Responsible Data Practices: How Businesses Can Leverage First-Party Data Ethically

November 12, 2023

First-party data is a valuable asset for businesses, but it has to be used ethically and responsibly. In this blog post, we'll explore the importance of responsible data practices and how businesses can leverage first-party data in an ethical way. From transparency to data security, we'll examine the key factors that businesses need to consider when using first-party data.

The importance of responsible data practices in the age of data privacy

Businesses use a variety of first- and third-party data to deliver better experiences to their customers. Modern customers demand personalization when interacting with brands and it can be challenging to deliver this without an in-depth understanding of their preferences and behavior. 

However, businesses must learn how to collect and use customer data responsibly. A recent survey revealed that 79% of American consumers are either very or somewhat concerned about how businesses use the data they collect. Responsible data practices can go a long way towards alleviating these concerns and make customers more receptive to data collection techniques that companies employ. 

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How to use first-party data ethically: Best practices for businesses

Most businesses understand that they need to use data responsibly but can be unsure of how to do so. These five tips will help you collect, store, and analyze customer data in an ethical and acceptable manner: 

Understand and communicate why customer data is collected

Before a business can begin to justify the reasons it collects customer data, it needs to understand those reasons itself. Once a business understands its reasons for collecting customer data, it can define its data collection policies with much more precision and purpose. 

However, it is not enough to simply have these policies for internal use. These policies have to be communicated in simple and understandable terms to customers. 59% of customers said that they have little or no understanding of what companies do with their data. Well-designed and executed data policies can help to educate customers about what is done with their information and how this can help them receive better shopping experiences. 

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Only collect data that is necessary for marketing activities

As customers become more cautious about giving their information to businesses, marketers have to be more careful about how they go about soliciting this data. More than half of American consumers are highly likely to walk away from a business if they feel like they are asked for particularly personal or sensitive information. 

Pro tip: As far as possible, limit customer data that is used for marketing. You can have individual profiles for each customer with highly detailed preference data and shopping behavior without the need for identifying information such as telephone numbers or addresses. 

Data Privacy and Data Security statistics
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Give users control over what they share with businesses

Modern customers are often frustrated with the lack of control they have over their own information. 81% of consumers said they believe they have little to no control over what data companies collect. Businesses need to help customers feel like they have ownership of their information. 

Pro tip: Always ask your customers for consent before you collect information from them. While businesses are required to inform customers when they use cookies to collect information, you should go further than that and hand control over to your customers. Let them decide what information they are comfortable sharing with you. 

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Implement strong data security measures to protect your customers

Businesses operating in the digital era collect staggering amounts of customer data. This data can sometimes include highly sensitive and personal information. Customers entrust businesses with this data and they expect companies to treat this information with the care it deserves. 

It is crucial that companies have strong data protection and security measures in place. Any business that is hit by a data breach can find themselves paying for fines and losing the trust of their customers, who might simply choose to purchase products from competitors instead. 

Communicate any policy changes with all customers

Legislators introduce new laws and regulations regarding customer data protection all the time. In response, businesses can change how they collect data or the extent of information they gather. When these changes happen, businesses should quickly communicate these changes to their customers. Customers who are kept in the loop regarding how their data is used are more likely to be comfortable sharing information with businesses. 

Balancing data collection and privacy: Finding the right approach for your business

Data collection is unavoidable for any modern business. Here are some steps you can take to ensure that your business’ data collection practices respect your customers’ desire for privacy and security: 

Unify customer data from across information silos 

When customer data is scattered across different silos or systems, it becomes challenging for businesses to have a comprehensive view of how it’s being collected, stored, and used. Consolidating customer data into a unified system allows businesses to implement robust security measures such as encryption, access controls, and authentication mechanisms to protect against unauthorized access and data breaches. 

Pro tip: Centralize data to make it easier to monitor and audit data handling processes, ensuring compliance with privacy regulations such as GDPR, CCPA, and other industry-specific data protection requirements. 

Use AI to plug the gaps between data points instead of collecting more data

AI algorithms can quickly process vast amounts of data and identify patterns, insights, and predictions that would be nearly impossible to detect manually. This ability to automate data analysis at scale creates opportunities for businesses to build detailed customer profiles without relying on intrusive data collection methods.

AI can help businesses harness insights from diverse data sources, including public data, CRM data, web behavior data, and more. By leveraging data from multiple sources, they can create a 360-degree view of the customer, which includes their demographics, behavior, preferences, interests, purchase history, and more. This view offers a way for businesses to understand their customers more deeply, anticipate their needs, and deliver personalized experiences.

Build a culture of responsible data collection and utilization

To balance data collection and customer privacy effectively, businesses need to build a culture that prioritizes responsible data collection and utilization. This involves ensuring that all employees understand the importance of data privacy and are trained on proper data collection and utilization practices. By promoting a culture of responsibility, businesses can minimize the risk of data breaches and build trust with their customers.

Deliver value to your customers in exchange for their data

Customers recognize that data sharing is an inevitable part of interacting with a business in the digital age. However, businesses should never take this for granted. It is important that customers understand and feel the benefits of sharing their data with businesses. If a customer receives marketing messages that are irrelevant to them or are inundated with advertisements they are not interested in, it can feel like the data they share with businesses is not being utilized well—and there is no incentive for them to share it at all. The margin for error for marketers can be extremely slim since customers view astounding amounts of marketing information on a daily basis. 

Collaborate with technology providers to improve data management

Between the processes required to collect, store, analyze, and maintain data pools, data teams are stretched. Businesses can reduce the strain on data teams by only keeping critical data processes in-house and partnering with technology providers that can help with more specialized data management systems. 

As businesses grow and generate increasing amounts of data, managing and analyzing that data can become challenging. Technology providers can offer scalable solutions to accommodate the growing data volumes and provide the necessary infrastructure to store, process, and analyze data effectively. Additionally, collaborating with providers allows businesses to adapt their data management strategies as needs evolve.

How MarinOne can help marketers succeed by maximizing first-party customer data utilization 

MarinOne is an all-in-one advertising platform that combines the power of search, social, and eCommerce advertising into one unified system. The platform is designed to help marketers maximize the utilization of their first-party customer data, enabling more effective audience targeting, higher-quality leads, and better overall ROI on their ad spend. 

MarinOne's advanced features include cross-channel audience targeting, automated bidding, and analytics to help marketers make data-driven decisions. Through its comprehensive interface, MarinOne allows marketers to manage, optimize, and analyze their advertising campaigns across multiple channels seamlessly. 

With its advanced feature set and sophisticated data utilization capabilities, MarinOne empowers marketers to more effectively engage their target audience, drive conversions, and achieve their marketing goals. By leveraging powerful first-party data utilization capabilities, MarinOne provides a competitive edge that can help marketers succeed in an increasingly complex advertising landscape.

To get started today, schedule a demo with one of our MarinOne experts. 

Kelsey Kamp

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