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What’s The Cost of Data Privacy?

September 1, 2009

Have you considered lately the cost of data privacy?  Most often when we think about the subject we think about the cost of administration.  While this is a true and measurable cost is it the most important one?  Increasingly consumers are becoming aware of what their privacy is worth.  While privacy had been legislated in Financial Services (FACTA) and Health Care (HIPPA) we are now seeing it transcend into popular culture. 

How many times in the last week have you heard or read about how someone’s Face Book or My Space posting had an adverse affect on their lives?  We are beginning to see services that purport to help one clean up their public persona.  This is the leading edge of consumer awareness with respect to privacy. 

What does this mean to your business?  It means that your customers are paying much more attention to what your company’s privacy policy says and are often choosing to do business based on that and whether there have been any reported privacy breeches.  Here are a few questions for your consideration: 

  • What is your organization’s view of privacy?
    • Privacy philosophy starts in the executive suite and flows outward into the organization.  When an organization is truly cognizant of consumer privacy it is a key criteria in the business decision process and is a common component of communications (both formal and informal).  Are your customers involved in the privacy process?
  • How does your privacy policy reflect that view?
    • A privacy policy should reflect the organization’s view.  It is not a static document written five years ago and posted on your site.  It needs periodic review and updating to reflect your organization’s current view of consumer privacy.
  • Do your CMO and CSO agree on the privacy standards?
    • There can be a disconnect between the Chief Marketing Officer and the Chief Security Officer regarding how consumer data can be utilized by the organization.  It is best to have this conversation in advance and ensure that all parties are in agreement. 
  • Do you allow your customers to select their level of privacy?
    • Consumers are becoming increasingly aware of the data collected on them through various media outlets and are becoming more vocal in their demands on how their data is collected and used.  Industry standards often provide guidelines with respect to opt-in/opt-out best practices that can be incorporated into your process.
  • What is the value exchange for the personal information you collect?
    • Consumers are willing to provide personal information if they perceive that there is a clear value exchange for the information (i.e. receiving a birthday discount).  It is important to clearly articulate why the personal data is being requested and what is received in return.
  • What is the difference in the Internal and External use of the data?
    • Consumers perceive a difference in their data being used internally vs. externally.  Generally they readily accept that data is used internally as it is required to process their order or facilitate their social commerce transaction, and appreciate it if that data is used to enhance their experience with your organization.  External use of their data is a touchier subject.  While most consumers do not realize how much of their privacy they have given away, they are becoming increasingly aware.  Generally consumers are okay with their data being used externally where it is aggregated or where they have given specific permission for its use.
  • Do you underestimate the importance of privacy?
    • Privacy is an ever increasing market force today.  Consumers are expecting more each day with respect to their privacy.  We have seen industries such as credit reporting (FACTA) and healthcare (HIPPA) that now enjoy strict government regulation.  Failure to act responsibly with respect to this issue could result in further government intervention.
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