Big Data: Protecting Privacy Is Good For Business

6 Ways To Master The Data-Driven Enterprise

When it comes to big data best practices, most companies are stumped about how to respect consumer privacy and still get the data they need to make their enterprises profitable. This is particularly true for companies using mobile apps, which often collect all manner of data about user location and habits.

The Mobile Ecosystem Forum (MEF), a global mobile trade association, publishes an annual research report on consumer trust and privacy, which tracks the attitudes of mobile users in 15 countries. In its latest report, released in February, 49% of the 15,000 survey respondents said a lack of trust limits the number of apps they download, compared to 37% who said the same in 2014. More than seven in ten respondents (72%) said they are not happy sharing personal data, such as location or contact details, when using an app, while 34% said lack of trust stops them from buying more goods and services using their mobile device.

"Companies clearly need to balance the need to gather consumer data to monetize services with the need for consumers to trust the services that are offered," said Andrew Bud, chairman of The Mobile Ecosystem Forum, in an interview. "Consumers must be treated as full partners in this value-exchange by helping them understand why their data is collected, how it is used, and what it is used for. That means transparency and a focus on clear privacy policies that are fully comprehensible and easy to read on a tiny mobile screen. In some parts of the world this is becoming a legal necessity, which companies turn into an asset."

It all begins with a change in perspective: Rather than looking at customer privacy as an challenge for your company to overcome, try looking at it as the foundation upon which all of your customer relationship efforts are built. "Customer privacy, and organizations' ability to protect it as customers expect, is, in fact, the building block of trust and long-lasting engagement," said Enza Iannopollo, a researcher at Forrester who is based in the UK where consumer regulations are far tougher than they are in the US.

Indeed, the data-collection practices of companies and governments have created trust issues with consumers. Government agencies and corporations worldwide have engaged in years' long data-gathering projects -- such as the NSA's collection of bulk call data from US telecommunications companies, which an appeals court last week ruled was illegal. Such bulk data gathering is often done with little to no regard as to whether the data gathered was actually useful to the agency or enterprise gathering it, or whether vacuuming up and storing such information was ultimately harmful to the consumer.

To make matters worse, some corporations shoved opt-out options into dark corners of their websites or apps, where consumers could not easily find them. Even if consumers found the opt-out button buried deep in an app or device menu, clicking it did not stop the data collection.

[ How much personal healthcare data will you reveal? Read The Internet Of Me Is Getting Real In Healthcare. ]

In his DoctorBeet's blog post, UK based ICT consultant Jason Huntley revealed the details of how his LG Smart TV collected personal data. Opting out did not stop the TV's data collection. After widespread news coverage and a resulting consumer backlash, LG announced it has fixed the opt-out problem.

Data Collection: Transparency Is Key

Most organizations today recognize the need for transparency in their data collection, usage, and retention practices. However, for many companies this is a scary tactic. The fear is that consumers will share little to no data voluntarily, or will over-restrict data use.

Scary or not, transparency is actually less harmful in practice than presumed, and actually provides more benefits to companies than insidious tactics do. "Consumers are happy to share data when three things converge: transparency, trust, and benefits," said Maxwell Luthy, director of trends and insights at TrendWatching, in an interview. "If the organization is transparent about what data it collects, the organization can be trusted to keep data secure, and the benefits of the collection are clear to the customer, most people are happy."

To turn data-gathering into a customer relationship enhancer, companies have to ditch the idea of a one-way data funnel and build a two-way engaging relationship centered on personal data. In other words, use analytics to provide insights for the customer as well as insights for your company. Personalized insights are often considered by customers as a top benefit. Other consumer benefits run the gamut from personalized services and loyalty rewards to simply feeling good for helping a good cause.

"Turn insight back around to the customer, for that is what creates the value cycle," said Brian Hopkins, vice president and principal analyst at Forrester, in an interview.

Companies need to move to a transparent, informed-consent, collaborative data model now, or risk losing major investments later, Hopkins said. "If you're dependent mostly or solely on consumer data, what happens to your organization and ecosystem if everything you're doing suddenly becomes illegal? One stroke of the legislation pen and you're out of business," said Hopkins. "Get proactive and protect your business with transparency and by digging into systems to make it easier to adapt to changes in political winds or to add more controls. Companies may be facing very expensive fixes as more legislation appears."

In other words, the longer you wait to provide transparency, build consumer trust, and provide real benefits in a data exchange, the more your costs are likely to rise in making those fixes later.

How do you go about making this transition? Craig Spiezle, executive director of the Online Trust Alliance (OTA) and former director of security and privacy product management at Microsoft, offered the following nine tips:

What's your big data strategy? Have you tried any of these tips in your organization? If so, how have they worked for you? Do you have additional best practices for big data collection that have kept you in good standing with your customers while giving your organization the insights it needs? Tell us all about it in the comments section below.

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