4 Ways Privacy in Business Generates ROI

Modern businesses have to be compliant with data privacy regulations. Everyone knows that. 

But nobody likes being told they have to do something. Especially not when that something seems like an expensive, complicated distraction from revenue-generating activities. 

Good news: A data privacy program can be so much more than a simple cost center. It isn't just something that you have to do; it's something smart businesses will want to do (assuming you’re interested in generating revenue).  

Investing in privacy is a wise strategic move that can provide a significant return on investment (ROI). In fact, estimates on the ROI of data privacy reach up to $2.7 return for every $1 spent. Here are four ways you’ll generate a return by investing in data privacy.  

Stronger Brands with More Customer Trust 

McKinsey reports that 71% of consumers surveyed would stop doing business with a company if it mishandled their sensitive data. A separate study from the Pew Research Center found that 52% of consumers actually have stopped buying from a company due to privacy concerns, showing that consumers aren’t just paying lip service to how much they care about data privacy. 

Money saved is money earned—but can privacy generate additional customer trust, and does that trust translate into more revenue? Consider this: Sixty percent of consumers indicated they would spend more with brands they trust to protect their data. Research from Google found that 49% of participants would switch away from their first-choice brand if they had a positive privacy experience with their second-choice brand. 

Even if you don’t find statistics compelling, it’s undeniable that some companies have chosen to make data privacy a part of their brand. Apple, for instance, considers privacy a “core value” and has made data privacy a key differentiator. Given that 81% of Americans have expressed concern over how businesses use their data, it’s no surprise that Apple’s recent product rollouts have all mentioned privacy in one way or another.  

More Effective Marketing 

A common objection to robust data privacy practices is that it’ll reduce the marketing team’s access to data, and therefore its effectiveness. In fact, the opposite is true. 

Businesses that attempt to “trick” consumers into handing over their data through dark patterns do get more data. But the bulk of that data will be inaccurate or generate bad leads from consumers that never wanted to be contacted in the first place. (Not to mention manipulating consumers to provide their data is noncompliant). 

Research has shown that customers who feel in control of their data during interactions with a given business are twice as likely to find advertising relevant and are three times more likely to react positively to advertising. 

Consumers aren’t against advertising and marketing. They just don’t want to feel deceived or tricked. Ultimately, consumers want to be in the loop about what you’re doing with their information. Once they know that, they’ll be far more responsive to your marketing campaigns.  

Consolidated IT 

Fifty-six percent of applications used within companies are not owned or approved by IT. With the accessibility of SaaS solutions, it’s simply not feasible to ensure every tool gets vetted and approved by IT first. Employees and teams will find their own solutions to problems rather than wait on lengthy procurement processes. 

This is a huge issue, both in terms of security and data privacy. 

But robust data privacy practices can help in the discovery of shadow IT and provide insight into data risk in these applications. Businesses that emphasize data privacy are more likely to make employees aware of the risks of sending personal information to unvetted applications.  

In addition, data privacy solutions often enable you to map the data and systems controlled by your organization. When you map your data in this way, you’ll gain visibility into shadow IT systems as well as potentially redundant or unneeded systems. As a result, you’ll be able to help IT streamline the tech stack and reduce the risk of data vulnerability or noncompliance. 

Risk Mitigation 

Speaking of reduced risk, one of the headline benefits of a data privacy program is risk mitigation. In the long run, risk is a cost—eventually there will be a breach or an incident, and that event will cost money to react to and recover from and will cost the business in reputational damage. Proactive risk mitigation is a cost-saver by its very nature. 

Eighty-five percent of companies have experienced some kind of data breach. Through data mapping, you’ll also be able to identify systems that contain personal information but haven’t been appropriately assessed and which may lack security controls. And by identifying where you can exercise data minimization, you can reduce the impact of a breach by limiting places where data can be exposed.