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Customer privacy is an important part of business strategy

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by Staff Writer

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This post has been modified to reflect new information since its original publication.

The ever-increasing use of the Internet has provided businesses with more ways than ever before to collect data about their customers and potential customers. This information is often gathered without the website visitor even realizing it, due to the use of unobtrusive data collection methods.

When you visit a company’s website, you could be unwittingly providing that company with information such as your IP address, the page that referred you to the website and the pages you’re viewing. If the website also utilizes cookies and other tracking devices, companies can gather even more information.

These practices are popular because they can benefit the company’s marketing efforts. In fact, because this information can be used to provide a more personalized browsing experience, some website visitors may even enjoy some of the end results.

However, there is now more of a focus on privacy issues and on what customers may be giving up in order to reap this kind of personalization. As more people become aware of privacy issues, many companies are discovering the need to change the way they do business in order to satisfy their customers’ concerns.

Websites employ various data collection methods

Websites have many different options available to them if they desire to collect information about those who visit. Sometimes companies simply gather this information in a totally unobtrusive way, such as is the case with Web traffic analysis tools and cookies.

However, in many cases customers are also providing information voluntarily, although they may not realize how it could be used. For example, ad networks can gather your name and address information from an online order you’ve placed, using it to create consumer profiles.

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Some websites offer enticing games and contests to lure people into providing their personal information. In other cases, people voluntarily provide this information in order to use handy applications and services provided on the website or to receive free products.

However, as customers are becoming more educated and savvy about the Internet and privacy concerns, they’re also becoming more distrustful of how companies gather and use this information. In fact, customer outrage over privacy concerns has prompted many companies to change the way they conduct their online businesses.

Companies use privacy protection to build customer trust and loyalty

In the wake of customer privacy concerns, many businesses are now looking for ways to assuage these concerns while concurrently building brand loyalty.

Customers naturally view companies who voluntarily add privacy protection to their website as more reliable and trustworthy as compared to companies that don’t. By changing their online business model, businesses are able to improve customer satisfaction, build trust and even avoid the cost of legal actions. Providing visitors with clear information about the website’s privacy policies is one way that companies can mitigate their legal risk.

More companies are also providing features that visitors can use to increase their personal privacy while using their websites. The mere presence of these features on a site can increase customer trust. However, if websites don’t make these controls easy for the average Internet user to understand, their efforts may backfire. Poorly described privacy controls may make people feel that there’s something they need to protect themselves against.

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It’s important for companies to balance their need for data and their desire to provide a customized browsing experience with user privacy concerns and needs. Businesses that successfully balance these issues have the opportunity to build their brand name and customer loyalty.

What actions are companies taking to ensure customer privacy?

Some businesses struggle with even understanding what kind of data they’re currently gathering and the risks of having this information. If a company doesn’t understand how much information it has and who has access to it, the company could be placing itself at risk.

Sometimes companies don’t really understand how they may be misusing customer data until something happens to call attention to it. Businesses that misuse data may be placing themselves at risk of financial penalties and lost customer trust. Consequently, more companies are reviewing and changing the way they do business online.

Common changes include:

  • Better disclosure of the company’s privacy policies, communicating them in ways that are easier for a customer to understand.
  • They’re also taking care to ensure that a secure online environment exists, which helps foster customer trust.
  • In some cases, websites are starting to use cookies with shorter timelines, or they may be “anonymizing” the data more quickly. These efforts to create more anonymous data often include masking cookie identifiers and IP addresses after a shorter period of time or storing account information separately from logs to provide improved privacy and security.
  • Many websites also include better-designed opt-out pages, so that visitors can decline the collection of data if desired.

Lack of government regulation fuels customer privacy concerns

The lack of government regulation concerning the collection and use of online data has contributed to the overall privacy problem. Without federal guidelines and privacy laws, companies have had the freedom to create their own privacy rules.

At some point, it’s likely Congress will intervene, setting legal standards for online data collection and for use and privacy regulations. However, until that happens, companies that make the effort to provide website visitors with more robust security and privacy protection are likely to be rewarded with their trust and continued business.

Moreover, there are actions individuals can take to protect themselves and their online privacy. By using a good online privacy and reputation service, individuals can gain better control over their online privacy and security, regardless of what companies are doing online.