In today’s era, data is the fuel that drives businesses around the world. Businesses in the banking, communications, healthcare, education, manufacturing, insurance, and retail industries need customer data. Even government agencies collect data for various purposes.
Businesses require data to deliver personalized experiences and automated messages to customers. There is increasing competition between organizations to collect important information and store it for future use.
However, lawmakers are making rules and regulations to protect people from information leaks and privacy violations.
Data privacy for individuals and companies
For individuals or a new freelancer, data privacy refers to the protection of private information, viz. bank account passwords, emails, phone numbers, etc. However, for businesses, data privacy refers to the protection of information that is critical to their identity and operation. This mainly constitutes sensitive data related to financial information, customer records and intellectual property, among others.
According to Integrate.io, a data breach refers to the intentional or unintentional release of sensitive data that exposes it to an untrusted environment. Data breaches have become quite common these days. Criminal hackers, foreign governments, activists, etc. resort to bad data practices.
Therefore, the General Data Protection Regulation (RGPD) was established. GDPR refers to a set of regulations in European Union (EU) law regarding the protection of personal data and therefore the right to privacy of all individuals within the European Union.
A person needs to understand the importance of data privacy. This is because companies use the data for various purposes.
Customers provide different types of information to companies, knowingly or unknowingly. Some of the information provided may pose a risk to customers in certain circumstances, such as:
- Personal information such as residential address, telephone number, bank account number, passport data, etc.
- Personal medical records and health information
- Bank details like debit card number, login ID, password, etc.
- Insurance information, social security number, intellectual property and the like.
Importance of data privacy
Data privacy has become very important in this age of the Internet and easy access to information.
Businesses collect different types of data from consumers, such as personal data (ie, social security number, personal IDs, etc.); behavioral data (transactional details); engagement data (how people interact with the business); and attitudinal data (satisfaction, desirability, etc.) among others.
1. To personalize the customer experience
The data provided by customers becomes the basis for companies. Based on this, they analyze the behavior of customers and modify the products or services to their tastes and preferences. Personalized experiences delight customers. This translates into brand loyalty and word of mouth marketing.
2. Design a marketing strategy
Data helps organizations understand customer behavior. Data analysts use the data to infer how customers interact with and respond to advertising and promotional activities. It even helps to know how the customer perceives the brand. This helps in new product development, product promotions, after-sales services, and other areas.
3. To sell it to other companies
There are various companies that collect data to eventually sell it to data service providers. These service providers buy business customer information and sell it to other businesses that require it, for a price. It is one of the rising industries due to the growing demand.
Why observe data privacy
The Internet has infiltrated the daily life of people and companies. With the increasing use of social networks and the disclosure of details, people must learn to protect their private information. Data privacy should be a daily practice for organizations and customers.
Here are the ways data privacy can help people:
When people protect their personal data, they save themselves from excessive surveillance and damage. Personal data can be used for manipulation by fraudulent companies. Protecting such data helps people from vulnerability.
Exposure to private data can damage a person’s reputation. Data breaches can even cause financial fraud, leading to instability and insecurity. The loss of reputation has serious consequences for people.
limit the power
Freeing up personal data means allowing companies and governments more power over the individual. Companies use such information to manipulate customer decisions and buying behavior and to exercise greater control over people.
How data privacy is a boon for businesses
Rather than view data privacy as a threat, companies should capitalize on it as a branding strategy. Today’s age customers make conscious purchasing decisions. They check the impact of the product on the environment.
Many customers check how the products are made. Similarly, customers even check how companies handle the data provided to them. Therefore, companies can devise a plan for using customer information.
Data Privacy Practices
Privacy plays a crucial role in building a brand image. Companies must make data privacy a part of business ethics. This helps build a positive image of the brand in the minds of the customers. When customers feel safe providing information to companies, it builds trust and likeability.
Companies are required to conduct regular data privacy audits based on standard practices. The results of such audits must be made available to society in general. This helps disseminate good business practices.
Data privacy in the digital age
Privacy has been a fundamental human right. However, people have let much of their private information out into cyberspace. The increasing use of the Internet has made data ubiquitous. Cyber criminals use this data for fraudulent activities.
Therefore, data privacy has become even more important in today’s era of digitization and IoT. To provide greater security for customers, data privacy regulations have evolved over time.
While consumers have become even more conscientious when disclosing information, companies have implemented best practices for consumer information collection, data management, and data privacy.
Sakshi Baid works as a Product Associate at Refrens.com – India’s most powerful invoice generator and platform for growth of freelancers. She has worked for some renowned companies as a brand and digital marketing associate. She can follow Refrens.com on Twitter, LinkedIn and Instagram.
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