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Customers Own Their Data: If You Want To Use It, You Need To Ask for Permission

Or Lenchner
Or Lenchner

Transparency and clarity must lead all data collection practices.

The idea of obtaining consumers' opt-in consent has recently been advanced by a law rolled out in the state of Maine. According to the law, all service providers must obtain consumer opt-in consent before their customers' data can be used for ad targeting. Consumers have been repeatedly expressing concerns over their own data privacy, and these concerns keep growing given that targeted campaigns expand and multiply by the minute. In light of this, other states have been contemplating and looking into the need for such laws.

As a rule, consumers' data should always be protected. This means that they are fully aware of when their data is being shared – by having given their explicit consent first! Businesses must respect their customers' data privacy and must assure consumers that they are always in the know of whether and how their data is being shared.

Prior to the implementation of the General Data Protection Regulation (GDPR) data privacy law in the European Union (EU) in 2018, businesses were not required to assure that their customers' information was secure. Rolling out GDPR has changed the data-collection game for many businesses. Whether operating within the EU borders or beyond, companies have had to start taking their data collection practices seriously.

In the present day, EU citizens' data is protected worldwide, and businesses have to continue to protect this data lest they face fines of up to 20 million euro or 2% of their annual global turnover (or revenue) per violation, whichever is the greater amount. This move to protect consumers' data and rights has seriously impacted businesses located within the EU and beyond its borders – and that's not a bad thing. It's also forced other countries, like the U.S., to think about their data-collection laws and regulations, with states like Maine leading the way on implementing greater data protections for U.S. citizens.

The need for transparency is clear

Targeted advertising campaigns have become the norm. As consumers, we expect companies to present to us with personalized offers. While collecting customer data is a regular practice among companies when creating targeted ads, many don't take the most transparent approach when dealing with the customer data that fuels these personalized ads.

Today, when we are flooded with digital ads, customers are not always fully aware that their private data is being used or how. For this reason, all consumers must have the option to opt in to their data being collected, and they should also be aware of how and when this data is being used.

How do you do it?

Exhibiting complete transparency is the only way to gain consumers' trust. Companies should always outline exactly how and when data is being used. Then customers will be more likely to trust a company with that data in the first place. According to a Salesforce research brief, only 55% of customers say they understand how companies use their data – resulting in nearly 50% of customers reporting that they're unaware of how their data and assets are being used.

This shows a massive disconnect between brands and their customers, and this communication gap must be closed in order to bolster customer trust. The trust developed by offering data usage transparency will lead to more customer loyalty, greater customer advocacy, and an increase in spending and purchases.

This transparent method should also be extended when looking at opting out. Opting out should be just as easy – if not easier – for customers than opting in. Businesses must provide customers the option to opt out of sharing their data at any time, for any reason.

Why collect data?

It's never too early to start collecting data. Businesses of all sizes can benefit from doing this – after all, who wouldn't want to know more about their market and consumers?

Small business owners may be unsure of how to get started. The first step is to start with a very focused and defined list of data requirements. Think about what types of data would be most helpful for your business:

  • Are you looking for competitive intelligence and how your competitors are interacting with their consumers?
  • Are you interested in following new emerging offers across your industry?
  • Are you looking for consumers review in a specific location and based on that plan your next business move? Would knowing about their current demands benefit your business?

By thinking through your data requirements ahead of time, you'll avoid wasting time and money spent on gathering data that you do not need.

Contrary to popular belief, small businesses are under no obligation to invest heavily in online data collection; you just need to focus on the online data that matters to you the most and start the process. Owners can start the data collection process manually, rather than committing to paying an outside service provider large scale data collection operation.

Look through the data yourself and validate that this is indeed the data you need the most to address your business challenges. Once you're happy with your results, you can move on to work with professionals and gradually expand. In today's fast-moving market, every decision counts, and making the wrong one can cost you dearly. Data can help you get it right, anticipate market shifts, spot the right opportunities and avoid risks.

Finally, it's important to have the data you've collected validated to make sure that it's correct. I recommend investing in an in-house process. An in-house validation process is critical with any data collection operation – big or small. As you're basing your most important business decisions on the data you've collected, make sure the data is sound.

Use data to connect with customers

The use of data should also aim to improve the overall customer experience. If companies are being transparent and only using customer data to bolster the user experience and provide suitable value, then they shouldn't worry about customers choosing not to opt in. In fact, 78% of customers expressed that they're more likely to trust a company with their data if the company uses it to customize their experience where the benefit is clear.

This fact is massively enhanced when looking at millennials and Gen Zers. Among these demographics, the number jumps to 86%, meaning that the youngest and most digitally savvy group of customers are even more willing to give their data in order to receive a better and more personalized experience.

Aside from a loss of customer trust, there are other pitfalls that companies can avoid by being transparent in their opt-in process. For instance, if a company can't articulate exactly what their customers stand to gain by giving them the right to collect personal data, then the customers will likely feel that their data isn't being used for a good reason. This will result in companies possibly delivering a poor customer experience, as well as losing their overall integrity value.

Being targeted for ads alone is also not a true consumer benefit. This is largely seen as a benefit to companies – meaning, they get consumers to purchase more from them. There must be an actual improvement to the customer experience, whether it be selected personalized offers based on the customers' choosing or access to new software features for free. Ultimately, ads using personal data should always fuel an improved customer experience.

Transparency should never be in question. It should become a best practice for every business and integrated into the daily work routine. Maine is on the right path with its new law, and it should be replicated across the country.

Data is a powerful tool, and one should treat it as such. Private data is just that – private. You must ask permission to use it first. After all, it does not belong to you.

Image Credit: Prostock-Studio / Getty Images
Or Lenchner
Or Lenchner,
business.com Writer
See Or Lenchner's Profile
Ever since his appointment as Luminati Networks CEO, Or Lenchner, has continued to expand the company’s market base, as a data collection operator, dedicated to maintaining the openness, transparency and integrity of the online ecosystem. Among Luminati’s 10,000+ customers, you will find Fortune 500 companies, major e-commerce firms and sites, prominent travel companies, ad agencies, security firms, finance services, government offices and more. Prior to his career at Luminati, Lenchner founded and managed several web-based businesses, developing digital assets and online marketing programs. Joining Luminati as head of product development, Lenchner’s career and evolvement at the company has been driven by his firm belief in a transparent, ethical by design web-environment benefiting both, enterprises/businesses and consumers. Or is a young CEO and has a passion for data insights and using them to drive business growth. He is also a keen surfer and spoke recently about how this helped him navigate the COVID-19 pandemic.