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Stringent privacy policy equals more profit?

5/31/2012

Business owners debating the privacy policy and terms of use that will govern their new website or mobile application might consider the arguments laid out by Mike Feibus, a principal analyst at market research firm TechKnowledge Strategies, in a recent blog post for Beta News.

Feibus said consumers who gladly traded personal information for discounts by signing up for retail loyalty programs in the 1990s are now more cautious about sharing data about themselves.

Citing statistics from Nielsen, which found 73 percent of smartphone owners worry about personal data collection, Feibus said a stringent privacy policy could gain consumer trust and translate to a competitive advantage.

"This sentiment should be top of mind for every strategist and decision-maker in the smartphone ecosystem," Feibus wrote. "For Apple and Google, yes. But also for hardware vendors, carriers, app developers - even cloud services. If your goods or services have the ability to collect or store our data, then you should consider your sales and profits to be on the tsunami hazard map."

Feibus argued that companies should be flagrant in promoting their privacy policy, even establishing an "Office of Privacy." He said the resulting consumer loyalty should offset any loss of competitiveness due to self-imposed data mining restrictions.

U.S. businesses considering a stringent privacy policy might look to Europe for examples. In Europe, data protection is considered a fundamental right rather than consumer right, said Jacob Kohnstamm, chair of the European Commission online privacy body, in a recent interview with the San Francisco Chronicle.