Innovation Vs. Data Privacy Or Innovation And Data Privacy?

Heidi Neumes

Nowadays, data security and customer satisfaction are increasingly gaining attention – in both the B2B and B2C segments. But what does this mean for companies when it comes to the handling of customer data? It has become clear that it is better for companies to collect less – but more targeted – customer data and to use it more efficiently. By taking this approach, companies can maintain their customers’ trust and remain successful in the long term.

I recently read an article about data usage and artificial intelligence (AI) in a hotel. The author was in favor of collecting hotel guests’ data and, with the aid of AI, using it to improve customers’ satisfaction with the company. The company, in this case, was a hotel chain, and the author was a guest at a hotel in this chain.

The author was evidently so unhappy with his stay at the hotel that he suggested using the hotel’s cameras to scan guests and analyze their mood. He recommending making this data available to hotel employees so they could improve the service at the hotel.

My first thought was: That is so manipulative; it is certainly not legal! Wouldn’t the customers’ consent be required to do that? And, if a guest does not want this kind of “service,” would it be easy to opt out of this tracking and manipulation?

Data collection vs. data protection

Continuously filming and analyzing customers is a huge breach of their privacy. And no matter how clever a system may be, it could never be able to determine why someone is in a bad mood from their facial expression. The information generated in this way would be nowhere near sufficient for sustainably improving customer satisfaction.

In an era of increasing digitalization, it is becoming easier and easier to collect data. Virtually all companies collect and store it, and often, they collect and store more data than they require or can cope with.

At the same time, reservations about large data collectors are growing. Remember the scandal involving Facebook and Cambridge Analytica, where it emerged that Cambridge Analytica illegally used Facebook users’ data to influence the 2016 U.S. election campaign?

So, we have two phenomena to consider: First, enormous quantities of unneeded data are being collected and stored. Second, the General Data Protection Regulation (GDPR) came into effect just under a year ago with the aim of ensuring better protection for EU citizens’ data.

Data use vs. data privacy

Most companies make a big mistake: They collect a lot of data that they do not need and can’t analyze. Customers question what is being done with all their data and are skeptical about the company. In the worst-case scenario, customers abandon the company and shop elsewhere.

This should make companies realize that customers highly value their privacy and the protection of their data. By collecting only the data that is relevant, businesses can convincingly demonstrate that they are taking their customers seriously and making a conscious effort to protect their privacy and the data customers have entrusted to them.

With the right strategy, by collecting less data and making optimal use of it, companies can also increase customer satisfaction and improve long-term customer loyalty. The aim should be to use less data more efficiently – not to collect and store masses of data without having any use for most of it.

Data use without customer alienation

Companies must be able to generate and use data without risking alienating their customers. Nothing is more damaging to a company than losing the trust of its customers and therefore their buying power. In the long term, data usage and customers’ privacy must always be considered hand in hand. Customer satisfaction must always be companies’ top priority – even if that means they can’t utilize the full potential of data collection and analysis opportunities. After all, just because something is possible, it does not mean we should do it. The data entrusted to you must be managed securely. That is the only way to reconcile innovation with the need to protect customers’ privacy.

Efficiency and less data

Companies that understand this principle and view it not as a conflict but as an opportunity will enjoy greater growth in the long term by gaining and retaining their customers’ trust. Use the data you have collected more efficiently, store less data, and ensure that it gets optimal protection.

Combining data privacy and data use

Companies that follow this principle have a competitive advantage. In the long run, they are in a stronger position and more viable than their competitors. To return to my unhappy hotel guest: Using manipulative strategies and processes at the customers’ expense are a no-go, particularly if the company alleges to have the customer in mind but is really just thinking about its own benefits.

This requires companies to understand that data analysis, data protection, and privacy must be considered in connection. They are not conflicts; they are key aspects of B2B and B2C relationships that must not be neglected to be successful in the long term.

For more on this topic, read the “Enterprise Data Strategy” series on The Digitalist.

This article originally appeared on itelligencegroup.com and is republished by permission. itelligence is an SAP platinum partner.


Heidi Neumes

About Heidi Neumes

Heidi Neumes is head of the Center of Excellence Data Management at itelligence. For more than 25 years, Heidi has been active as product developer, team lead, and expert for data management and data migration. In addition, she is responsible for the whole itelligence portfolio related to master data management and EU GDPR in Germany.