You need these two ways to win customers’ data privacy trust

Building customer trust involves two distinct but complementary business skills. Companies of all sizes must foster both forms of trust.

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Business sees trust in data privacy as a panacea. Companies that foster customer trust see more customer engagement and willingness to share valuable personal information. But what do we mean when we talk about trust in data privacy? What are privacy experts advising companies to do when they recommend building trust?

It’s one of the driving questions behind my book, The Intelligent Marketer’s Guide to Data Privacy: The Impact of Big Data on Customer Trust. Most guidance around instilling trust doesn’t adequately explain what trust is, or how to develop it.

In researching companies that use privacy as a competitive advantage, I found two types of trust are key. First, customers must trust the company is competent and skilled in protecting their data. Second, they must trust the company’s reasons for protecting their data are customer-centered. Although each type of trust is valuable alone, developing both is optimal for customer and business outcomes.

Be capable of delivering what you promise

The Oxford English Dictionary says trust is “belief in the reliability, truth, ability or strength of someone or something.” This definition links trust with data privacy capabilities.

For a company to position itself as strong on data privacy, it must have the skills and competencies to be effective in security and protection. For enterprises, this means having resources like data security teams or systems in place, and a talented chief privacy officer (CPO.) You should find it relatively easy to implement (and exceed) privacy regulations. For smaller firms, demonstrating responsible data handling across all interfaces and processes strengthens customer trust in your privacy capabilities.

For companies of all sizes, if you talk a big game on protecting customer data privacy, ensure you have the skills and resources to back it up.

Trust in your company’s data privacy abilities also involves your history with data protection. Strong claims about protecting customer data privacy seem suspicious if you’ve had a well-publicized data breach in the past. But my research found organizations that have suffered a data breach can recover trust by giving customers transparency and control. Ensure you’re honest about past lapses when encouraging customers to trust your data protection capabilities following a breach.

Be privacy-conscious for the right reasons

Customers must also trust your data privacy position is for the right reasons. If trust in your ability to uphold privacy is the cold, rational side of trust, trust in your intentions is the warm, fuzzy side.

If customers think your positioning on data privacy is simply profit-driven or lacks transparency, trust can quickly erode. Companies that demonstrate a motive to protect data privacy for customer-centered reasons get noticed and, over time, trusted.

Ways to build trust in your company’s data privacy motivations are less clear and may take longer. This kind of trust is linked to reputation, so just one negative event can deteriorate it, with a long, hard road to redemption.

My research found many prominent technology companies suffer from this deficiency in trust. Large firms with ample resources for strong data protections may not necessarily find customers like their privacy stance. For example, even before the Cambridge Analytica scandal, Facebook (now Meta) wasn’t well regarded for its privacy practices. When companies like this talk about privacy, customers tend to distrust their reasons. This trust deficit around big tech may present opportunities for small or new tech companies to make a mark, differentiating themselves through customer-centered privacy values.

Building customer trust is key to creating value through smooth exchange of personal information and building long-term, mutually beneficial relationships. Businesses of all sizes should pursue customer trust. But, before devoting resources to building trust in data privacy, your business must understand what trust involves.

Trust implies distinct company behaviors and practices. Carefully managing trust and not taking for granted what trust you already have, is key to leading on privacy.

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About authors

Kelly D. Martin is Professor of Marketing and Dean’s Distinguished Research Fellow at Colorado State University.