Increase Use And Customer Spending

Trust between vendors and customers is essential to commerce, and even more critical in Internet commerce.  One study showed that privacy and security were two of the biggest concerns about Internet commerce for more than half of Americans. Another estimated that consumers would spend several billions more annually on the Internet if they did not feel that their privacy was on the line every time they make a transaction. A third study by Carnegie Mellon in 2007 shows that shoppers care enough about their privacy to pay more when they feel secure with a vendor’s practices.

Increase Brand Loyalty

Customers who have had a positive experience with a vendor are much more likely to use this vendor again. The positive experience will be reinforced when they can easily find a privacy policy that they can read and understand, when they feel that they are not asked to disclose more information than required for the transaction, and when they know that they can conveniently opt-out of further communications if they wish. Customers who have had a positive experience will easily recommend your store, driving more traffic to your site and building your brand.

Protect Your Reputation

Companies concerned about their reputation in the market should not only ensure that they are in compliance with the laws, but also that their business practices are aligned with the privacy preferences of their customers. As consumers better understand the risks of online activities, they expect their vendors to protect their privacy.

Mistakes Are Expensive And Damaging

Poor practices for handling private information can result in data leaks or breaches, which, in turn, will lead to government investigations and possibly expensive lawsuits and fines. Choicepoint paid $25M in fines, legal fees, and notification costs, and saw a 9% drop in stock price after a security breach. Several companies who started to track their users activity without providing sufficient notice have been the targets of major protests. NebuAd’s attempt to use such tracking to deliver targeted advertising was derailed by consumers’ uproar. This resulted in a Congressional investigation, loss of advertising partners, the resignation of the top executives, and ultimately the demise of the company.