Data transparency

Navigate the Balance between Customer Data Transparency and Hyper-Personalization

Digitalization has resulted in individuals generating large volumes of data collected by companies to provide a personalized customer experience (CX). With this mass collection of personal data for personalized communication, data misuse has become an increasing concern. But, in the age of cybersecurity, customer data transparency can solve this disconnect.

What is customer data transparency?

Customer data transparency is the practice of openly and honestly letting customers in on how their personal data is sourced, used, and shared. There is clarity about the customers’ data handling practices, giving them control over their personal information. Companies have to be accountable for how sensitive data is handled.

Data handling and usage must comply with the appropriate laws and regulations and should be ethical. Customers should have a clear understanding of why companies and organizations require their data and how their personal information is sourced, stored, and protected.

Essentially, data transparency is about giving the customer full control when it comes to their own data. Otherwise, customers will never know who has access to their personal information.

Importance of customer data transparency

With a rise in data privacy awareness, it’s becoming critical for companies to exercise utmost care with how they handle their customers’ data. A recent survey by IAPP reported that 68% of consumers were either “somewhat” or “very concerned” about their online data privacy.

Here are some key reasons why data transparency should be prioritized by the organizations that collect user data:

  1. Customers’ trust: A customer’s trust is the foundation on which a successful business relationship is built. When a company is transparent about its data practices, customers are more likely to place their trust in that brand.
  2. Customer control: Data transparency gives customers control over their personal information, and how their data is shared and used, thus creating a more positive CX.
  3. Legal compliance: Data transparency is a legal requirement for many businesses, and there are strict data privacy regulations in place that they must comply with.
  4. Mitigates data breach risks: Data transparency reduces the risk of data breaches through the identification and rectification of vulnerabilities.
  5. Customer loyalty: With customer trust, comes brand loyalty. When a company respects the privacy of its customers and values their trust, customers will highly appreciate the transparency and choose to remain loyal to the brand over the long term.

Who handles data transparency?

Typically, there are three departments in an organization that handle data transparency — the marketing department, IT, and the legal department. Each department has its own responsibilities in the process.

The marketing department identifies the type of information that needs to be collected to improve the customer experience. Then, the legal counsel determines any potential issues that need to be addressed.

After the legal department’s approval, the data management team consisting of data quality managers, analysts, and engineers in the IT department decides the best way to collect, manage, and store the data.

Consumer data transparency awareness

With data hailed as the new currency, customers now expect businesses to collect and store their data responsibly while also providing transparency. However, increased data transparency does not necessarily mean increased data control.

Awareness about data transparency and accessibility needs to exist first. Furthermore, the individual should possess the ability and the desire to exercise their rights and be in control of their own data.

Awareness grows from a place of concern for data privacy. As a result, organizations are also implementing robust data access policies under consumer pressure. Prioritizing customer data transparency and accessibility is a commitment that builds the trust and loyalty of the customers, demonstrating the respect the brand has for individual privacy rights.

Achieving customer data transparency

According to a 2019 survey by Harris Poll for RedPoint Global, 63% of those surveyed expect and prefer personalization as a standard of service. But how can one grow their business with the kind of tailored customer experience preferred by consumers while also respecting their data privacy?

Here are some measures to achieve data transparency:

  1. Clear privacy policies: There should be clear and concise privacy policies that explain in plain language what data is collected, the purpose, and how it will be used.
  2. Opt-in, not opt-out:  The customers should have the choice to opt in for data collection rather than only the option to opt out of it.
  3. Data portability: Customers should have access to their data to reinforce the idea that they have the right to their data.
  4. Consent management: Data management should include robust consent tools that allow customers to easily manage their data-sharing preferences.
  5. Regular updates: Customers should stay informed and updated about any changes to data practices and privacy policy. They should also be promptly notified about any data breach that occurs.
  6. Data security: There should be tight data security measures in place to protect customer data.
  7. Customer support: If customers have questions or concerns about their data, companies should ensure customer support is actively responsive to those inquiries.
  8. Third-party transparency: Any type of customer data shared with third parties should be disclosed to the customers along with the reasons for doing so.

Challenges in customer data transparency

With companies collecting large amounts of customer data, ranging from purchase history to personal preferences, data accessibility has become a critical issue. There are several challenges in ensuring the gathered data remains accessible and usable to the rightful owners.

To begin with, the siloed nature of user data scattered across various departments and systems within the organization makes it difficult and complex to create a holistic view of the individual.

Secondly, the ever-changing data privacy regulations add another layer of complexity to compliance and data security. It is challenging to maintain the right balance between data accessibility and data security.

Lastly, older data formats are bound to become obsolete as technology evolves. As a result, accessing historical customer data becomes a problem.

In a data-driven world, addressing these accessibility challenges is crucial for businesses that want to effectively serve their customers through informed decisions taken with the help of data-based insights.

On top of being a moral imperative, customer data transparency builds more ethical customer relationships and enhances customer loyalty and retention. It is capable of unleashing the full potential of data while respecting individual privacy.

Harness the power of data and AI to make your organization truly data-driven.

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