Risks of collecting consumer information

Consumer information is a valuable asset to possess. Businesses collect customer data so it can be sorted, analyzed and then turned into useful information. This ability, often facilitated by technology, can give a business an incredible competitive advantage and it also provides many benefits to the organization.

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Decision makers who decide to collect customer information often find a wealth of information that helps them improve their business strategies. This information can be used to provide better service and products, identify superior marketing approaches, better the level and type of customer service offered, and improve sales techniques.

However, with every advantage typically comes some disadvantages. Amongst the biggest drawbacks associated with collecting customer information are issues associated with privacy, security and responsibility.

Security risks

Collecting, sorting and storing information is a large responsibility. The information collected through marketing, sales and other aspects of doing business is often personal and private data. Data breaches are serious business and, as time moves forward, there has been a steady growth of stricter laws and regulations established to protect consumer information.

As a part of the responsibility of collecting customer information, this means the proper efforts and expenses to maintain a reasonable amount of security must be invested. If a company does not exercise due care in protecting information they are likely to be held liable in the event of a data breach or other theft.

Privacy expectations

People like their privacy and expect a reasonable level of it. Many feel violated when their information is used, especially without their knowledge. While information systems provide many ways for businesses to collect information, it is important to keep privacy considerations as mind.

When businesses collect information that extends beyond the strictly "need to know" philosophy and collects and stores data for the sake of having it, take a serious risk. Not to mention these companies run the risk of trashing their reputations. If people fear or take issue with certain kinds of information being used, this could deter sales and profitability can go down.

Data is used irresponsibly

When the ability to collect such a vast amount of information because physically possible through the development of technology, many businesses went overboard with collecting information because they recognized the value in information.

Today information has become a commodity and, unfortunately, there are some businesses that use information irresponsibly either through collection, storage, security or lack of policy.

If a business wants to collect information to extract the benefits, this is within its right, but it should keep foremost in mind that this takes on a responsibility – one that should be taken seriously. While the data collected is used to turn into information is extremely valuable, businesses must be careful to use due care of any personal information that ends up being collected.
 
A way to offset this risk is to:

• List a privacy policy notice
• Display an information practice statement
• Clearly define the personally collected information clearly
• Only collect the minimal information that is necessary, don't amass data for the sake of having it
  

All information relating to collecting data should be easily found on the organization’s website. This way consumers know exactly what happens to their information and this knowledge puts the decision is in their hands. Essentially, it allows consumers to be in the driver's seat where their information is concerned.

Informed consumers are happier ones

As web visitors are informed about what happens during a web visit, this gives them the choice of what they want to do. This is important not only for the consumer, but for the company too, because as digital and electronic commerce advances, the laws are also evolving. A company needs to protect itself so it does not break any privacy laws.

The best way to mitigate this is to create a privacy policy that is easy for people to understand and not full of legalese that no one understands. Another way is to invest in security for information systems to decrease the risk of theft or breach.

Companies can really benefit from the collection of customer information, but must also recognize and mitigate the risks at the same time.