A recently released study has given further evidence to the link between privacy and personal information protection and consumer confidence.
The Edelman study released in February 2012 shows that consumer concerns about data privacy and security are actively diminishing their trust in organizations. For instance, 92% listed data security and privacy as important considerations for financial institutions, but only 69% actually trusted financial institutions to adequately protect their personal information. An even sharper disconnect can be seen with online retailers, with 84% naming security of personal information as a priority but only 33% trusting online retailers to protect it.
It’s hardly surprising that consumers are nervous. Stories about privacy and security flaws and breaches abound in the media these days. From flaws in mobile applications, retroactive release of archives for marketing, service amalgamation and data breaches, users are constantly confronted with evidence that their personal information is at risk. Lack of transparency on the part of organizations and consumer discomfort with cross-border data traffic, outsourcing and cloud storage only further exacerbate the issue.
This challenge to trust appears to correlate to an increased willingness on the part of consumers to invest in their privacy. Where a 2009 study concluded that consumers were unwilling to pay extra for privacy, recent research from the European Network and Information Security Agency (ENISA) finds that individuals weigh security and privacy considerations as heavily as those relating to a product’s design, style, and physical dimensions. All other things being equal, the study discovered that consumers were willing to pay a higher price in order to protect their privacy.
Investing in privacy is not the only way that consumer concerns are indicated – the Edelman data also shows nearly 50% of participants either leaving or avoiding companies that have suffered a security breach. Following a data breach suffered by an organization with whom they’re already involved, up to 70% of those surveyed expressed willingness to terminate a relationship or switch providers.
Findings like this should be a wake-up call for organizations, an indicator that it is no longer enough to “manage” security and privacy concerns. Instead, privacy and security need to be prioritized and strengthened to the point where they can be made key parts of branding and corporate identity. Consumer confidence is key, and reliant upon trust. And new evidence increasingly shows that privacy is not only good business – it’s good for business.