Customer Data Privacy 101: What It Means for Your Brand

If you want to understand your customers and form strong connections with them, you need customer data. But collecting and managing that data isn’t without its challenges. When you deal with people’s personal information, you must take steps to ensure their privacy and instill trust.

Let’s look in more detail at what customer data privacy means for your brand.

Understanding Types of Data

Discussions of customer data privacy often refer to different types of data, so let’s start with a definition of these categories. 

1. First-Party Data

Data your company collects directly from your audience (e.g., customers, website visitors, social media followers) is known as first-party data. You may also hear the term zero-party data, which refers specifically to data your audience voluntarily gives you, as opposed to the data you collect through observation via tools like email and website analytics. 

2. Second-Party Data 

If another company shares its first-party data with you, this is known as second-party data. For example, a bridal salon could share or sell its first-party data with an event rental company to help that company reach engaged couples who are potentially interested in renting tables, chairs, or decor for their big day.

3. Third-Party Data

Third-party data is any data a brand collects that isn’t directly related to its brand or audience. This data is typically sold in large sets from data aggregators. Third-party data is a broad category that used to be a big part of brands’ marketing strategies, but this data has become more difficult to access with changing regulations.

Changes in Customer Data Privacy Laws

Marketers need to be aware of recent changes at the cultural and legal levels that impact the approach to data privacy. 

Public Opinion on Private Data

There has been a paradigm shift in how consumers, businesses, and governments view data sharing. According to Harvard Business Review, cultures worldwide have begun to see data not as a free resource, but as “an asset owned by individuals and held in trust by firms.” McKinsey research found that “consumers are becoming increasingly intentional about what types of data they share—and with whom.” Brands can no longer expect consumers to freely share data without reservations. 

That may seem like cause for alarm, but it’s not all bad news for brands. Consumers are generally OK with sharing data if they know this data leads to an improved customer experience and more personalization.

Public Policy on Private Data

This change in how the world views personal data has also brought legal changes. A number of US states have recently implemented new laws to protect consumer data that isn’t provided with explicit consent, and other states are expected to follow.

These changes have created new challenges for brands that need customer data to refine their offerings and deliver a personalized experience. The key is to responsibly collect and leverage data directly from your customers and ensure they experience the benefits of sharing that data firsthand. 

Special Industry Considerations

Some industries deal with more stringent laws and regulations around customer data privacy.

For example, healthcare companies must comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which requires careful measures to keep protected health information (PHI) private. Financial services companies must also follow industry-specific legal requirements, such as the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act. 

It’s imperative that companies in these industries only work with marketing partners who understand these regulations and can ensure consumer privacy and security at every level, from data collection to storage to use in marketing campaigns.

Find a Partner Who Prioritizes Privacy AND Data-Driven Personalization

Don’t let privacy concerns keep you from using customer data in your marketing and customer communications strategies. This data is necessary to meet consumers’ expectations for a personalized experience with your brand. 

Instead, find a marketing partner who can help you make the most of customer data, all while prioritizing privacy and following the relevant regulations. Baesman Group is an experienced partner you (and your customers!) can trust to responsibly collect, manage, and leverage customer data.

Want some insight into how you’re doing with your use of customer data? Take a few minutes to complete our CRM & Analytics Checkup!