Customer loyalty programs are among the basic building blocks of successful consumer products and services companies today. These programs are not only competitive differentiators, but also key drivers of revenue and profits for retailers, restaurants, hotels, airlines and many other businesses. The success of loyalty programs, however, hinges on more than inspiring customers to opt in and offering them rewards that they find compelling. Consumer trust is also essential.
Consumers want to be assured that the companies they interact with through various touch points — online, offline and through mobile applications — are doing everything possible to protect their personal data and privacy. Even millennial consumers, who are generally more willing than customers in other demographic groups to share personal information with businesses in exchange for rewards, have high expectations that companies will keep their data secure and respect their privacy. And if the companies don’t, they are quick to hold them accountable.
Privacy concerns are weighing on the minds of executives in the consumer products and services industry this year, according to a survey, Executive Perspectives on Top Risks for 2017, from Protiviti and North Carolina State University’s ERM Initiative. Representatives of this industry group who took the survey ranked the following concern third among the top five risks: Ensuring privacy/identity management and information security/system protection may require significant resources for us.
Digitalization, the IoT and cyberthreats add to the challenge
Like most things related to information security in a digital world, privacy, customer identity management and information security are all easier said than done. In fact, they are becoming only more challenging for consumer products and services companies as these businesses:
- Introduce more mobile and digital offerings to their customers
- Collect, store and analyze more and more customer data from applications and devices
- Develop and use applications and devices designed for the rapidly emerging and highly interconnected Internet of Things (IoT)
- Embrace digitalization and migrate “analog” approaches to customers, products, services and operating models to an “always-on,” real-time and information-rich marketplace
It is hardly surprising then that consumer products and services businesses face a constant barrage of sophisticated and stealthy cyberthreats designed to target customer and payment information.
Recent high-profile data breaches and targeted hacks involving major retailers, fast food chains and hotels are just the latest headache-causing wrinkle as consumer products and services companies are scrambling to evaluate their ability to protect customer and payment information. (Executives no doubt had these incidents on their minds when responding to the latest risk survey: they also ranked cyberthreats among the top five risks for their industry in 2017.)
Drive results through strategy and collaboration
Certainly, there is no getting around the need for consumer products and services companies to devote more resources toward ensuring privacy, addressing identity management issues, and protecting information and systems. This is an imperative for any business that handles customer and financial data in a digital world. But organizations also must be very strategic when aligning and deploying these resources if they want to see results.
Developing the right strategy requires effective collaboration between the business and IT. If they are not doing so already, business executives in consumer products and services organizations should resolve to reach out to their counterparts in IT sooner rather than later.
Another party to include in discussions about privacy risk and cyberthreats this year: internal audit. We are seeing more organizations increasing business, IT and internal audit collaboration not only to address known risks, but also to help the business prepare for new challenges related to digitalization and the IoT. As Protiviti’s white paper, The Internet of Things: What Is It and Why Should Internal Audit Care?, explains, “Businesses developing and using applications and devices within the IoT must be aware of how the data they are collecting, analyzing and sharing impacts user privacy.”
Engaging business, IT and internal audit leaders to share their perspectives on these risks will help consumer products and services companies to ensure they are doing everything necessary to protect their customers’ privacy and information in a digital and hyperconnected world. It will also give them more confidence to interact with consumers through more channels, and to innovate programs and other offerings that will earn — and keep — their business.
[…] week, I wrote about customer loyalty, and how a strong cybersecurity program can help ensure the trust of consumers. Here are some fresh […]