Stop me if you've heard this one: companies are losing customer trust. From a perceived lack of honesty, using their information in ways they didn't overtly approve, to data breaches, customers are increasingly frustrated with their interactions with the companies and brands they use. This lack of trust affects the way they make decisions and their behavior in general.
When customers start out skeptical, they're far less inclined to share more information than necessary to complete a transaction. This lack of engagement makes it much harder for the company to market to them effectively, which increases the likelihood that the customer unsubscribes from communications, and the negative cycle continues. Forrester found that the perception of data, for example, misusing data, and poor trust coming from that, can decrease retention by about 18% within a year, can make customers spend less, at around 15% in one year, and also makes customers more likely to dissuade others using that organization.
So how do you build trust with your customer? Aside from having generally upstanding business practices, staying mindful about corporate data security, being active and engaged in the community and philanthropic efforts, etc., companies need to make sure when they interact with a specific customer that they are treating that customer with respect. Respect means different things to different customers, but most customers agree on some basic principles: don't sell our information. Only contact us with content that might be relevant or important to us. And stop contacting us if we ask.
A lot of companies have a remarkably hard time with these basic principles of data collection and communication. Companies are running the risk of being caught non-compliant to government regulations, and some of them do it with complete disregard to the potential consequences. Don't be one of those companies! The new GDPR regulations going into effect in May 2018 will have fines of €20 million, or 4% of companies' annual global turnover, whichever is the highest. You can't afford to be non-compliant.
Eric V. Holtzclaw is Chief Strategist of PossibleNOW. He's a researcher, writer, serial entrepreneur and challenger-of-conventional wisdom. His book with Wiley Publishing on consumer behavior - Laddering: Unlocking the Potential of Consumer Behavior - hit bookstores in the summer of 2013. Eric helps strategically guide companies with the implementation of enterprise-wide preference management solutions.
Labels: customer trust, data breaches, data collection, data security, forrester, GDPR regulations, government regulations, non-compliant