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Customer data privacy: A CX guide for 2024

Prioritizing customer data privacy is key to building strong, trusting customer relationships. Learn how your business can help keep consumer data private.

Door Hannah Wren, Staff writer

Laatst gewijzigd January 18, 2024

What is consumer data privacy?

Consumer data privacy, also known as customer data privacy, is the practice of protecting sensitive customer data your business receives. This may include contact information, usernames and passwords, and payment information.

Customer data without privacy protection is like money stashed in a cardboard box. Sure, someone might not find it immediately, but if they do, nothing is preventing them from stealing it. So when it comes to managing customer data, prioritizing customer data privacy is mandatory. Plus, proper data management can turn that cardboard box into a steel bank vault, helping ward off anyone looking to exploit your data.

In this comprehensive guide, we’ll break down the importance of customer data privacy, common privacy concerns, best practices, and key privacy standards and regulations, all backed up with facts and figures from the Zendesk Customer Experience Trends Report 2024.

More in this guide:

Why is customer data privacy important?

Customer data privacy is important because it helps protect your customers’ personal information. When businesses don’t prioritize customer data privacy, there’s a risk of exposing private information to people or entities consumers had no intention of sharing their data with.

Three statistics represent the importance of customer data privacy in CX.

Many customer experience (CX) leaders prioritize strong customer data privacy to provide a secure, positive CX and build customer trust. If your customers can’t trust your business to properly handle their personal information, it is unlikely that they’ll trust you for anything else.

Plus, customer data privacy is often a legal requirement. If you fail to comply with relevant privacy laws, based on your industry and the location of your business and customers, you may be subject to fines.

83% of CX leaders say data protection and cybersecurity are top priorities in their customer service strategies.Source: Zendesk CX Trends Report 2024.

How does consumer data privacy impact your business?

Customer data privacy impacts your business because it directly affects your customer relationships. If your business doesn’t safely handle consumer data, you could leave your customers vulnerable to threats that could negatively impact their lives. As a result, your customers may lose trust in your business and take their business elsewhere.

And if your business gains a reputation for not properly protecting customer privacy, potential customers may be less willing to work with you. On the other hand, if your business prioritizes the safety and privacy of customer data, your customers may trust your business more and choose you over your competitors.

6 consumer data privacy concerns

An illustration accompanies five dangers of poor customer data privacy.

Failure to safeguard customer data can compromise your customers’ privacy. From identity theft to software vulnerabilities, here are six data privacy concerns your organization should know about.

Identity theft

If consumer data isn’t kept private, your customers could be at risk of identity theft. Generally speaking, identity theft is when someone uses another person’s information without their consent or knowledge.

For example, an identity thief may use personal information to apply for government benefits, sign up for credit cards, or take out loans in the victim’s name. Identity theft can have devastating consequences, from negatively impacting credit scores to financial loss.

Financial fraud

Like identity theft, financial fraud involves exploiting a person’s identity, specifically for financial gain. If a fraudster finds the right customer data, they can commit financial fraud in different ways.

For example, a thief may use stolen login credentials to gain unauthorized access to someone’s online bank account. Or, they can use stolen credit card information to make purchases online.

Data breaches

Data breaches are security incidents in which individuals gain unauthorized access to private or confidential information, like customer data. If a business is targeted in a cyberattack and doesn’t have the proper protection, its consumer data could become exposed. This can open the door to identity theft, financial fraud, and other privacy threats.

Hackers and cyberattacks

Hackers and cyberattacks are also threats to customer data privacy. One common example of a cyberattack is phishing. Phishing attacks are when hackers send emails impersonating trusted sources to trick people into giving up private information. If a phishing scam targets someone at your company, it could put the privacy of your company’s customer data at risk.

Another example is malware attacks. Malware is malicious software designed to gain unauthorized access or damage a computer system. Hackers may expose systems to malware by attaching it to a phishing email or linking to it on a malicious website designed to impersonate a trustworthy website. A successful malware attack could compromise the security of customer data.

Software vulnerabilities

Whether it’s the software you use to message your coworkers or the customer relationship management (CRM) tool you use to keep track of leads, hackers may look to take advantage of software vulnerabilities to gain unauthorized access to consumer data.

Because of this, you’ll want to ensure you only use software with trusted security measures and privacy standards. Additionally, keeping your software up to date can help reduce the risk of vulnerabilities, as software updates usually address these issues.

CX Trends 2024: Unlock the power of intelligent CX

Learn more about the 10 trends driving the era of intelligent CX so your business can be at the vanguard of change.

