Skip to contentSkip to navigation
/ Spring2020/Issue 98

The three Ts of handling consumer data

Customers give personal information to companies that are careful about trust, transparency, and the type of data they request.

When consumers get to the cash register or checkout screen, they are increasingly asked to disclose personal information. Studies show that even people who harbor privacy concerns are willing to provide personal details to a company.

Indeed, most consumers realize they’re being tracked when they surf corporate websites, research shows, believing it’s just a part of doing business online. A large survey in 2015 of consumers in the U.S., the U.K., Canada, France, and India found that 75 percent of respondents were willing to hand over personal details to a company in exchange for a product or service they valued, especially if they trusted the brand.

However, several more recent high-profile security breaches have rattled some consumers and lawmakers, triggering calls for stricter legislation on how consumer information is used and stored.

In an era in which good customer data offers a clear business advantage, how should firms communicate with customers whose data they seek? The authors of a new study set out to answer that question. They reviewed research on consumer privacy issues, legislation, and best practices at firms around the world, looking at mistakes made and lessons learned. The study concluded that successfully handling client data comes down to three Ts: trust, transparency, and type of data.

Trust. The more consumers trust a firm, the less they worry about sharing private data with it. As with interpersonal relationships, trust between a customer and brand is complex. And as trust becomes a more important part of doing business, the authors write, firms must view the trust they engender among consumers as an essential asset.

The more consumers trust a firm, the less they worry about sharing private data with it.

Transparency. When companies request personal data, they must be transparent about why they want it and what they plan to do with it. Indeed, transparency is a cornerstone of recent data laws. When disclosing data usage policies, firms must communicate in a friendly, straightforward manner, the authors write, and not bury the notifications in fine print or legalese. Firms should be up-front about data processing and third-party involvement, which many consumers are suspicious of.

Type of data. It’s important to be selective when requesting customer data. In the U.S. and E.U., particularly, people tend to be guarded about giving up identifying information. Firms should consider the context of transactions and then be careful not to ask for data beyond that scope. Most people wouldn’t give a second thought to providing their address when buying something online but would balk at filling out a form requesting shopping preferences or detailed demographic information. Firms must keep the type of data they collect pertinent to the transaction.

Access to customer data is a powerful business advantage. Companies that stick to the three Ts can continue to collect this information and use it to drive growth. Firms that flout the guidelines risk seeing their customers — and that coveted personal information — defect to competitors.

Source: “What if you ask and they say yes? Consumers’ willingness to disclose personal data is stronger than you think,” by Grzegorz Mazurek and Karolina Małagocka (Kozminski University), Business Horizons, Dec. 2019, vol. 62, no. 6

Matt Palmquist

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

Get s+b's award-winning newsletter delivered to your inbox. Sign up No, thanks
Illustration of flying birds delivering information
Get the newsletter

Sign up now to get our top insights on business strategy and management trends, delivered straight to your inbox twice a week.