laws helps you avoid hefty fines, penalties, and legal action in the event of a data breach.
  • Maintaining your brand reputation and value. When you make it clear that protecting the privacy of your consumers is a primary goal for your business, you make it possible for consumers to build an emotional connection to your brand. This, in turn, improves your brand’s reputation, and increases its value.
  • Building customer trust and loyalty. Customers expect privacy as a basic human right. Prioritizing data privacy gives consumers a reason to trust you and stay loyal to your brand, which puts your business at a competitive advantage.

Best practices to follow

Here are some best practices you should follow to make data privacy your competitive advantage.

1. Create a straightforward privacy policy.

The first step you can take to gain consumer trust is to present a privacy policy that’s simple, straightforward, and easy to understand. For example, Validity’s privacy policy clearly articulates what information is collected, how/why it’s collected, and how it’s used, shared, secured, and retained.

Once you have a privacy policy in place, be sure to remind customers on a regular basis of your privacy terms and clearly explain any changes. This transparency goes a long way in building trust. Also keep in mind that best practices, and regulatory guidance, evolve over time. Your policy should be updated on a frequent basis to reflect this.

2. Give a clear purpose for collecting data.

In the wake of new data privacy laws, data collection is now a two-way conversation with the consumer. It’s important to be clear and transparent about why you’re asking for their data and how you plan to use it.

For example, if you ask for someone’s birthday when they’re opting into your email program, they’ll be more likely to provide and trust you with this information if you give a clear reason for needing it (e.g., to send them a free gift on their birthday).

Customers want to know you’ll be using their data ethically and that they stand to benefit from providing you with their data. Seventy percent of consumers say they would share more data if there was a perceived benefit to them. If you can provide real benefits in exchange for data whilst honoring and respecting customer privacy, you’ll be at a greater competitive advantage.

It’s also best practice to only collect data you are absolutely going to use, then delete it if you are no longer planning to use it. This is known as data minimization and is one of the core principles of data protection laws like GDPR and CPRA.

3. Establish a cross-functional data governance team.

Data privacy is part of the larger topic of data governance. Data governance requires businesses to understand the data they have, where the data is stored, how it flows through their CRM, and how it’s used. It ensures the consistency of data and prevents it from being misused, which is essential to ensuring data privacy and remaining compliant with laws and regulations.

Establishing a cross-functional data governance team can help you maintain data quality, integrity, and trust in your data. In fact, businesses with a designated data governance team show 42 percent greater confidence in data quality than those without.

4. Train your employees.

Everyone at your company is responsible for protecting the personal information in your database. Therefore, having a well-trained team is crucial when it comes to data privacy.

Whether you develop the training on your own, hire a professional, or ask employees to participate in eLearning courses, be sure the training covers the following topics:

  • Privacy laws
  • What is personal data?
  • Security policies
  • How bad actors gain access to personal data
  • Reporting a data breach

5. Work only with safe organizations that have privacy policies in place.

You’re taking data privacy seriously. But are the vendors and partners you’re sharing customer data with doing the same?

Working with companies who don’t have or can’t demonstrate compliance with privacy policies or don’t make an effort to follow data privacy best practices can put your company (and your customer data) at risk. Be sure to work with organizations that will act in accordance with your instructions when processing data and can respond quickly to subject access requests from individuals.

6. Collect zero-party data.

Zero-party data has become much more important in light of data privacy laws. Unlike third-party data, which is collected from external sources, zero-party data is shared voluntarily with a brand.

Since customers share this data willingly and know it’s being used by your brand in a manner they have approved of, they’re more likely to trust you with their personal information. This data also tends to be more accurate, since customers supply it to you directly.

Doubling down on data privacy

The data privacy landscape is always evolving. To make data privacy your competitive advantage, follow these six best practices and keep an eye on new legislation in jurisdictions relevant to your business.

Want to learn more about data privacy laws around the world? Check out our Guide to Global Privacy and Compliance.

The post 6 Ways to Make Data Privacy Your Competitive Advantage appeared first on Validity.

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