Data ethics is more than a corporate social responsibility initiative—it’s a smart and strategic practice that can improve customer relationships and cost efficiencies in marketing.
Without a comprehensive understanding of legal requirements, consumers only see the actions an individual company makes in the context of their experience with that company. In fact, a recent study found just 14% of Americans agree that “companies can be trusted to use my personal data with my best interests in mind.”
Data ethics are critical for companies to define and put into practice because consumers want to trust the companies with which they do business—a full 74% of people now rank data privacy as one of their top values.
Lack of consumer trust has direct business implications, as untrustworthy companies must work harder to build loyalty and brand affinity, resulting in higher marketing costs and lower marketing effectiveness, and consumers reward brands that have responsible data practices with 23% more purchase intent.
It’s critical for businesses to understand that adopting ethical data standards will not result in a loss for their bottom line—in fact, the opposite holds true, especially as consumers continue to look to businesses for societal leadership and demand more trust, evidenced by the 2022 Edelman Trust Barometer.
Creating a data ethics agenda
We’ve long been told that marketing’s job is to reach the right person at the right time with the right message. Technology allows us to do this, but failing to implement a business strategy based on ethical data standards means companies are still wasting money pursuing customers who don’t really want to hear from them, don’t want to sign up for that marketing email and aren’t interested in being retargeted across the internet.
Establishing a process by which you respect your consumers enough to be transparent and give them a clear choice for their data means your company will have valuable information to be used in developing better business and marketing strategies. Those in the trenches of day-to-day business will be able to categorize users into groups based on their affinity for your company to determine accurate customer lifetime values and adjust marketing strategies accordingly.
While there is no one process to establish a data ethics agenda, businesses often account for corporate values, mission and vision, broad industry guidelines like WFA’s 2022 Data Ethics Guide for CMOs and cross-functional workshop-style inputs. The first steps to developing your own ethical data standards are to review what exists in the marketplace now and create an interdepartmental team to design principles that are unique to your business. This is a step worth taking now—according to the Trust Barometer, “distrust is now society’s default emotion.”
