As coverage of data misuse becomes the new normal in traditional and social media, the number of consumers who become aware that data about them is being collected and used in new ways, who consider those uses to be potentially harmful, and who feel that companies should not engage in such practices is likely to increase—and with it the economic impact of any spending reductions that consumers may make in response.
Few companies see the landmines that are looming under the surface of their attempts to use data in new ways. They overlook these risks because their focus is on data privacy—a necessary requirement in an intense and rapidly changing regulatory environment. In the process, however, they are overlooking the needs of their customers, who define data misuse on the basis of their perception of right and wrong, not on the basis of regulatory rules or legal agreements. Make no mistake, this strategic blindness will lead to a painful loss of revenues and customers.
As we will discuss in the next article in this series, most companies are poised to fail in their pursuit of new data uses. In fact, they have set themselves on a recklessly conservative path, which is leading them to unnecessarily limit their own opportunities while at the same time ensuring that they act in ways that engender the negative consumer reactions they hope to avoid. By focusing privacy and data stewardship practices on the regulations and guidelines that have arisen around big data and advanced analytics—many of which were designed to protect consumers—companies are creating a gap between themselves and their customers. The economic harm that is likely to result is something that few if any C-suite executives can afford to disregard.
Instead, companies need to fundamentally change their approach to data stewardship. They can build consumer trust by making significant improvements in the four main dimensions of robust data stewardship: internal policies and practices; current and new data usage; transparency about current practices; and usage-specific notification and permissions. Adopting best practices in these areas will not only help companies avoid the pitfalls of perceived data misuse but also enable them to expand the range of opportunities they can pursue. Ultimately, companies will foster a broader and deeper level of consumer trust.
Next up: a detailed examination of current business practices and the disconnect between consumers and companies over data privacy.
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