Mistrust of how online retailers handle customers' personal information is at an all-time high, costing merchants lost revenue and follow-up orders.
More than a quarter (26%) of consumers have abandoned a brand in the past 12 months due to privacy concerns. Establishing higher levels of trust is no longer an either/or option. It is becoming increasingly important as a foundation for the success, if not survival, of digital retailers.
Technology and security provider Thales released its 2024 Digital Trust Index rankings in February. The report found that only 8% of consumers are comfortable sharing personal information with online vendors. His findings, based on responses from 12,426 consumers around the world about their relationships with online brands and services, cast doubt on the growing popularity of online shopping.
The findings don't just apply to food and soft goods purchased online. Media, entertainment, social media and logistics companies languish at the bottom of industry rankings.
Thales has found that most retail customers now expect a balance of security and a positive digital experience from all online business encounters. The study also revealed that new forms of online engagement pose a barrier to ensuring customer trust.
Consumers will trust banking, healthcare, and government services more when they share information. According to Danny de Vries, vice president of identity and access management at Thales, this is a common trend across all markets surveyed.
“This is perhaps not surprising given how highly regulated these industries are, the types of information they are responsible for handling, and the steps taken to keep consumer data safe.” he said.
Problems are ignored and solutions are not found
This year's report ranks retail and hospitality fourth among the least trusted sectors. This is in line with the 2022 survey finding that retail remains one of the least trusted industries, advised Haider Iqbal, Director of Product Marketing, Thales IAM Business.
“Interestingly, however, while retail was not one of the most trusted businesses in either 2022 or 2024, consumers did not rank among the most trusted businesses in 2022 (8%) compared to this year (8%). 20%) had significantly more trust in retail organizations,” Iqbal told E-Commerce Times.
This issue seems to be ignored as the percentage of consumers who do not trust data security is so high. He noted that while the need for data privacy is clearly recognized, that recognition does not necessarily translate into practical results.
“Regional dynamics appear to be the biggest driver for action. Strong enforcement of GDPR by regulators will push European retailers to implement better practices and controls for consumer data privacy.” We are working more seriously towards this,” Iqbal said.
H&M's data protection breach fine was an eye-opener for the industry. However, as the report points out, retailers should not only focus on data privacy just because regulators want to enforce it.
“They should focus on it because their customers are asking for it,” Iqbal advised.
Rise in the Digital Trust Index
The report's findings confirm that the rights to privacy and security are non-negotiable. The majority of customers (89%) are willing to share their data with their organization.
However, there are some non-negotiable caveats to this. For example, more than a quarter (29%) of consumers have abandoned a brand in the past 12 months because it asks for too much personal information.
“Companies are subject to international data privacy laws regardless of sector, but companies at the bottom of the rankings are less likely to be subject to directives that directly address both data security and privacy.” Freeze said.
As more companies expand their digital presence and consumer preferences evolve, lessons can be learned even in unregulated industries.
More than four in five people (87%) expect some degree of privacy rights from the companies they interact with online. Most expected is the right to be informed that data is being collected (55%), followed closely by the right to have personal information erased (53%).
Online customers also expect companies to make further concessions regarding the privacy standards they follow. For example, 39% expect the right to rectify their data, 33% expect the right to request a copy of their data, and 26% expect the right to move their data from one platform to another.
Online complaints drive brand loyalty even more
Thales' report also highlighted the role that a rich website experience plays in cementing customer loyalty, regardless of the privacy factors they face. Customers' concerns go beyond how online services use their data.
In addition to demands for privacy, organizations must also provide a seamless online experience to earn their customers' trust. Today's consumers are increasingly time-conscious, with more than a fifth (22%) saying they would immediately give up on an online interaction if faced with a frustrating experience.
Respondents also cited ad pop-ups as their top complaint (71%), followed closely by resetting passwords (64%) and re-entering personal information (64%). In this study, 59% of those surveyed cited complex cookie options as their top complaint.
“Our research reveals that 93% of consumers give up on an online brand within five minutes if they have a frustrating experience. In fact, 25% They give up within ~2 minutes. This means that businesses have a short window of time to ensure they are delivering the digital experience they want to their users,” said Iqbal.
Lip service no longer works, consumers demand action
Looking at retailers' reactions, Iqbal believes paying lip service to data privacy and security will soon be an option. With GDPR being the predecessor to all U.S. law, he sees more regulatory action on consumer data rights coming, following in California's CCPA and Virginia's VCPA. .
“With greater scrutiny of large-scale language models (LLMs) and where their training data comes from, this conversation will only become more important, and the right to privacy and security will be as important as the report. “There will be legal guarantees that it is non-negotiable,” he predicted.
According to Iqbal, the report highlights that email (40%) and phone calls (28%) are the preferred communication channels for consumers in retail as well as other industries. A key trend to note is the significant increase in the number of channels and touchpoints that retail services can handle.
For example, the concept of having a good strategy for omnichannel experiences is not limited to the banking industry. In-store/in-person communication remains a very important communication method in retail (32%). The industry needs to accept this reality and work towards creating a consistent omnichannel experience for consumers.”
What is Endgame?
Iqbal argues that trust is not a monolithic concept, especially in the digital world. Organizations must devise their own formulas to measure trust.
“The perception of trusting a retail brand is likely to be very different from the perception of trusting a bank or insurance company,” he notes, adding, “This concept of trust is not specific to any particular industry. , Thales understands that there are very nuanced differences, not only in other industries, but also within the industry. ”
With this understanding, Iqbal explained that organizations must have the fundamental capabilities to fine-tune data security and data privacy controls into their digital channels. For example, if a company discovers a reason for consumer churn but lacks the means or agility to address it, it needs to prepare for a steady exodus of consumers.
“If you are still relying on legacy and often monolithic systems to meet the modern and rapidly evolving needs of consumers and regulators, you are not ready for the future. No,” Iqbal concluded.
