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The Future is Trust - Why Companies Cannot Survive Without It

Without trust, products won't sell in the digitized 21st century. According to Harvard Business Review, almost 71 percent of Fortune 500 companies categorize themselves as technology firms because technology has taken over every sector of commercialization. As our globe becomes increasingly dependent on software, cyber hacking increases exponentially.

Why Trust is Essential in an Increasingly Digitized World

Trust is Essential in an Increasingly Digitized WorldIn an increasingly digitized world, companies need to be able to sell their products and services while remaining trust-worthy to their customers. To ensure that they maintain the trust of their customers, companies need to minimize the inherent privacy and security risks related to their software. Some of the steps companies can take to keep consumer trust intact, are:

  1. Prioritize data privacy and security
  2. Understand demographics
  3. Demonstrate Step 1 to stakeholders
  4. Display transparency about data risks

Prioritize data privacy and security

Trust is essential for every facet of a business, whether it is software or any digital product or a physical product utilizing the software. According to Adobe's Business Blog, European studies have shown that consumers will desert businesses if they do not trust them. According to a study by Advanis in August 2021, 7 out of 10 consumers will buy more from a brand they trust. Moreover, about 70% of European customers are willing to abandon the company if trust is broken. The research also uncovered several ways brands compromise trust, namely through customer data. Some of the comments provided by consumers about brands they don’t trust are:

  1. They are creepy (43%): “They track me online/on my mobile devices without my permission and send emails/other communications, but I do not remember giving them my information.”
  2. They are annoying (40%): “They send me too many communications and are unclear about their privacy policies or what they do with my data.”
  3. They don't listen (38%): “They keep sending me ads or communications after I've opted out.”

If a brand oversteps the mark, customers are more than willing to take their business elsewhere: just under half stopped purchasing from a brand last year after their trust was broken. Younger generations are the least likely to forgive a breach in trust, with more than two-thirds of Gen Z and Gen Y customers leaving at least one brand.

Prioritize data privacy and security  within your organization

Alvaro Del Pozo, Vice President of International Marketing at Adobe, said: "If customers lose trust in the brand they are buying from then, as our research proves, they are highly likely to walk away and take their money with them. To earn and maintain trust, businesses are responsible for building more direct and personal relationships by using customer data in a transparent manner, which ultimately starts with marketing."

Customer expectations of responsible data management by companies are reasonable.

  1. They want companies to ask for permission to use their data (42%).
  2. They want companies to be open and transparent about the use of their data (39%),
  3. They want control over their data (37%).

Like a return on investment (ROI), cyber analysts have coined the phrase ROT, Return on Trust as necessary in business strategy. Therefore, privacy and data protection become a priority because corporations gain value when they safeguard their customers’ data and privacy.

Understand demographics

Adobe's research shows a digital experience gap between the customer's experiences and how the firm ranks itself. Even though almost 95 percent of European companies report that they are good or excellent at delivering meaningful connections through their data-driven approach, only one-third of customers concur with the companies' self-assessment.            

Marketers focused on increased personalization for Baby Boomers, Gen X, Millenials, and Gen Z will blossom in the digital 21st century because younger generations rate the quality of their digital experiences higher. For instance, while the average rating is 31%, Gen Z respondents have rated their digital experience at 49% and Millenials at 46%.

Demonstrate step 1 to stakeholders

Companies need to show stakeholders how they prioritize data security and privacy, and they protect customer data. Many questions need to be resolved to portray data protection inside and outside every business.

Demonstrate step 1 to stakeholders on all facets of cybersecurity
  • Is there a governing body in charge of privacy?
  • Is there a governing body in charge of security?
  • Are these governing bodies inside or outside of the organization?
  • At what stage of product development are privacy and security integrated?

Organizations who leave these questions unanswered are not portraying efforts to minimize security breaches, ultimately causing them to lose consumer trust. However, if these basic questions are answered, companies can use branding, marketing, and public relations to signal their emphasis on protecting their consumers' privacy.                

Display transparency about data risks

Within industries, companies must be transparent about their stakeholders' digital risks. As security and privacy pioneer, Willis Ware once wryly declared, "The only computer that's completely secure is a computer that no one can use."

Advocacy for Privacy Laws

Tim Cook is one of the first corporate leaders to emphasize trust and privacy as part of the Apple brand. Consumers trust Apple to keep their data private. Cook strategically challenged America’s government about data security while advocating for his customers through an op-ed in Time Magazine by “trying to win back their right to privacy.” Through his efforts, he advocated for some parts of the GDPR and called for a similar plan in the United States, starting with the California Consumer Privacy Act (CCPA). Cook’s campaign aligns with Apple’s strategic interests and its positioning as a company that can be trusted to value customer’s data.

