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The Importance of Trust
Companies who fail to use personal data responsibly risk losing customer confidence and loyalty.
Posted Jun 22, 2012
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Building a strong relationship between a brand and a customer takes time, diligence, understanding, and investment—and often involves the sharing of very private information. As with any relationship, however, the bond that has been built can be easily shattered if trust is broken.

New research shows that when it comes to consumers and brands, the failure to handle customer data conscientiously and effectively can have a huge impact on customer trust and, in turn, loyalty. A survey of 1,000 British consumers Transactis carried out in the first quarter of this year reveals that 95 percent of those surveyed would cease to do business with a company if it handled their private details irresponsibly, got them wrong, passed them to third parties, failed to keep them secure, or otherwise abused their trust.

The findings demonstrate that not only would an overwhelming majority take such action, but more than two-thirds have in fact already done so: Sixty-nine percent of those surveyed say they have actually terminated their business relationship with a company within the last three years because they felt it had mishandled their personal data and could no longer be trusted.

It is clear then that the safe and effective handling of consumer data is essential to gaining trust, maintaining loyalty, and reducing the risk of a broken customer relationship. And consumers want to be able to trust companies, but recent news stories have raised doubts. Google, for one, made headlines with its controversial new privacy policy, under which it would track users across various services—including its search engine, Gmail, YouTube, its Android mobile platform, and the Google+ social network—which it then rolled out despite being told this action may violate European Union data protection laws.

Fears of the growth of a corporate "surveillance society" have made consumers more conscious than ever of companies collecting their personal data and using it to analyze their behavior, needs, and preferences—not just by tracking Web site interactions but through transaction records, loyalty schemes, newsletter registrations, event participation, sign-ups for discount vouchers, and other dealings with businesses.

Gaining the trust of consumers, however, is not just about keeping customer data secure or ensuring it is not used in an unauthorized way—firms also need to actively demonstrate that they are making intelligent and efficient use of the information they hold. The research indicates firms that fail to employ personal data effectively, thus calling their responsible handling of it into question, will see a breakdown in loyalty, with 83 percent of consumers saying they would be inclined to switch to a competitor if a company ignores their personal details and simply sends them blanket marketing messages.

While consumers may sometimes be unsettled by the idea that the companies they deal with are using their personal information to track their behavior and create more targeted marketing, they also do not want to be carpet-bombed with a deluge of untargeted and largely unwanted communications because companies have no means of refining their marketing campaigns to reach the right individuals. Consumers have high expectations today, and effectively using customer data is essential to meeting those expectations.

This is best demonstrated by the evident trust consumers have in supermarkets. In the survey, respondents were asked specifically how they would rate the organizations they deal with directly—such as "your main supermarket" and "your bank"—in terms of handling personal details responsibly. Overall, "your main supermarket" topped the results, with 84 percent of consumers rating their grocery store as "good" or "very good."

The confidence British consumers have in their supermarkets is a strong indicator that the vast majority are aware of, and value, the application of insight gained from loyalty programs—especially those run by leading names in the grocery trade. They see these companies collecting data on what, where, and when they are purchasing, and then using this data to good effect in a multitude of ways—for instance, to provide bonus reward points on needed purchases, to send discount offers sent through the mail on appropriate products, or to print out useful coupons at the register when a purchase is being made.

Clearly, consumers want firms to show they understand their customers' preferences in terms of communications, offers, and timing. According to the research, 76 percent of consumers say that if they can see companies using their personal details to tailor services and offers—namely, justifying the customer's confidence in their handling of private data—they are more likely to continue their custom and not defect to a competitor.

Furthermore, using data effectively to provide products and services that demonstrate careful management of consumer information is essential to achieving true customer trust—which, in turn, results in more robust customer loyalty. The vast majority of the respondents to the survey—83 percent—state that, if a company deals with their personal details responsibly and employs the information to provide good service, they are more inclined to keep buying from that firm than its competitors.

Without a doubt, how a company manages customers' personal data has a lasting effect on the relationship—and careful stewardship keeps consumers from losing faith in a brand's ability to deal with them fairly and efficiently. To really gain the trust of its consumers, a firm has to do more than just get the contact details right. Companies must prove they know their customers in terms of the products they consume, the service options they want, their preferred communication channel, the appropriate time to contact them, and their desired delivery procedure. Only then can consumers have full confidence in a brand and a relaxed attitude in their relationship with it.


Michael Green is the director of insight at Transactis, a U.K. consumer insight and database marketing firm. He has worked on both the client and agency side in the United Kingdom, Europe, and Asia Pacific, with a broad range of brands, including John Lewis, Nissan, Barclays, NatWest, Shop Direct, General Motors, and UNICEF. He sits on the Data Council of the Institute of Direct and Digital Marketing in the U.K.


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