When building a business, the biggest concern for founders is getting things up and running and finding a sustainable business model. In the rush to figure out how to make money, startups should sacrifice good data security practices.
A recent survey from Mailjet shows only 29 percent of startups encrypt all to the data they collect, 34 percent have a data breach notification policy, 47 percent ask for consent before contacting customers and 50 percent make it easy for customers to withdraw consent. That isn’t a great track record for companies that increasingly must rely on data collection for practical business models.
Data collection has become commonplace among technology companies. Rather than seeing customers become more accustomed to this as the norm, consumers appear more uncomfortable than ever about all the data they have drifting about in the world.
This is part of the impetus behind the European General Data Protection Regulation, which goes into effect in May. The Mailjet survey examined readiness for this new law, but compliance in Europe could mean a change in practices in other places, as well. The law itself might even change consumer perception about the proper handling of their data.
Some of these practices are common sense. As startups build their business, they should be thinking seriously about how to safeguard the data they collect and what to do in the event of a breach. Large companies like Yahoo and Apple might have a larger target on their backs, but a breach can happen to any company of any size if a vulnerability is unearthed. Larger tech companies also have more resources to expend in protecting themselves, but it has clearly not made them immune.
Among surveyed chief data officers, 63 percent identified improving data security as a leading business challenge, according to an Experian Data Quality survey. It beat out “keeping pace with technology advances,” which came in second place with 59 percent. Another survey from last year showed only 23 percent of medium-sized businesses in the U.S. believed they were “very prepared” against data privacy and cybersecurity threats. Another 59 percent, though, said they were “somewhat prepared.”
There’s plenty of reason to be concerned. High-profile data breaches have done a lot of harm to giant corporations. Verizon dropped its valuation of Yahoo by $350 million after learning of new breaches that hadn’t been revealed before agreeing to the acquisition. For a startup, a big breach would be catastrophic.
Data encryption and good network security measures are important, but of course there’s no such thing as being hack-proof. That’s why building consumer trust with data policies is so important. Giving consumers more control over there data will help them trust the company more. They will know that if ever they have a problem with the company, they can migrate their data to somewhere else or just remove the data they don’t want on the platform.
With proper cybersecurity measures and transparent policies governing the use of data in place, consumers will hopefully won’t get to the point of not trusting the platform and company behind it. It’s possible that these things can endear a customer to the company. It might make them more likely to use a new platform in the first place.
Even a company as large and powerful as Google has made it easy for customers to export their data and remove it from company servers. This helps give customers who are reliant on the company’s services some peace of mind.
Data policies are only likely to be more scrutinized in the foreseeable future. New laws could increase expenses for some tech companies, but these laws can be seen as an opportunity to implement new internal policies that will help build consumer trust.
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