MIT Sloan Management Review

Why Managing Consumer Privacy Can Be an Opportunity

March 19, 2013 | Avi Goldfarb and Catherine Tucker

How many privacy policy updates does your credit card company send you each year? How many of them do you read through — and how many get immediately trashed? Companies often “manage privacy” and “keep consumers informed” by drafting their privacy policies as broadly as possible and consider their job done if they change the policy 10 times a year to fit with changing practices within the company.

However, there is a difference between informing consumers and respecting them.

Managing privacy should not be seen by businesses as a burden. Instead, it can be a valuable way to generate and maintain a good relationship with your customers. Companies should view the establishment of a framework of consumer privacy controls as a key marketing and strategic variable that conveys considerable benefits.

There are three strategies that companies can follow to transform touch points around privacy into a positive customer experience:

1. Develop user-centric privacy controls to give customers control.
2. Avoid multiple intrusions.
3. Prevent human intrusion by using automation wherever possible.

As an ancillary benefit, organizations will be better able to leverage the better-targeted products and services enabled by customer data if their customers will welcome, rather than fear, such innovations. However, this will only happen if companies shift from thinking about privacy as a compliance burden to thinking of treating data with courtesy as a fundamental part of the relationship with their customers. Privacy policies should be organized around managing customer data courteously, in accordance with consistent principles that customers feel comfortable with.