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Data privacy deserves a bigger spotlight for building the perfect online customer experience

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By K S Sreedharan, Director of Compliance, ManageEngine, Zoho Corp

With India’s e-commerce sector growing leaps and bounds since 2020, companies need robust data privacy measures and technological solutions to keep customer data safe and create a business advantage.

K S Sreedharan

In recent years, Indian e-commerce has seen a massive increase in transaction volumes. E-commerce order volumes witnessed a sizeable 37% growth last year, with Tier 2 and Tier 3 markets showing a far bigger spike than their Tier 1 counterparts at 51% and 64.7%, respectively. As per Indian Brand Equity Foundation estimates, India’s retail market was valued at $883 billion in 2020 and is projected to reach $1  trillion by 2030.

Third largest in terms of e-retail shoppers, Indian businesses have also realised social media’s true lead generation potential, with 79% of them intent on using these platforms for targeted advertising and sales. The clamour for an omnichannel experience too continues to grow since it also ties in with companies’ digital vision of providing a comprehensive, end-to-end customer journey.

Currently, India is increasing its focus on building a regulatory framework for data protection. Businesses will also need to devote a good amount of their attention to ensure robust data privacy measures for the customer experience (CX) they envision.

Consumer data is the new oil
The proliferation of smartphones, especially in the post-lockdown era and beyond the Tier 1 markets, has further catalysed e-commerce growth in India. Coupled with increasing technological awareness across the nation in recent years, along with the recent 5G rollout, e-commerce accessibility has reached new heights lately.

From a consumer perspective, this allows for seamless communication and interactions with brands of their choice. But from a  business perspective, this entails the exchange of massive volumes of sensitive personal and financial information, be it addresses, government documentation data, or even credit card details.

This brings about many a question regarding the ways in which companies handle consumer data. What steps do they take to obtain customer consent before they access personal data? Where do they store it, and what processes are followed? How long will they be able to use it? And in what ways are they allowed to use it?

Before getting into the basics of how companies implement their data  privacy policies, here are five major categories data is categorised into:
Primary personal data:  Information that enables personal identification, such as name, age, gender, or email address
Demographic data: Information that indicates user location, such as coordinates determined through tracking IP addresses or application permissions
Engagement data: Information that can be used to gauge website and social  media preferences, such as page views, email interactions, or paid  ad interactions
Behavioural data: Information that can be used to determine purchase preferences and patterns, such as order history, free  trial sign-ups, or feature utilisations
Attitudinal data: Information that helps analyse customer perception and satisfaction levels, such as online reviews, ratings, or surveys

While using these data buckets can help companies put together highly personalised customer experiences, they also increase the risk of data breaches, leaks, and a myriad of other privacy-related issues that can have far-reaching consequences for both the organisation and its customers.

This is because the use of third-party vendors with increased touch points across the sales cycle and the handling of multiple sales channels by distributed teams have increased data risk factors. According to a recent ManageEngine report, 25% of global companies are aiming to involve third-party security specialists to protect organizations from cyberattacks.
Lately, businesses are also making investments in compliance and future-proof solutions to handle customer data. They’re also beginning to understand that it’s important to have customer-facing best practices to strike a balance between security and the user experience.
The role of IT decision makers in protecting customer data

It’s imperative for businesses to create data maps to categorize the type of data they collect from customers with the help of  IT and privacy teams. They should also identify and implement a strategy for securing the different categories of data, which might require multiple storage policies. Given the increase in advanced machine learning tools that collect customer data, IT teams can minimise risk by supervising the algorithms with caution.

This sentiment was reflected in a recent survey where maintaining IT security levels was considered a top challenge for 56% of global IT decision-makers when examining the role of IT and future technologies.

When companies consider data privacy from a CX perspective, it’s crucial for them to assess their consumer data strategy, ensure that their media network policies are up to date (for potential monetisation of consumer data), add auditing safeguards for third-party vendors, and mandate consent rate as a KPI for assessing the company’s overall CX performance. To achieve this, IT  decision-makers and other team members need to collaborate and work together.

Placing this many checks on processes that protect the privacy of customer data may seem like a strategy that could end up making business manoeuvres cumbersome; not only is that notion as removed from the truth as it could be but focussing on data privacy for building the ideal online CX will go a long way in helping e-commerce firms make a creditable, trustworthy name for themselves.

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