Customers won't buy services or products from companies if they don't trust how their data will be used, Cisco found.
A Cisco report released on Tuesday outlined consumers' growing demand for data privacy. Not only do people care about data privacy, but they have taken actions to protect it. These consumers view respect for privacy crucial to determining the companies they do business with, the report found.
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Cisco's Consumer Privacy Study surveyed 2,600 consumers worldwide. The report identified four key insights, which all point to an increased emphasis on the importance of securing personal data.
Key insights on data privacy
Insight 1: People care about privacy, and a large number have taken action
In the past, consumers indicated they cared about data privacy, yet they never took noticeable steps toward protecting their privacy.
However, with the increase in big-name data breaches—including Equifax and Facebook-Cambridge Analytica—and the implementation of data privacy regulations over the past few years, people began turning those sentiments into action, said Robert Waitman, director of Cisco's privacy office.
Not only did 84% of respondents say they care about data privacy, but 80% indicated they are willing to spend time and money to protect their data and 48% said they've already acted by switching companies or providers because of data policies.
Taking all of those factors into account, 32% cited themselves as "Privacy Actives," or those who care about privacy, are willing to act, and have already taken action to protect their privacy, the report found.
"That is big news." Waitman said. "To say that there's already a third of the population who not only says they care, but says they're willing to act, spend more time and money, or have already acted, is something that is brand new to the market."
Not only were the number of Privacy Actives sizable, they also represented a crucial demographic for organizations. More than half (61%) said they are under age 45, the report found.
This data shows that organizations must take data privacy into account if they want to retain younger customers, as those consumers are the ones with the greatest lifetime value and do the most online shopping, Waitman said.
"The biggest thing on Privacy Activists we found is how much they were associating a company's brand with privacy. This I think is also new," Waitman said. "When a person is thinking about the goods, services, and the customer experience that they get from any company, they are now thinking about privacy as one of those things."
The overwhelming majority of Privacy Actives (91%) said they won't buy from a company if they don't trust how data is used, and 90% said they view how a company treats data as how the company treats the customer, the report said.
Insight #2: Privacy regulation helps build trust and facilitate innovation
The second area the report explored involved the role privacy regulations play in user acceptability.
With data privacy issues increasingly in the public eye, consumers have felt as if they've lost control of their data, but privacy regulations appear to make users more comfortable with how their data might be used, the report found.
The report offered respondents a list of business models that featured the use of data in a way that could be beneficial to the users' lives. One of the examples was allowing a smart home speaker to listen for personal information in exchange for receiving health or safety warnings that could benefit one's self or family.
Despite being shown positive ways personal data could be used, 36% to 47% (depending on the example) indicated they were not comfortable having their data shared, the report found.
However, privacy regulations played an interesting role. Respondents who were aware of the existence of privacy regulations, like, indicated they were more comfortable (38%) with these potential business cases; those who were not aware (24%) were not as comfortable.
"Just knowing that there is something out there, that the government and other regulators have done something to help protect this, provides some level of trust and comfort around how the data is actually going to be used," Waitman said. "It makes them more willing to share. It makes them more trusting of the organizations that are asking for that information."
Insight #3: Consumers value government's role in regulating the use of personal data, and they view GDPR very favorably
When asked who in particular is responsible for protecting their data, most selected the federal government (45%), followed by the individual user (24%), and the companies (21%), the report found.
"Companies can do their part by communicating clearly and help us understand how the data is being used. We, ourselves, need to play a role too by making good decisions," Waitman said. "But, if you don't have the oversight from the government in terms of these regulations, then it's pretty hard for consumers to have the confidence that the data they're sharing with companies is, in fact, being used that way. They need that level of oversight around it."
This reasoning explains why the overall sentiment surrounding the impact of GDPR was positive (55%). Some 40% of respondents said they were neutral, and only 5% indicated negative sentiments toward the regulations, the report found.
Because of GDPR, 52% of respondents said they felt as if they had more control over their personal data and 47% said they felt greater trust in companies that use their data, according to the report.
Insight #4: Consumers feel they are unable to protect their personal data, and their biggest challenge is figuring out what companies are doing with their data
With the previous insights in mind, one of the biggest issues survey respondents raised was the need for more transparency and simplicity in regards to how their data is being used, the report found.
"Almost half of the people (43%) said they didn't feel they can adequately protect their own data today," Waitman said. "Their No. 1 reason was it's just too hard to figure out what companies are doing with [the data]."
"It's like the data nutrition label. When you go into a grocery store, you don't want to just buy something and not know what's in it," Waitman said. "You like the fact that there's a little label on it that tells you exactly what's in it. And that was the No.1 piece of this fourth insight: Consumers saying, 'we want companies to do that.'"
The primary way companies can make their customers feel more comfortable is by considering privacy a part of their brand, Waitman said.
By treating privacy as part of the brand, "you're going to think about this differently. You're going to invest differently. You're going to make this a priority. You're going to do things with transparencies, asking your customers what's important for them to understand about this," Waitman said.
Transparency and simplicity in all communications between customers and businesses is key, especially in regard to their data, Waitman said.
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