In a data-driven world like the one we live in today, the reputation of your business is strongly linked to how you handle data that comes your way. Consumers are increasingly aware of how their data is being collected, so they demand to know how these data are being used.
Lack of transparent practices or poor data management may spell doom for the business.
That’s not all.
Government regulations will make it hard for you to do business if your data privacy practices do not meet certain standards. In a few words, data privacy is crucial to building successful businesses.
In this article, we will discuss what data privacy is all about and why it should be a crucial part of business plans and operating policies.
1. Data Privacy: What is it?
Businesses require their customers to provide specific data. The data collected is usually used to serve the customer for their peculiar needs. It can be in the form of pictures, contacts, files, e-mails, bank records, information, location, etc.
Also, the business generates various forms of data to keep its operations active. Such data include financial data, product data, and logistical data.
‘Data Privacy’ refers to practices that ensure that these data are used for the intended legal purposes.
Data privacy describes all the methods your business uses to prevent unauthorized access to your business data, including your customers’ data. It encompasses the way you collect, store, and use data to achieve your aims.
These rules and processes must be an integral part of your business for many reasons. Let’s discuss some of the reasons below:
2. To meet compliance requirements & avoid lawsuits
In many parts of the world, some regulations guide the handling of their citizen’s data. Non-compliance with these regulations can make it difficult to run your business in such regions.
With regulations like the European Union’s GDPR (GDPR stands for General Data Protection Regulation), businesses could pay up to four percent of their global turnover in fines for violation of certain data privacy rules. Non-compliance can also result in up to 20-year penalties for companies.
Also, a company with poor data privacy practices is at risk of lawsuits from customers. However, non-compliance fiascos with the government and potential lawsuits from customers can be avoided if your company operates with proper data privacy practices.
3. To avoid cyber-crimes
The threat of data breaches is rising every day. More than 3,000 breaches were reported in the first half of 2019, and they affected more than 4 billion records. Both big and small businesses are prime targets of these cybercrimes. Verizon reported in 2020 that 28% of data breaches had small businesses as victims.
Big companies can muster the resources to resolve the problem. Many small businesses cannot do that. Therefore, they suffer even more.
Poor data privacy practices make a company susceptible to data breaches. Thus, implementing strong security safeguards and firewalls to protect your business data has to be a top priority. It helps reduce the incidence of data breaches to the barest minimum.
Data breaches may still occur. However, its impact will be minimal because your business already has protocols to keep its effects at bay.
4. It shows you Care about Ethics
Running a business acceptably and honestly is what you must strive for. This means your business operates strictly to its values and ideals. Keeping your customer’s data safe should be one of those ideals.
It is not enough that your business has a code of conduct or ethics code; strict adherence to it is much more valuable. Good content and an effective PR strategy will help your business grow. However, that growth can only be sustained with consistent, responsible, and trustworthy practices.
Your business’s ethics should make it clear that customers’ data can only be used for the purposes it was intended. The data should not be used in any way that harms the customer. Also, these kinds of company cultures demonstrate trustworthiness and motivate employees to increase productivity levels.
5. To Fulfill Customers’ Wishes
Safeguarding your customers’ data is a no-brainer for businesses that want to fulfill their customers’ wishes. They are now more than ever aware of their data to businesses. In return for the trust, they demand a high level of ethical practices with their data.
Many customers nowadays consider how you handle their data as part of your overall customer experience and service. According to a 2019 Cisco survey, 90 percent of consumers believe that how their data is handled reflects how they are treated as customers.
Consumers will do as much as they can to keep their data safe. According to the Cisco survey, 3 in every 10 persons have taken actions to ensure their privacy. This adds to the explanation of why we see the increasing use of anti-detect browsers among internet users.
Awareness about the existence of browser fingerprints and many other internet tracking systems spurs consumers to be increasingly vigilant about how they give out their data.
Successful businesses today have proved themselves worthy of their customers’ trust. They have consistently demonstrated that their customers’ needs are important to them.
6. To Avoid Unnecessary Expenditures
Just as discussed above, the effects of data breaches impact a company’s reliability and trust. It also costs the company lots of money to resolve. A study by IBM and the Ponemon Institute indicated data breaches cost nearly $4 million globally.
Businesses are liable for data loss involving financial information, confidential customer files, and employee information. However, some businesses are unaware of the risks that such vulnerabilities may pose to their operations, and they fail to invest in data security and the necessary security protocols.
A data breach would necessitate the expenditure of budgeted funds to resolve a problem that could have been avoided.
The high costs of data breaches are the direct result of various actions that a company might take following a data breach, such as investing in new security mechanisms and paying for an investigation to determine how the breach occurred.
These funds can come in the form of fines paid to government authorities. It can also be in the form of legal compensation provided to affected customers. For example, Equifax’s 2017 data breach resulted in the company having to pay up to $700 million in compensation to its customers.
7. To Advance Brand Value
One of the ways to increase brand value is by making your consumers’ privacy a primary goal. When customers know you care about their privacy, they build emotional connections to your brand. That way, you will build a loyal user base for your services.
Data privacy is more than a protective measure. It is strategic leverage your business can utilize to woo more customers to use your products. Small and large businesses can use this tactic to remain competitive and win the appeal of potential customers. A brand that has a bad reputation for data breaches and security leaks will lack a competitive advantage.
When you protect your customers from unauthorized access and surveillance, you win them over and establish a reputation as a trustworthy brand. If it goes the other way round, the reputational damage may be unrepairable. Learn from Facebook’s example.
8. To Avoid Operational Downtime
A significant data breach will ground a business operation, at least for a while. The ground time is often used to investigate the extent of the breach, its effects, and the cause. For many businesses, this is necessary to prevent future breaches and resolve the issues caused. However, it comes at a great cost.
Operational downtime can cost business deals worth millions of dollars. Businesses should establish strong data protection policies and practices to prevent this. This helps to reduce operational downtime significantly even if a case data breach occurs.
Conclusion
So far, we have learned what data privacy is and why it is vital for businesses to make it an integral part of their business practices.
Data privacy is not just about your customers’ data. It encompasses every form of data used to run a business. All data must be handled appropriately, from your customer’s data to employees’ data to information about your product and services to trade secrets.
All these forms of data are at risk of violations and unauthorized access as breaches can impact your business’s future and jeopardize your growth opportunities.
Data privacy is a concept that tests the limits of how well your customers trust your business. It also demonstrates how well your business is managed. Therefore, you must prioritize keeping your business data safe.
