CPO MAGAZINE – THE CHALLENGES OF EXPANDING CUSTOMER ANALYTICS INITIATIVES IN THE FACE OF DATA PRIVACY REGULATIONS
Companies across all industries are under increasing pressure to become more data driven by expanding their customer data analytics initiatives. However, these initiatives often conflict with – and can be stymied by – evolving data privacy regulations if not proactively dealt with. I’ve spoken with companies across retail, telecommunications, financial services and the automotive industry who are all wrestling with this data utility/data privacy trade-off in key analytical areas such as personalization and predictive modeling. This leaves companies facing what can be an existential question. How can we use customer data to drive new business opportunities while at the same time protect that data and comply with new, complex regulations?
Despite the demand for analytics projects, most companies are struggling to move forward. According to a recent HBR survey, 69% of companies reported they had yet to create a data-driven organization, and 52% admitted they weren’t even treating data as a business asset, much less fully dealing with data as a potential liability.
For many companies, a critical obstacle to building customer data analytics initiatives is the growing challenge of data privacy. Evolving data privacy regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Protection Act (CCPA), create compliance challenges. In addition, growing consumer awareness of their legal rights in the face of increasing privacy threats creates brand challenges, especially when a company is fined for regulatory non-compliance or suffers a data breach. Anecdotal evidence clearly reveals that companies are motivated by a fear of large fines or the potential loss of reputation. Without trust, customers are just one click away from switching to a competitor.
Other more ethically minded companies have actively sought out solutions to ensure data privacy compliance simply because it’s the right thing to do. As an example, a global financial services firm recognized that complying with the GDPR would reduce the depth of analytical insight available from its European merchant business intelligence solution, which leverages transaction data to enable merchants to benchmark their performance and identify growth opportunities. Putting compliance first, prior to the start of the GDPR, the firm sought out a third-party provider to independently anonymize the data, eliminating any data privacy concerns.
How can companies act ethically, protect their brands, and still become data-driven? By going all in on an approach to data privacy compliance that enables the business to be more agile and use data more effectively. Let us take a look at some of the strategies to get started:
1. Take a comprehensive approach to data privacy compliance
2. Approach analytics projects with data privacy in mind
3. Be transparent with consumers about their data privacy rights
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