Customer experience (CX) has become the business strategy, and with good reason. 75% of customers will spend more to buy from an organization that treats them well, according to the 2021 Zendesk Customer Experience Trends Report.
Those that don’t risk losing the half of customers that say they'll walk away after one bad experience.
But it’s not just an unhelpful support agent, a delayed order, or even a convoluted return process that has consumers looking elsewhere.
Transparency around how businesses collect, use, or even share personal data, now plays a critical role in any customer-company relationship. So much so, that 71% of customers would leave a company if it shared their data without permission, according to a 2020 McKinsey survey.
Why is data transparency important?
Customer data has become an incredibly powerful CX tool. Think of the last time you shopped on Amazon. Your home page is custom-built from data on your previous orders and search history. No two Amazon home pages should look exactly the same.
75% of customers say they expect personalization when making purchases.
This style of concierge service has become the hallmark of any good customer experience. In fact, 75% of customers say they expect personalization when making purchases. But paradoxically, fewer and fewer customers want companies to have access to their data.
Why? A lack of transparency around what’s being collected and how it’s being used has eroded trust.
What are some examples of customer data?
- Previous orders or interactions with customer service
- Information about the device used to contact customer service
- Status of recent orders
- Credit card information from previous purchases
- Search history
- Personal details (address, date of birth, etc.)
- Conversational data (shoe size, favorite brands, etc.)
Much of the data that companies collect, from your favorite running shoes to your shirt size, makes you feel like you’re walking into a store with a personal shopper. And these personal touches go beyond sizing and product recommendations.
Details like your preferred communication channels or prior support interactions mean that agents can contact you where it’s most convenient. And no one wants to repeat themselves, so knowing how and why you reached out previously gives agents the context they need to provide better support.
1 in 5 customers are looking to share as little data as possible, a 50% jump from the previous year.
These types of experiences cannot exist without customer data, but policies are often vague and distrust is on the rise. Recent high-profile incidents certainly haven't helped, while efforts aimed at safeguarding public health have once again thrust data privacy concerns into the spotlight.
According to Zendesk research, 1 in 5 customers now say they want to share as little of their personal information as possible, a 50% jump from the previous year. And a separate study found that 40% of customers don’t believe that organizations are following their own data privacy policies.
To provide some guardrails, a growing number of governments have enacted laws to regulate how business collect and use customer data, including:
- Europe’s General Data Protection Regulation (GDPR)
- California's Consumer Privacy Act (CCPA)
- Japan's Personal Information Privacy Act (PIPA)
- Brazil's Lei Geral de Proteção de Dados (LGPD)
These are important steps, and it's now up to organizations to show that they’re embracing transparency and empowering their customers. Faster movers may find themselves with a competitive advantage when it comes to trust.
The business case for data transparency
The stakes are high, but organizations that are upfront and transparent about what information they’re collecting and why have an opportunity to stand out from the rest of the pack. Transparency builds trust, trust becomes loyalty-a winning strategy for building lasting relationships with customers.
Being able to pinpoint exactly what organizations are doing with your data can be like trying to decipher the Rosetta stone. And for those that don’t speak legalese, it’s a major obstacle in feeling confident that your personal data isn’t being exploited or used for purposes other than those that benefit you.
Transparency builds trust, trust becomes loyalty—a winning strategy for building lasting relationships with customers.
Of the half of customers that don’t feel like they can protect their personal data, according to data from Cisco, 79% blame it on their inability to understand what they’re consenting to.
What's good for customers is good for your business
According to the 2021 Cisco Data Privacy Benchmark Study, companies, on average, saw nearly double the returns for every dollar spent on privacy, with wide-ranging benefits:
- 76% saw a significant boost in customer trust
- 73% said it made them more attractive to investors
- 73% said it enabled innovation
It's a customer experience issue. And businesses can help by using clear language around their data collection policies and how they benefit customers. Whether that’s faster support, better product recommendations, or even access to recall warnings on past purchases, customers are more likely to feel comfortable sharing their data if they understand the advantage to doing so.
Businesses can help by providing clear language around their data collection policies and how they benefit customers.
Web and mobile messaging could be useful tools here. How? By giving consumers greater control over what information gets stored and for how long.
Say you’re messaging with a company about what type of windshield wiper to buy for your car. After asking you for the make and model, they follow up by asking if you want to store that information. Doing so means that you're only shown the accessories that work with your specific car.
Web and mobile messaging could be useful tools here. How? By giving customers greater control over their information.
Not only does this boost transparency around the process, but it puts decision-making in the hands of the customer — a huge step to rebuilding trust. And when experiences like these could be the difference between loyal or lost customers, companies have no choice but to pay attention.
What can companies do to build trust?
Be transparent around the data you’re collecting around how you’re using it.
Customers that understand what they’re consenting to and how it benefits them are more likely to be comfortable with doing so.
Set a high bar
Employ company-wide guidelines that conform to the most comprehensive data privacy laws, not just the ones in a customer’s home region.
Going above and beyond to show customers that you’re working in their best interest will go a long way to rebuilding trust.
Messaging through your own website or app can collect key data points in a way that’s more transparent to customers.
Both chatbots and human agents can ask if a customer wants to store information (say their shoe size or credit card number for future purchases) and for how long, thereby improving customer confidence in the data value exchange.