How to manage customer data ethically in eCommerce

Today’s eCommerce operations share much in common. They all rely on the expertise of technical wizards who can turn code into winning platforms. They all know the increasing role social media is playing in driving sales. They all live in fear of systems crashing and ‘Page Not Found’ error notices.

They are also united by the incredible resource they acquire every time they engage online with an existing or potential client. Customer data is a modern-day gold mine for eCommerce businesses, with respected consulting firm McKinsey & Company going as far as to declare that every company is now a data company. As it has noted: “By 2025, individuals and companies around the world will produce an estimated 463 exabytes of data each day, compared with less than three exabytes a decade ago.”¹

The ability to store, analyze and share data that eCommerce businesses collect offers them huge opportunities but there is cause for concern for operators that fail to appreciate the dangers associated with failing to properly protect it. In the ever-evolving tech space, data ethics has emerged as a hot topic and there has never been a more important time to look beyond the potential riches of data and focus on the importance of treating it with the utmost care.

What is data ethics

Data ethics relate to the moral principles and guidelines that oversee the ethics of data collection, processing and use. This encompasses factors such as privacy, consent, transparency and accountability and requires individuals and organizations to balance the potential benefits of data use with the protection of individual rights and societal values. Ultimately, a commitment to data ethics aims to ensure that data-driven practices are conducted in a responsible and socially beneficial manner.

^{Source: Data ethics and privacy: should, can, will? - Compact}

What are data ethics principles?

Data ethical principles are general judgements that guide organizations’ decisions and actions when handling data. For eCommerce businesses, these principles include:

• Ownership: this lies at the heart of data ethics. Data may not be a physical object but individuals own their personal information as much as they own a car or computer. It is unlawful and unethical to collect someone’s personal data without their consent, which is why eCommerce businesses need to develop signed written agreements, digital privacy policies or pop-ups with checkboxes that permit websites to use cookies to track users’ online movements.
• Transparency: it is not enough for eCommerce operators to simply gain consent to obtain personal data. Customers also have a right to know how they plan to collect, store and use their information. Such processes should be outlined in policies that allow users to decide whether they approve for their data to be used in such ways. Transparency is not just about telling customers the truth but ensuring such information is promoted.
• Privacy: a customer may grant an eCommerce business permission to collect, store and analyze their data but that does not necessarily mean they want it to be made publicly available. Many organizations have felt the heat of the public spotlight for failing to securely store customer data, with security breaches causing untold reputational damage. Deidentifying datasets is just one way to mitigate the risk of private details such as addresses, bank details and passport numbers ending up in the wrong hands.
• Intention: asking questions of customers is only one aspect of data ethics. Before even collecting their personal information, an eCommerce operator should consider their intentions – why do we need this data? What will we gain from it? How do we intend to use it? If the answers to such questions indicate intentions to hurt others, profit unfavorably or similar malicious goals, it is unethical to continue on that course.
• Outcomes: eCommerce operators may have the best intentions for collecting data but there is always the risk that it can lead to inadvertent negative consequences for customers. For example, algorithms based on their customer profile can send inappropriate posts their way. It is difficult to definitively know the impact data use will have but adhering to data ethics means considering potential outcomes beforehand.

What are data ethics examples?

Navigating data ethics can be difficult, which is why it pays to look to real-world examples for insights - both good and bad.

• Apple’s privacy policy: it is rare that a global tech company gets applauded for respecting users’ privacy but Apple stands tall on this front. Its privacy policy² is a model for underlining principles such as data minimization and user transparency, while the company promotes its commitment to privacy by processing the majority of customer data on their devices instead of the cloud and handing users significant control over what they share.
• IBM and AI: the rise of artificial intelligence has inspired countless scare-mongering headlines (look no further than this effort from The Guardian: ‘Five ways AI might destroy the world: ‘Everyone on Earth could fall over dead in the same second’³). So credit to IBM, which developed its Everyday Ethics for Artificial Intelligence policy⁴ to reflect its adherence to data ethics. The company has stated that AI systems should be transparent and the decision-making process of the technology should be explainable, while also stressing the importance of removing bias from AI systems to ensure fairness and impartiality.
• Facebook and Cambridge Analytica: of course not every company gets it right. Exhibit A - Facebook and its textbook example of what can unfold when data ethics are not followed at best or ignored at worst. The Cambridge Analytica scandal⁵ exploded in 2018 when it was revealed that the British consulting firm had harvested the personal data of millions of Facebook users without their consent. As the guardian of that data, Facebook suffered a public relations nightmare amid talk of unethical data practices and calls for stricter data regulations across the globe.

^{Source: [Infographic] The Value of Customer Data | Kobie Marketing}

What are tips for managing customer data?

The incredible amount of data being captured by modern businesses is only beneficial if it is being collected, stored and utilized properly. Here are three tips to help achieve that goal.

• Identify quality information: in a world where eCommerce businesses can capture seemingly infinite amounts of customer data, it is imperative to remember that not all data is worth capturing. Indeed, there is an argument to be made that collecting every detail can be self-defeating. The key is to approach data collection with a strategic mindset and focus on identifying information that will optimize user experience, boost sales conversion rates and deliver long-term success. It should not feel like searching for a needle in a haystack and a way to minimize that risk is by ensuring the haystack is not needlessly large.
• Prioritize data security: eCommerce operators can collect the best data and have the best analysis systems in place but it only takes one security breach to severely undermine all that great work. When customers agree to share their personal information with you, they have every right to trust that it will be treated with the respect and care it deserves. The onus is on businesses to practice safe and secure customer records management, which includes strictly following the likes of GDPR data security guidelines and investing in SSL certificates that secure the data that flows between browsers and servers. There is a reason the world’s leading eCommerce brands have made data security an integral part of their company’s priorities.
• Invest in training: implementing a data security policy is not worth the paper it is written on if not accompanied by an investment in staff education. From CEOs to casual staff, eCommerce employees need to be trained in not only the what, where and how of capturing, storing and utilizing customer data but the equally important question of why? Explain the step-by-step processes for keeping customer information safe and teach them how CRM tools can be used to improve results. One of the greatest defenses against cyberattacks is an educated workforce and ongoing training will help create an environment where customer data is respected and protected.

Conclusion

Conversations about managing customer data ethically are important for all eCommerce businesses but particularly those that benefit from partnering with outsourcing providers. While working with an offshore team is a proven way to reduce costs, increase efficiencies and boost customer experience, it is essential to take proactive steps to ensure that your outsourcing partner is equally committed to data ethics and security. Ask the right questions, research their systems and consider the reassurance that comes from teaming with experienced providers.

An increasing number of businesses are looking outside their own walls for expertise in managing data. Discover the benefits of outsourcing data management services and the hurdles that established offshore providers can help you overcome.