How important is data privacy to the customer experience?
Customers are increasingly willing to walk away from companies that don’t treat them right, especially when it comes to their personal data.
Published March 16, 2021
Last updated May 4, 2021
Customer experience (CX) has become the business strategy, and with good reason. 75% of customers are willing to spend more to buy from a company that treats them well, according to the Zendesk Customer Experience Trends Report 2021.
Those that don’t risk losing half of their customers — who say they'll walk away after one bad experience.
But it’s not just an unhelpful support agent, a delayed order or even a convoluted return process that has customers looking elsewhere.
Data privacy — or how businesses collect, use or even share their customer data — is playing an increasingly critical role in customer-company relationships. So much so that 87% of customers say they’d stop doing business with a company over data privacy concerns, according to a 2020 McKinsey survey.
Customers want personalisation, but they also want privacy
There’s no denying that customer data can be a powerful CX tool. Think of the last time you shopped on Amazon. What you see on the homepage is custom built for you based on data from previous orders or search histories. In theory, no two Amazon homepages should look exactly the same.
75% of customers say they expect some level of personalisation when making purchases. And much of the data that companies collect, from your favourite running shoes to your shirt size, is designed to make you feel like you're walking into a boutique store with a personal shopper.
This style of concierge service has become a hallmark of good customer experiences, and it goes beyond sizing and product recommendations. Access to details like preferred communication channels and previous interactions with support agents is also important.
Why? No one wants to repeat themselves, so knowing how and why a customer reached out previously gives agents the context they need to provide better support.
75% of customers say they expect some level of personalisation when making purchases.
What are some examples of customer data?
- Previous orders or interactions with customer service
- Information about the device used to contact customer service
- Status of recent orders
- Credit card information from previous purchases
- Search history
- Plan or subscription details
- Personal details (address, date of birth, etc.)
- Conversational data (shoe size, favourite brands, etc.)
But distrust around what companies are collecting and how they’re using the data is on the rise.
One in five customers are looking to share as little data as possible with companies, a 50% jump from the previous year.
According to Zendesk research, one fifth of customers now say they want companies to have as little of their data as possible, a 50% jump from the previous year. And a separate study found that 40% of customers don’t believe that companies are following their own policies around data privacy.
To provide some guardrails and protect customers, a number of governments have enacted data privacy policies, including:
- Europe’s General Data Protection Regulation (GDPR)
- California's Consumer Privacy Act (CCPA)
- Japan's Personal Information Privacy Act (PIPA)
- Brazil's Lei Geral de Proteção de Dados (LGPD)
The business case for transparency
The stakes are high, but companies that are upfront and transparent about their policies have an opportunity to stand out from the rest of the crowd. Transparency builds trust, trust becomes loyalty — a winning strategy for building lasting relationships with customers.
Being able to pinpoint exactly what companies are doing with your data can be like trying to decipher the Rosetta Stone. And for those that don’t speak legalese, it’s a major obstacle in feeling confident that your personal data isn’t being exploited or used for purposes other than those that benefit you.
Transparency builds trust, trust becomes loyalty — a winning strategy for building lasting relationships with customers.
Of the nearly half of customers that don’t feel like they can protect their personal data, according to data from Cisco, 79% blame it on their inability to understand what they’re consenting to.
What's good for customers is good for your business
According to the Cisco Data Privacy Benchmark Study 2021, companies on average saw nearly double the returns for every dollar spent on privacy, with wide-ranging benefits:
- 76% saw a significant boost in customer trust
- 73% said it made their company more attractive to investors
- 73% said it enabled innovation within the company
Companies can help by providing clear, concise language around what they collect and how it enhances the overall customer experience. Whether that’s faster support, better product recommendations or maybe even access to recall warnings on past purchases, customers are more likely to feel comfortable sharing their data if they understand the benefits of doing so.
Companies can help by providing clear language around what they collect and how it improves the customer experience.
Research suggests that the better informed a customer is about privacy policies and laws, the more comfortable they are with exchanging their information for personal or public gain. The rising popularity of web and mobile messaging could actually help bridge the transparency gap here by giving customers greater control over what data gets stored and for how long.
Maybe you're messaging with a company about what type of windscreen wiper to buy for your car and they ask you for the make and model. You could then be prompted to store that information so that next time you are only shown the accessories that work with that specific car. Otherwise, the choice would be yours.
Messaging could help bridge the transparency gap by giving customers greater control over what gets stored and for how long.
Issues like data sharing and privacy already shape experiences for customers. Now it's up to companies to catch up.
What can companies do to build trust?
Be transparent around the data you’re collecting and around how you’re using it.
Customers that understand what they’re consenting to and how it benefits them are more likely to be comfortable with doing so.
Set a high bar
Employ company-wide guidelines that conform to the most comprehensive data privacy laws, not just those in a customer’s home region.
Going above and beyond to show customers that you’re working in their best interest will go a long way to rebuilding trust.
Messaging through a company’s own website or app can collect key data points in a way that’s more transparent to customers.
Both chatbots and human agents can ask if a customer wants to store information (such as their shoe size or credit card number for future purchases) and for how long, thereby improving customer confidence in the data value exchange.