How Privacy Laws can affect your business         

General Data Protection Regulation (GDPR)

GDPR mandates that customers have control over their data. EU-based companies must retrieve consent from their users, which customers can withdraw at any time. Unlike in America, Europeans can see how their data is used since companies notify users when it is collected, processed, and even stored. Customers can say no to certain parts of data usage rather than a black and white “yes” or “no.” The GDPR allows users to avoid the potentially harmful effects of automated decision-making. In her 2016 book, Weapons of Math Destruction, mathematician Cathy O’Neill said, “Increasing awareness of these potential harms is another benefit offered by the GDPR: it upholds an individual’s right not to be subject to legal consequences based on automated decisions.” Since consumers have become aware of being a commodity in the digital age, businesses are increasingly expected to define a set of values and to make decisions that uphold them. Due to GDPR fostering customer trust, companies worldwide can manage data more ethically. GDPR is transforming consumer trust and data privacy in Europe, according to a study conducted in late 2019 by OnePoll. The study revealed that 73% of European organizations claim it has boosted their data security. Meanwhile, two-thirds of those polled say their business has fully adopted all GDPR measures, and when asked to rate their performance with GDPR compliance, the average score was 8 out of 10.

How Privacy Laws can affect your business GDPROne potential reason for this positivity is the strategic approach to data security that GDPR has encouraged. The research by OnePoll discovered that around two-thirds (65%) of the CTOs, CIOs, IT managers, and security managers in Europe believe their company has an organic and strategic approach to cybersecurity. This strategic approach is defined as one where measures are applied from the bottom up and used to meet the obligations of GDPR.

From an IT perspective, the most common steps taken to meet the security requirements imposed by GDPR are:

  • Adopting standard security measures
  • Initiating training for employees to increase their understanding of data security risks
  • Implementing an access and encryption control system

The research reveals that although addressing GDPR requirements resulted in considerable expenses ranging from 50K to 200K, these investments have improved customer trust and data security.

The three most-anticipated long-term benefits of GDPR according to GDPR-compliant European companies are:

  • Helping organizations to demonstrate their focus on customers’ data and thereby increasing customer loyalty (45%).
  • Making operations more efficient, especially regarding cybersecurity (44%).
  • Providing a more comprehensive view of the information processed by the company (40%).

California Consumer Privacy Act (CCPA)

Three and a half years ago, Senator Hertzberg shared that the imbalance between the average internet user and technology companies was the basis for creating the CCPA. As stated by Senator Hertzberg, companies have “monetized” consumer data without compensating consumers, raising the questions:

  • How do companies ensure a return on investment while creating a return of trust?
  • How do tech companies ensure competitiveness while engendering trust?
How Privacy Laws can affect your business CCPA

The implementation of the CCPA not only contains cybersecurity requirements but also helps consumers sue for privacy breaches. Since companies must work together to display transparency about data risks, there must be a universal definition of privacy. Government intervention through the CCPA created a working definition of privacy so that companies and constituents can be on the same page. The Senator stated that “we haven’t done the necessary thinking” as a society to define privacy in a way that works for everyone. By giving consumers more control over the sale of their information, the CCPA is intended to allow the consumer to create their definition of privacy.

Since there was no implementation of federal law and firms in America have not self-regulated - both parties - government and private businesses - “failed to step up.” The CCPA is a framework that can eventually become national law according to Senator Hertzberg.

Andrew Burt’s article, “Cybersecurity is Putting Customer Trust at the Center of Competition,” agrees with Senator Hertzberg’s prediction. Burt identifies three principles that companies can utilize to build consumer trust: 1) cybersecurity and privacy issues cannot be afterthoughts to establish consumer trust from the outset; 2) data privacy, data protection processes, and parties responsible for these processes, need to be readily transparent to people within and outside of the company; and 3) companies need to manage expectations about cyber security and privacy risks. According to Burt, companies must understand that breaches are inevitable, and to behave otherwise undermines not only a company’s data protection efforts, but also the company’s credibility. Cybersecurity experts concur that a proactive approach and plan for a data breach and how to remediate it indicate how seriously a company views these risks.    

Summary

More than 200 companies are advocating for stronger federal privacy laws, thanks to Apple CEO Cook. Trust is critical and can lead to a national privacy regulation that simultaneously minimizes data breaches. By incorporating better security and privacy protections and then transparently sharing – and indeed, marketing – them, companies can demonstrate the importance of trust in building business. Therefore, trust is essential for businesses even though it is intangible and cannot be measured. And because companies cannot prove trust, it must be signaled — through branding, marketing, and more.

 

 

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Yashica Nagpal
Yashica Nagpal

Yashica Nagpal is a freshman at Tufts University with interests in research, poetry, and finance/economics.

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