E-privacy is the key competitive differentiator in the online marketplace, according to PricewaterhouseCoopers, which is calling upon companies to recognise e-privacy as a strategic opportunity for building sustainable and profitable customer relationships.
In its new insight paper, "E-privacy: A key asset for winning customer Loyalty", PricewaterhouseCoopers argues that the overly defensive approach taken by many US and European companies towards e-privacy could be costing them the chance to maximise the value of their data and to build the customer trust so vital to e-commerce.
In SA most companies are apathetic towards privacy and have yet to define their approach to e-privacy, which could be equally damaging.
Overhead or opportunity?
The strengthening of data protection legislation means that awareness of e-privacy - the right of individuals to determine for themselves when, how and to what extent, information about them is communicated to others - has never been higher.
However, much of this awareness is based on a perception of e-privacy as a hazard or a threat facing businesses. Several companies have received negative publicity for infringing the privacy of their customers or for passing on personal database information to third-parties. While this highlights the importance of compliance, an overly defensive approach to e-privacy brings its own problems as companies risk missing out on vital opportunities to deepen relations with the customer, for example by unnecessarily curtailing marketing activities for fear of breaching regulations or damaging client trust.
Ernst Maritz, Director Global Risk Management Solution, PricewaterhouseCoopers warns local companies not to consider the protection of private information a First World luxury. South African companies need to review their privacy practices to reap the benefits and to be ready for the local legislation. The Electronic Communications Act is expected to incorporate privacy legislation (the associated Bill should be published for public comment before the end of the year).
In addition, many companies are implementing customer relationship management strategies that highlight the balance between privacy and personalisation. Such customer relationship management applications will benefit from a thorough consideration of company privacy practices, both on- and off-line.
Securing competitive advantage
PricewaterhouseCoopers argues that companies need to adopt a positive and proactive attitude to e-privacy, recognising it as a critical enabler for e-business. Consumer trust is a vital element for successful Internet commerce. Yet, research from PricewaterhouseCoopers has found that over 75% of European consumers say they opt out of providing information to avoid intrusion and the misuse of data. Furthermore, only one-fifth of consumers are willing to share information with companies in exchange for products or services that meet their needs.
The South African statistics reflect a similar sentiment locally. As the findings indicate, trust and transparency are now vital ingredients in maintaining and building profitable customer relationships. Those players that succeed in engendering both elements, by applying rigorous e-privacy standards, are likely to stand head and shoulders above their competitors.
Building online trust
There is no `one size fits all` solution to e-privacy; each company has to make choices depending on the nature of its own specific and unique customer relationships. However, PricewaterhouseCoopers` research has identified a range of practical steps to help companies achieve early and successful build-in of e-privacy protection measures, which include:
* Put the customer in control - by gaining consent for data collected and moving towards a model of `permission marketing`.
* Adopt the highest standards of compliance.
* Develop an enterprise-wide approach and resolve internal conflicts.
* Address the issue of legacy systems - ensuring compliance with current legislation.
* Enhance data management with privacy information.
* Forge trusted relationships with regulators.
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1. The Insight paper is based on the knowledge and experience of PricewaterhouseCoopers` e-privacy experts, the results of in-depth interviews carried out over six months with senior business managers across a range of European and South African businesses, and an independent survey of consumers in Europe and SA to examine their attitudes towards privacy on the Internet.
2. PricewaterhouseCoopers reports, E-privacy: A key asset for winning customer loyalty and E-privacy solutions: Bridging the B2C divide can be found on www.pwcglobal.com/ebusinessinsights
3. PricewaterhouseCoopers is the world`s largest professional services organisation. Drawing on its knowledge and skills of more than 165 000 people in 150 countries, the organisation helps clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to members of the worldwide PricewaterhouseCoopers organisation. The name PricewaterhouseCoopers is one word, with upper case P, uppercase C, and all other letters in lower case.
4. For a copy of the report, please contact Ernst Maritz, Director of E-privacy for SA.