Why Managing Consumer Privacy Can Be an Opportunity

  • Avi Goldfarb and Catherine Tucker
  • March 19, 2013

Too often, companies treat privacy policies as a compliance cost. Instead, think of managing consumer privacy as a way to give people a positive experience with your brand.

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.

Many large companies have privacy officers who set rules for managing data and audit compliance with those rules; however, hiring a privacy officer is usually seen by senior managers as a compliance cost. A company that respects the relationship with its customers, on the other hand, would think of the privacy officer as a strategic role and would establish a framework of consumer privacy controls as a key marketing and strategic variable.

This is not to say that compliance is irrelevant. Privacy regulations do exist, and all companies must abide by their legal obligations to their customers. However, the regulations that exist often provide little guidance to managers regarding how to manage consumer privacy. In the U.S., for example, a health-care law simply mandates that hospitals have a privacy policy, without making recommendations as to what it should be.

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.

1. Develop user-centric privacy controls. Companies can make their customers feel helpless when it comes to their privacy. Privacy policies are usually drafted from a legally conservative perspective, from which a privacy policy that is vague or all-encompassing is seen as somehow benefiting the company if things go wrong.