Customer data is a vital component in the success of businesses in any industry. In the retail sector, the collection and use of customer data are essential for retail marketers to learn more about customers, understand customer behaviors, communicate with customers personally, and develop deeper relationships with customers that make repeated purchases.
Customer data provides businesses with insights to improve customers’ shopping experience, customer satisfaction and provide them with products or services that better satisfy their needs. The collection of customer data derives from various avenues such as point of sale transactions, analysis of foot traffic on websites and brick-and-mortar stores, social media, email, surveys, and other types of market research. The collection of customer data helps marketers tailor products and services to meet customers’ needs efficiently and effectively. However, phishing, privacy violations, online threats, and data breaches have raised concerns among customers about how their data is protected and utilized.
Customers are influential in driving significant changes rapidly in the retail industry. The growing concern of data privacy among customers created a vital shift and urgency in the retail sector in the U.S. The rise in privacy concerns from customers, emerging developments, and advances in technology caused an acceleration for actions in laws that govern the collection of customers’ data, and consequently, the sharing or selling of their information.
According to The Wall Street Journal, Risk & Compliance Journal, 2020, “companies have to address a growing list of global and state privacy regulations aimed at protecting consumer data.” Furthermore, the European Union’s General Data Protection Regulation established in May 2018, “was an early warning to many U.S. retailers” to prepare for this anticipated change.
Additionally, according to the Q2 Customer Engagement Report 2020 by Merkle, the California Consumer Privacy Act (CCPA), was effective January 1, 2020, and “represents the highest standard of data protection yet in the U.S. and will require companies to assess their data practices carefully.” Retailers must be proactive in their response to the rapid developments in privacy regulations regarding customer data.
A few states have taken action towards enacting laws to enforce the new privacy regulations. In fact, according to U.S. Privacy Survey 2019 by Deloitte, “3 states have enacted dedicated privacy laws covering 42.5M Americans (13%),” “19 other states are debating new privacy laws,” possibly protecting “134M Americans (41%),” and the remaining states currently do not have a data privacy action plan. The three states that have enacted privacy laws include California, Maine, and Nevada.
Retailers must prioritize customer privacy by taking the necessary steps to prepare, transition, adapt, and comply with new privacy regulations concerning customer data. Retailers must improve their business strategies to survive and overcome these challenges. They must also maintain and strengthen trust among their customers and develop a customer-centric approach to their relationships with customers to sustain a competitive advantage over its competition. Retailers can demonstrate to their customers their transparency and security in their processes and interactions with customers.
Build Trust and Develop a Customer-Centric Focus
Deepen Customer Relationships
Improve Legal and IT Processes
Maintain Regulatory Compliance
Retailers must provide their customers with notifications about their privacy practices and disclose specifically the categories and specific pieces of personal information collected at the customer’s request. According to the California Consumer Privacy Act of 2018 and the European Union’s General Data Protection Regulation, maintaining compliance can be achieved through automation technologies and analytics tools.
Retailers implementing changes in privacy regulations relative to protecting customer data is advantageous for their business because it creates the opportunity to interact with customers. Retailers can drive business growth while successfully meeting the customers’ needs and desire to control their data by ensuring privacy and reducing their risk to their data exposure. Furthermore, retailers can develop key business strategies to create more relevant data and increase customer engagement. Building the customers’ trust through transparency about the kinds of personal data collected and its intended use is crucial for retailers to establish a good rapport and positive experience with customers. The most significant experience a business can bestow upon its customers is one that leaves them feeling valued, safe, and protected.
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