“Big Data? Big problems,” writes Maurice Lévy, chairman and chief executive of Publicis Groupe. “With each hack, leak, and act of piracy and sabotage, we grow more aware that the performance of the new digital order is in direct proportion to its users’ confidence.”[1] Privacy and security have been the 600-pound gorillas in the room since the beginning of the big data era. Cavalier attitudes about protecting personal data have brought unwelcome attention to a number of companies. Lévy argues, however, that the promise of big data has such a significant upside that companies need to do all they can to eliminate or mitigate privacy and security concerns. He explains:

“The questions raised by Big Data are of urgent importance to everyone. Privacy is at the heart of democratic modernity, and it must be preserved. The manipulation of the information we share with organisations online, increasingly extensive and sensitive in nature, makes digital processes a question of life (private life, certainly) and, potentially, death. At the same time, Big Data analytics have been shown to have significant potential to benefit the common good: in the fields of health, science, research and security, among other examples. At this moment of high tension about our online information, everyone involved must accept their responsibilities. We must ensure that fear does not restrain the great promise of Big Data.”

David Weldon (@DWeldon646) agrees with Lévy that consumer trust lies at the heart of digitized commerce. “How your organization handles issues related to data privacy and data security,” he writes, “will have an enormous impact on the willingness of consumers to do business with you.”[2] To support this assertion, Weldon points to a study published by the law firm Morrison& Foerster which found, “Despite privacy being unrelated to the quality of a product or service that consumers receive, more than one in three people (35%) over the last 12 months have decided not to buy from a company based upon concerns over privacy.” Maggie Buggie (@MaggieBuggie), Vice President and Global Head of Digital Sales and Marketing at Capgemini, asks, “Are you personalizing services for your customers, or intruding on their privacy?”[3] She elaborates:

“Big Data and analytics technologies have promised to lead to a golden era for retailers and consumers alike, providing ways to deliver highly personalized services to a greater number of, and more satisfied, customers. But now there are strong signs that such personalization is in danger of fuelling the notion that data privacy is being eroded. A new report from Capgemini, Privacy Please: Why Retailers Need to Rethink Personalization, finds that an overwhelming majority of consumers have adverse views on retailers’ privacy initiatives, often as a result of badly executed personalization. Based on more than 220,000 social media conversations covering 65 large retailers globally, the report reveals that 93% of all consumer sentiment is negative when it comes to retailer privacy, with data security and intrusive behavior key drivers of that negativity.”

Those kinds of statistics explain why Lévy is so concerned about privacy fears cutting short big data’s potential. Anjali Lai (@anjalilai), an analyst on Forrester’s data insights team, adds even more fuel to the bonfire.[4] She notes that Forrester research has found consumers are more willing than ever to:

1) walk away from your business if you fail to protect their data and privacy;

2) adopt technologies like tracker-blockers and VPNs to limit their exposure to data misuse; and

3) extend their protective actions to the physical realm.

And, Forrester’s Consumer Technographics® data shows that this story pertains to millennials and their older counterparts alike:

60 percent of US online adults are very concerned about their privacy

58 percent of US online adults have changed their online behavior

51 percent of US youths aged 11-17 are very concerned about their privacy.

Lai concludes, “Pundits like to say that privacy is dead. But our data shows that privacy is very much alive — and research indicates that it’s set to become a major competitive differentiator in the years to come.” The emergence of the Internet of Things (IoT) means new methods of collecting personal data are coming and each new wearable device adds data to the so-called “quantified self.” You simply can’t get more personal than that. Buggie points out that most people actually like personalization. That’s good news for retailers and manufacturers. What they don’t like are poor privacy policies. Buggie explains:

“The research found that 80% of all sentiment on personalization was positive. It’s just that dissatisfaction with privacy policies can strongly tip the balance the other way. Fully 86% of customers perceive that retailers struggle to strike a balance between personalization and privacy. The very methods being put in place to provide more personalized services now threaten to compromise data privacy. Retailers have many sources of information on their customers, and used separately that data remains relatively anonymous. But once it is analyzed and cross-referenced to build a more complete profile, the anonymity of customers can be jeopardized — much to their annoyance. The use of more sophisticated analytics tools means retailers must become more savvy about how to ensure data privacy is not breached. Algorithms can help to build granular profiles of consumer activities, but without some element of human intervention offers can turn out to be highly inappropriate. As a result, while personalization requires the use of more data, many consumers are pushing back against such requests.”

Lévy fears governments are going to step in and sharply curtail data collection and analysis if companies fail to act responsibly. “Now is the time to start,” he writes, “and those with the most influence — global digital companies to begin with — should tackle this problem, which is central to the trust of internet users and, in turn, to the very future of the digital world.” Buggie agrees that companies need to step up to the task. “Measures must be put in place to safeguard data, establish transparent and thorough privacy policies and governance mechanisms that prioritize data, and to strengthen authentication methods to prevent hacking. … Retailers need to rebuild consumer trust and ensure they are better at using data to enhance the customer experience. Answering such difficult questions honestly could be the difference between winning or losing customers.” Those questions include:

• Do we provide clear communication on how data is collected, used and shared?
• Can we give users greater control over data, including the ability to erase it?
• Can we create a contextually rich view of the customer across multiple channels for accurate personalization?
• Is the data approach respectful of the fact that consumers are increasingly aware that their data has a monetary value and are retailers offering fair exchange for it?

The big data privacy issue isn’t going away. Nothing makes this clearer than the European Union’s new privacy laws. Andy Mutz, Chief Technology Officer at BeyondCore, explains, “A major change is on the way in how American companies must handle European citizens’ personal data. The EU recently rejected Safe Harbor rules that would have allowed US companies to manage EU data under existing US law. Now, new legislation will tighten the rules — and the penalties — significantly, to better protect European citizens’ personal data.”[5] Most analysts agree, companies dealing responsibly with costumer data will be rewarded in the years ahead.

Footnotes
[1] Maurice Lévy, “Do not let fear kill the promise of Big Data,” Financial Times, 1 September 2015.
[2] David Weldon, “How You Handle Data Privacy, Security Key to Customer Loyalty,” Information Management, 3 February 2016.
[3] Maggie Buggie, “Balancing Personalized Services Without Threatening Data Privacy,” Information Management, 28 December 2015.
[4] Anjali Lai, “The Data Digest: Evolving Consumer Attitudes On Privacy,” Information Management, 23 November 2015.
[5] Andy Mutz, “8 Reasons Every US Business Should Care about New EU Privacy Laws,” Information Management, 1 April 2016.