Privacy as a Competitive Advantage for Australian Businesses: Why should companies care about data privacy?
While not as well-publicised as greenwashing, consumers and regulators are becoming more aware of the emerging ‘privacy-washing’ trend. Privacy-washing occurs when an organisation makes claims about its culture of robust privacy protections, yet the organisation fails to actually implement privacy best practices – or even good privacy practices.
But with so little regulation and so much opportunity for deception, it can be difficult for companies to see why they should care about data privacy.
Why Should Companies Care About Data Privacy?
There are so many reasons for Australian organisations to care about data privacy. Strong data privacy practices can (according to CPO):
- Reduce the harm caused by data breaches.
- Increase consumer trust and loyalty.
- Drive sales.
- Attract new customers.
- Improve customer relations.
- Help your organisation meet customer expectations.
- Support innovation.
- Decrease risk.
Yet many companies consider data privacy to be more of a cost of compliance than an opportunity for growth. Ironically, failing to implement privacy as a competitive advantage can actually be more expensive in practice. Keeping personal information safe from malicious actors and accidental breaches is complex and expensive, while the cost of collecting, storing, and using data also increases as the volume of data goes up.
Failing to implement good privacy practices around collecting personal data can also present an opportunity cost. 78% of consumers are concerned or very concerned with protecting their personal data, which means that businesses need to offer compelling reasons for them to hand it over. Sales processes that require consumers to supply personal data will therefore likely experience higher customer drop-out than sales processes that don’t. You might see this where companies won’t allow a consumer to check out as a guest, requiring them instead to create an account. Again, these practices negatively impact consumer trust, too.
Why does your customer’s trust matter? Because it impacts their purchasing behaviour.
A 2018 poll of 10,000 consumers (conducted for IBM) revealed that 75% will not buy a product from a company if they don’t trust the company to protect their data. Meanwhile, the 2021 Cost of a Data Breach report indicated that lost business is responsible for an average of 38% of the costs of a data breach. These costs are attributed to customer turnover following a breach, as well as the costs of acquiring new customers.
Beyond trust, better data privacy practices can drive innovation and operational efficiencies.
Many organisations collect data for data’s sake, without having a firm grasp on why the data is being collected or what the benefits of collecting that data are. Collecting personal information without a clearly specified and appropriate purpose is a major privacy no-no.
From that already problematic position, they then are tasked with developing, implementing, and continually revising practices to keep that data safe to meet customer expectations and regulator demands.
The starting position for strong data privacy practices within an organisation is knowing and understanding what data is being collected and for which purpose, and ensuring that that purpose is appropriate and legal. When the purpose behind data collection is known, organisations can better use that data for those purposes and efficiently dispose of it once that purpose has been served. Importantly, organisations are also forced to look at their practices and consider whether there are more efficient or impactful ways to operate. This streamlines compliance, reduces risk, and also minimises data bottlenecks and management costs for your team, while ensuring you meet customer expectations and retain their trust.
Privacy as a Competitive Advantage with Privacy 108
Knowing and understanding how to harness privacy as a competitive advantage can help you make informed decisions about your product/services development, suppliers, marketing, operations, and more. Privacy 108 helps organisations access the benefits outlined in this article by developing robust and efficiency privacy programs designed to meet your organisational goals while minimising the costs, risks, and potential harm associated with the collection of personal data.
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