Business must earn trust or feel the heavy hand of government intervention. Tai Rotem explains.

Time is running out for business to self-regulate how it uses customers’ data. Every time a Facebook or an Equifax or even a smaller, less visible company misuses data, or allows data to be misused, the likelihood of regulatory intervention increases.

Regulation of any industry happens after the fact. It doesn’t adapt well to a fast-changing market and is often cumbersome and expensive. The message to all custodians of consumers’ data is clear: self-regulate before you get regulated.

The main lesson from the unfolding Facebook scandal is: be authentically good. Ensure data is secure, and that third parties can’t use that data to do harm.

Ensure there’s a thick line drawn between leveraging and exploiting a relationship with consumers.

All of that can be achieved through self-regulation, ensuring full transparency, and ultimately building trust, as in any relationship. Critical incidences where this trust is betrayed do immeasurable damage to consumer confidence that transcends the transgressors and attracts unwanted attention.

The question is not whether businesses should use data, but rather, how the data can be used with customer’s best interest at heart and always front of mind. The effective use of data and analytics is integral to how successful businesses operate, and none can afford to be scared off using it.

Call it the Paradox of Creepiness: consumers increasingly are uneasy about how their personal data is being used. However, they will complain loudly if advertising on a website is not relevant to them or a service provider dares to ask them for information “they should already know”.

Consumers are accustomed to publishing their daily experiences and innermost thoughts, deftly crafting a projected self-identity to the world.Yet they recoil in disgust at the thought of losing control of their privacy.

Companies need data

Of course, to deliver relevant advertising, convenience and more valuable service, companies need data to understand their customer’s preferences and desires. To connect with the world and build a digital identity, consumers need to share their data far and wide.

Consumers and business are still negotiating the exact terms of a relationship built on the collection and use of consumers’ data. The relationship is blurred by the realisation that the consumer themselves (or at least their data) are often in fact the product and the most valuable commodity. Consumers remain unsure exactly where to draw the line over how and when businesses may use information about them – and businesses cross that line at their peril.

They’re prepared to accept usage of their personal data up to a point and push these issues back of mind when ticking those ubiquitous ‘I agree’ boxes in the T&Cs. However the tide quickly turns when reminded that businesses do not always have their best interests at heart. The bigger question is: will this really matter in the long term or is it just something that we are increasingly conditioned to accept as the price of convenience?

The use of Facebook users’ data to attempt to influence the 2016 US Presidential Election is only the latest high-profile example of this moving line. While people accept that Facebook is freely exchanged for targeted advertising, they do not remember ticking the box ‘I agree to be manipulated for political purposes’. Suddenly the use of their personal information is perceived as downright creepy and evil.

The evolving consumer relationship

The issue here is the concept of trust, and the evolution of how consumers are interacting with businesses. Digital technology has created a revolution by facilitating intimate 1:1 business to consumer relationships at scale, but these are not necessarily the sorts of relationships that consumers have actually asked for themselves.

Even though we’re in a historically low-trust, low-loyalty environment, people still have to trust in and be loyal to something to get by. People adapt. That’s the nuance, and the really interesting thing.

The Facebook example shows that people will react strongly when they no longer feel a company is looking after their best interests. However, most feel they need a platform to stay connected and provide a repository of collective memories. We have invested ourselves in Facebook – starting from scratch and losing the one stop shop where most of our connections reside and our memories are stored does not sound very convenient (or even a real option for many).

Maybe the future will see the development of more portable social media identities or cross-talking platforms to address this issue. Maybe the future will see a consumer market split by those who are prepared to pay for privacy and those who prefer to trade their information for free services. For now, however, despite the outrage, most of us will return to Facebook, if only to express some disappointment in the powers that be with a post or an even more impotent “Like”.

We are witnessing the birthing pangs common to the dawn of any new age. Only time will tell if the age of information truly makes for a better world, in which everyone wins.

Marketeers and brands are watching this space closely.

Tai Rotem is Director of Research for CoreData Research