Essential Guide To Data Protection – Session 1: Why Data Protection affects your bottom line
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Lesson 1 – Rosemary Smith, Director of data protection consultancy Opt-4 talks about why Data protection affects your bottom line.
Most business people have heard of data protection; after all, we are consumers too. We are constantly reminded of our rights when we sign up for anything from loyalty cards to e-newsletters.
So it’s just a consumer issue for big brands right?
Well no, actually, the Data Protection Act 1998 applies to processing of any personal data whether held by multinationals or SME’s and it covers business to business named contacts as well as consumers. A fair number of small companies are exempt from registration with the Information Commissioner but they still have to apply the eight Principles of data protection. Add to these the more recent rules covering email marketing and you could be forgiven for thinking the Government was trying to strangle businesses in privacy red tape.
In fact, the bulk of the rules reflect common sense database practice and, in comparison with many other European countries, we got off lightly, retaining the right to process data provided an individual hasn’t objected i.e. opted out – a very different thing from the positive consent or opt-in required in some places.
And when it comes to dealing with data privacy, there are several business imperatives which should push you towards fair processing
Forget, for the moment, the possibility of prosecution by the Information Commissioner’s Office (ICO), fines, imprisonment for directors or at least a public hauling over the Information Tribunal carpet.
Think rather about the relationship you have with your customers. In these days of identity theft, information “phishing” and “pharming” and widespread spam, can they really trust you with their data?
Do you make it clear to them when you collect their data what you intend to do with it? Do you maintain personal information securely and use it responsibly? Response to promotional campaigns is hugely affected by relevance of message but people are rationing their information, only handing it over to companies they trust. Gone are the days when personal data was a commodity used and abused by everyone. The Data Protection Act has seen to that.
There is a real budgetary imperative too. Everyone knows that it costs more to acquire a new customer than it does to “cross sell” an existing one. Under the current legislation your hard won customer is no more than a one night stand if you don’t get permission to market to them in the future; all that money spent acquiring them will just have to be spent over again which makes little financial sense.
Like much of English Law, there are various interpretations of the different requirements of the Data Protection Act. The deceptively simple Principles can cause plenty of head scratching when they have to be applied in day-to-day business.
Rosemary Smith is a director of Data Protection Consultancy Opt-4 Ltd. Updates on privacy matters are available from http://www.opt-4.co.uk/subscribe.asp
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