Jodi Daniels, an Entrepreneurs' Organization (EO) member in Atlanta, is founder and CEO of Red Clover Advisors, which helps businesses simplify their data privacy practices to go beyond compliance, while building customer trust and gaining a competitive edge. We asked Daniels about the importance of digital trust and its role. Here's what she shared.
In business, few things are as vital to a company's success as its brand reputation. It's so important that 87 percent of executives told the World Economic Forum that reputational challenges are more important than other strategic risks.
In our modern economy, there are few issues that bring more reputational risk than a loss of digital trust.
What is digital trust?
Digital trust, as defined by IBM, is a consumer expectation that companies have privacy controls to ensure that the right user has the right access to the right data for the right reason and the right purpose.
It means you're using customers' personal data the way they want you to by:
- Explaining why you want their information, what you're going to do with it, and who can access it before any data is collected
- Giving them opportunities to opt-out of having certain information collected or shared
- Providing cybersecurity and privacy process measures that ensure information isn't exposed by bad actors or human error.
The rise of detailed data privacy laws like the European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act mirror the rise of more knowledgeable consumers who understand the value of their personal information to the companies that collect it.
Digital trust has dropped from 77 to 68 percent since 2012, largely thanks to endless data breaches across businesses of all sizes in all industries. However, companies that successfully navigate rapidly changing government oversight and increased consumer awareness have a tremendous opportunity to improve their reputation and increase consumer trust.
Three ways to build digital trust
Companies find data privacy complicated because the laws governing digital privacy vary widely by jurisdiction.
This is particularly true in the U.S. Unlike the EU, the U.S. doesn't have a federal digital privacy regulation. Instead, companies must navigate a patchwork of state and industry-specific privacy laws. Depending on where your offices are, where your customers live, and your specific industry, you may be subject to multiple privacy statutes.
While legal compliance is unquestionably important, building a program around privacy best practices is often easier. Not only does it lead to better business results--good privacy practices yield better data--but also it creates a foundation of trust with your customers.
Here are three ways to improve your privacy practices and build customer trust at the same time:
1. Map your data
Mapping your data, also known as creating a data inventory, involves following a data record through your system from the point of collection to deletion. Data mapping can help your company understand:
- What types of information are actively collected
- What data is actually being used
- Who the information is shared with and who has access to it
- Where and how long data is being stored
- Where your processes deviate from stated policies
Many companies think they know this information already, but most businesses collect more information than they need, store it too long, and have poor access controls that leave data vulnerable to exposure.
A data map gives you the empirical information you need to recognize and address these issues.
2. Set your privacy strategy and policy
Once you know where the weak points in your processes are, you can start building a new privacy strategy that's legally compliant and future-proofed against changes to either privacy laws or best practices.
Foundational principles that should be part of any privacy program include:
- Seeking cross-functional input from all your teams
- Maximizing data value while minimizing the amount collected by focusing on first-party data
- Establishing a culture of privacy through continuous employee training
3. Brag about it
Almost 76 percent of companies that invest in a robust privacy program see increased loyalty and trust from their customers. But even the best privacy program in the world won't help you if your customers don't know about it.
Marketing your business's commitment to privacy is just as essential to building digital trust as building your privacy program in the first place. Instead of treating privacy as a cost center, weave your commitment into all your messaging until it becomes a key part of your brand's reputation.
Privacy is powerful. Research shows that, given the right value proposition, 90 percent of consumers are willing to share their personal information. Prioritizing data privacy is the fastest, most effective way to tap into that willingness and increase trust from your users.