Customer experience (CX) improvement has become sort of a holy grail of digital transformation. Every business wants to deliver superior CX, which requires collecting and sorting through massive volumes of data in order to learn what customers want and how to best deliver it to them.

But there’s more to data than collection and analysis. To judge from a recent Verizon-sponsored global survey conducted by Longitude, Winning the CX War, in which 6,000 consumers across 15 countries participated, organizations also must respect consumer data protection and privacy. That means being transparent about data collection so customers understand why they are being asked to provide personal details, giving customers something in return for the data, and making sure it doesn’t fall into the wrong hands.

The importance of protecting consumer trust

In recent years, consumers have felt the sting of high-profile corporate and government breaches that in some cases have compromised private data of millions of people. It feels like at some point just about any type of private data, from online login credentials to credit card accounts to Social Security numbers to medical records, have been exposed. Consumers have also experienced privacy abuses in social media, so most are in no mood to trust corporations with their data without assurances of protection and proper use.

Violate consumer trust, and be prepared to suffer the consequences. The survey reveals that a high-profile data breach would have a moderate to significant impact on the relationship that 92% of consumers have with a company. Many would simply take their business elsewhere.

Nothing is free

Despite cynicism regarding corporate intentions for their data, consumers are willing to give up some privacy if they get something for it. In the Americas, convenience is highly prized. The Longitude study reveals one quarter of American consumers would allow financial services organizations to integrate their data if it translates to quicker, easier service. The implicit message: “I’ll give you the data but when I apply for a loan, don’t make me jump through hoops.”

If you want to deliver superior customer experience in the Americas, focus on quick, seamless experiences. Thirty-seven percent of consumers in the Americas want one-click functionality for login, checkout and other activities. Only discounts and promotions rate higher. European consumers want discounts and one-click experiences, too: 73% are willing to provide data in exchange for special pricing, and 41% for one-click convenience.

Glitchy apps and services are a serious irritant: 39% of Americans will turn to a competitor when that happens. And if they can’t talk to a “real person” when needed, an even higher number (44%) will do the same. So convenience is welcome – and worth giving up some private data – but if the stuff doesn’t work, customers will punish you for it.

Building trust

Before companies can improve customer experience and deliver the experience customers expect, they must work on building trust. And that’s a dwindling commodity. In the Americas, 72% of consumers say they are more concerned about how companies use their data today than a year ago.

According to the report findings, Europeans are especially guarded when it comes to privacy and sharing personal data – hardly a surprise considering the General Data Privacy Regulation (GDPR). The GDPR was adopted by the EU Parliament in 2018, and it greatly restricts companies in the types of personal data they can collect. Violations are punishable with stringent fines.

Only 6% of European respondents in the Longitude study share data without knowing for what ends the data will be used. Even more telling is the fact that three quarters of European consumers believe companies collect data for their own benefit, not to better serve customers. This compares with 71% in the Americas and 62% in Asia-Pacific. Skepticism is especially high in France (82%) and the U.K. (81%).

Nevertheless, Europeans aren’t completely opposed to sharing data. It’s just that if you want their private details, 68% say you have to explain why. Sixty-nine percent of Americans feel the same. Building trust is essential to improving customer experience– and to accomplish that, it’s clear that organizations must be transparent. They need to communicate honestly to customers what data they collect, how they are going to use it, and how that benefits the customer. Otherwise, they’re just asking for trouble.

Security rewards

The stronger the trust a company builds with customers, the more likely it is to succeed in its mission to improve customer experience. Trust is usually built on experience. A company with a demonstrable track record of respecting and protecting customer data and privacy is already ahead of the game. If you’ve suffered a breach in the past, transparency about what was compromised and how you solved the problem will be rewarded, though it takes time to rebuild confidence among consumers.

Consumers have seen too many data breaches, and have little tolerance for them. A strong majority of consumers across all regions (69%) would avoid a company that experienced a breach, even if the company beats competitors on price. If personally affected by a breach, more than half would avoid the company; 20% would never return.

These findings should serve as a serious warning for companies building data-driven CX strategies. A robust security infrastructure, complete with effective technology, well-defined policies and clear customer communication, is absolutely critical. “Transparency,” says Craig Palmer, Director of Customer Experience Transformation, EMEA, at Verizon, “is the key way to build trust, and many organizations are stepping up to that now. But there’s still a lot of jargon around security and what organizations are doing – simple language has to be a key element of transparency.”

And that’s good advice for organizations that consider customer experience an essential component of their digital transformation strategies. You can beat competitors by providing a superior experience, but it’s heavily dependent on use of customer data. Misuse it, and your customer experience strategy may crumble.

Learn more in our report, Winning the CX War.

Gordon Littley is the CX Innovator and Practice Leader for Verizon.