Why consumer data privacy matters: A modern guide for businesses

Data is the fuel that powers our digital economy. It gives businesses insight that’ll allow them to make decisions tailored around customer preferences.  However, in recent years, the widespread collection and use of personal data has also raised serious concerns about consumer privacy. As a result, consumer data privacy has become a pressing issue that affects everyone who uses the internet — and businesses who serve digitally-savvy consumers. Most now understand why consumer data privacy matters, but what many businesses don’t know is how to ensure it, and what you can start doing today.

What is consumer data privacy and why is it important?

Consumer data privacy refers to how your organization protects the data it collects from customers. This data often involves:

• Contact information
• Physical and email addresses
• Buying habits and purchase history
• Passwords and usernames

Consumer data privacy is important for one simple reason: It protects your customers against data breaches.

If someone gives you personally identifiable information, they expect you to keep it safe. If you gain a reputation for losing customer data to cyber criminals, it’ll negatively impact consumer trust.  This makes it harder to bring in new customers, and fixing this reputation can take several years.  Moreover, if cyber criminals get their hands on customer data, it can lead to identity theft. Hackers will open loans and credit cards in your customers’ names, hurting their creditworthiness.

Understanding regulations and laws related to consumer data privacy

Another reason you want to prioritize consumer privacy is because of the strict regulations and laws. 

For example, the CCPA (California Consumer Privacy Act) gives consumers the right to know what data you’re storing. If they ask you to delete information you collected from them, you have to do so within a reasonable timeframe.Another big data privacy law is the GDPR (General Data Protection Regulation). This is an EU regulation that says companies must use customer data in a responsible and friendly way. Failure to meet these regulations can result in hefty fines. For instance, Luxembourg issued an $877 million fine to Amazon in the Summer of 2021 because of GDPR breaches.

Additionally, global data privacy regulations and being joined by an increasing number of regional data localization regulations.

How consumer data privacy impacts your business

70% of customers will only do business with a trustworthy brand. This makes data security and transparency essential for winning customers over. Just one data breach can turn customers away. Keeping your consumer data safe positively impacts your brand’s reputation because you’re seen as a trusted organization.

This allows you to easily bring in new customers while retaining old ones. So we highly recommend implementing consumer data privacy best practices. It protects customers and employees from data breaches, presenting your brand in a good light.

Here’s what you can do right now

Now that you understand how consumer online privacy affects your business, you’re probably thinking, “How can I improve data security?” In short, there are four things you can start doing right now:

1. Consider the data you’re collecting, and scale data collection down to only what’s necessary

The first thing you should consider is the data you’re currently collecting. If you can remove a data point from your database without negative consequences, there’s no reason to keep it. You should only collect data points that are fueling you toward your business goals. This minimizes data collection, putting a smaller target on your back from cyber criminals.

2. Protect saved data

Now that you’re only collecting essential information, it’s time to protect saved data. This could mean introducing a secure CDP (Customer Data Platform) into your business, conducting regular data audits, or hiring cyber security professionals to protect your customer data.

3. Dispose of unwanted or unnecessary data

Disposing of all the unnecessary data you’ve collected is also essential as it ensures that you’re only storing user data that’ll fuel your business’s decision-making.

4. Create a proactive plan for security incidents

There’s only so much you can do to prevent data breaches, so create a plan of action for each department in case of security incidents. Your step-by-step plan should prioritize securing the system immediately while minimizing lost information.

Strengthen consumer data privacy with Lytics

Because you’re collecting more data than ever, consumer data privacy is important for business success. It paints you as a reputable and privacy-centric organization, increasing the chances of customers doing business with you. Governments are also creating new regulations like the CCPA and GDPR to protect customer privacy. If you can’t meet these regulations, you could face fines worth millions of dollars. To address these risks, consider investing in a CDP like Lytics.