November 13, 2012
Shining a light on privacy
Marketers by and large remain cavalier about privacy issues, even while consumers express heightened concern and threaten to cut ties with companies that share their sensitive information, says a new study from Edelman.
Sixty percent of 6,400 executives surveyed in 20 countries said their companies don’t consider privacy a priority, and more than half don’t believe that a data breach would adversely affect their corporate reputations, according the Edelman Privacy Risk Index, which was produced in concert with The Ponemon Institute. It might well affect their businesses, however. Eight in 10 consumers would leave banking institutions that accessed their personal information without permission, Edelman reports, and 70% would dump health care providers that did so.
There’s a massive disconnect between companies and consumers on the issue,” says Pete Pedersen, EVP and chair of Edelman’s Global Technology practice. “We’re seeing these massive differences between consumers’ expectations and the behavior of companies.”
Larry Ponemon, CEO of The Ponemon Institute, notes that while the issue is an important one, privacy is something most direct marketers respect and address. He advises them to take further steps, however, to avoid upsetting extreme segments within their customer bases that could make trouble for them. “About 10% of the population is extra sensitive to privacy concerns, and these people are apt to get noisy if they feel their privacy has been violated,” he says. “Marketers should identify them in their customer bases and make it very easy for them to opt in or out of communications. Either that or put them on a ‘Do Not Touch’ list.”
It’s advice that some companies may find easier to take and put into play than other approaches, according to Ponemon’s own study. Nearly two thirds of companies don’t have the expertise or technology to protect personal information, according to survey respondents, and half lack the resources to put the processes in place. What’s more, 61% say their customer service operations are not quick to respond to privacy complaints.
The price of negligence is costlier for some concerns. Companies that collect large amounts of health and financial data from consumers have higher risk profiles than,say, manufacturing companies that collect demographic data. “Consumers expect to give up something to get something,” Ponemon says. “Most are savvy and understand why companies would want their income levels and locations. But asking them for the social security numbers, for instance, is going to raise a red flag.”
The research suggests some clear policy imperatives to marketers, say Edelman executives, chief among them increasing transparency of what they do with customer data, responding more quickly to complaints, and devoting suitable resources to protecting customer data.
“The reality is that the analytics for extracting insights is getting increasingly sophisticated. If a consumer gives permission today, he or she has no idea how that information will be used two or three years from now,” Pedersen says. “Every successful marketer is respectful of the changing dynamics. They just must be sure they keep mindful of the issue.”