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The ROI Of Privacy

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For B2C Marketing ProFessionals The ROI Of Privacy February 5, 2019 © 2019 Forrester research, inc. Unauthorized copying or distributing is a violation of copyright law. Citations@forrester.com or +1 866-367-7378 4 Business Case: The Customer Trust And Privacy Playbook Document The Cost Of A Privacy Breach, Not Just A Data Breach your firm can be compliant with data protection laws and regulations yet still incur a data or privacy breach. organizations that are legally compliant but fail to use frameworks like contextual privacy or privacy by design are still ill prepared for the kinds of breaches that make customers uneasy — or creeped out — and will suffer negative effects across the business. The components of this model that focus on the cost of a privacy breach: › measure all the costs associated with a breach. Firms that fall behind in trust and privacy suffer immediate substantial losses on the income statement and balance sheet. data breaches were always expensive, but rules like the general data Protection Regulation (gdPR) and the california consumer Privacy act (ccPa) make privacy breaches — even when no data has actually been breached — costlier than ever. Beyond fines, breaches provide grounds for costly civil and class action suits, to say nothing of the damage done to a firm's reputation. › Identify the necessary investments that come after a breach. after a breach, firms spend countless hours and dollars fighting lawsuits, revamping systems, hiring new talent, and complying with compulsory annual audits. again, it's not necessary for a security breach to occur — a slip in data governance, a third-party vendor acquisition, or a failure to comply with a data subject request can all trigger a privacy triage. our model captures these costs over a three-year period and shows how they affect an average firm's performance. Quantify The Value Of Trust And Privacy Appreciation Forrester's Tei framework includes the savings marketers can realize when their consumers appreciate a firm's data privacy practices and never experience a creepy marketing or advertising situation. The components of the model that focus on privacy appreciation: › measure the impact of "creepiness avoidance." Trust is hugely important in an increasingly digital age; when consumer trust falls as the result of a creepy experience, so do average order values, conversion rates, and purchase frequency. conversely, when consumers appreciate how a firm protects and treats personal data, they will spend more and purchase more frequently. 1 This model accounts for the positive effects that ethical data collection and treatment can have on a firm's bottom line. › Quantify the potential savings on third-party data. Marketers spend millions of dollars a year acquiring third-party data to infer customer preferences and intentions. When customers trust a brand, they're much more likely to provide explicit intentions and needs, which is vastly preferable to third-party inferred data. When scaled, this influx of precious zero-party data results in considerable savings on third-party data. 2

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