12 best practices for protecting customer data

While breaches in consumer privacy can negatively impact your business and CX, your organization can take action to help keep your customers safe. Follow these best practices to prioritize the security and privacy of important customer data.

Twelve icons and steps illustrate how to prioritize strong customer data privacy.

1. Educate employees on data privacy

As the saying goes, “A chain is only as strong as its weakest link.” This also applies to your organization’s cybersecurity. If your company handles customer data, you’ll want to educate every employee on data privacy best practices.

This can ensure that every one of your employees behaves in a way that prioritizes the privacy and security of your customer data. For example, all employees should use strong passwords and avoid clicking on suspicious links. If your employees don’t understand data privacy best practices, they could accidentally put your customer data at risk without even knowing it.

Only 28% of CX leaders report that their teams have advanced knowledge about data privacy best practices.Zendesk CX Trends Report 2024

2. Collect only the necessary data

Gathering only the consumer data that is essential to your business operations is a great way to help protect customer information. For example, if your business has no need for a customer’s date of birth, then you shouldn’t ask them to provide it. This practice can help build trust with your customers and reduce the amount of information that could be exposed in a breach or cyberattack.

Additionally, if your business doesn’t collect a lot of customer information, it could be a less appealing target for cybercriminals.

3. Encrypt sensitive consumer data

Simply put, encryption is the process of converting plain text into a secret code that helps prevent unauthorized users from accessing it. Unencrypted data is easier to exploit if intercepted, making it a prime target for hackers.

Encrypting all consumer data from the moment you receive it can help you reduce the risk of exposure. For example, Zendesk Advanced Encryption ensures that external parties cannot read stored customer data in plain text.

78% of CX leaders agree that ignoring encryption in customer service exchanges leaves customer data vulnerable.Zendesk CX Trends Report 2024

4. Implement a transparent data privacy policy

Before collecting customer data, create a transparent data privacy policy and share it with all relevant stakeholders. This policy should clearly state the do’s and don’ts of how your business handles and uses consumer data if given consent.

You should also publish a privacy policy on your website that details how your company collects, uses, and stores customer data. With this level of customer transparency, nothing should be left open to interpretation and customers can easily learn how your business uses their information. For example, our Zendesk Privacy Policy clearly states how we handle personal data, including emails and purchase history.

5. Audit your data regularly

Regularly performing data audits can help your business answer the following customer data questions:

  • What data are you collecting?

  • Where are you storing the data?

  • How are you using the data?

If you don’t know the answers to these questions, then you can’t determine if you’re following the proper steps to protect consumer data.

Regular data audits can also help you identify customer information that you don’t need to collect. That way, you can adjust your practices to gather only the most necessary data for business operations.

6. Avoid data silos

Data silos occur when data is stored in different places and unable to be accessed by everyone who needs it. When businesses silo customer data, it’s easier for information to get misplaced, misused, or exposed.

You can avoid silos by keeping all types of consumer data in a single place, such as a cloud storage system with trusted security measures.

7. Protect against cyberattacks

Because cyberattacks can expose customer data, your organization must follow proper cybersecurity best practices to help reduce the risk. For example, implementing cybersecurity protection like antivirus software can help detect security risks and remove malware cybercriminals may use in an attack.

88% of IT leaders plan to increase the budget on cybersecurity over the next 12 months.
Zendesk 2023 data security report

8. Keep your software up to date

From your operating system to customer service software, always apply updates issued by the software company. Software updates often include security patches that can help fix any bugs or vulnerabilities bad actors may try to exploit.

9. Use multifactor authentication

Multifactor authentication (MFA) is an authentication method that requires users to provide more than one type of verification factor when logging in to a website or app. Examples of an MFA verification factor include:

  • Passwords

  • Verification codes (often sent via email or text message)

  • Security questions

  • Fingerprint ID

Using MFA reduces the risk of bad actors gaining unauthorized access to your consumer data, even if they figure out somebody’s password.

10. Limit access to sensitive consumer data

In most cases, not every employee at your company needs access to all the data your business collects and stores. To ensure consumer data is only accessible to those who need it, consider implementing the principle of least privilege (PoLP).

PoLP is a security practice where users have access to the minimum amount of data needed to do their job. This can help reduce points of vulnerability within your organization. For example, if 10 employees have access to your customer analytics but only three really need this information, you’re creating seven unnecessary potential entry points a hacker could attempt to exploit.

11. Roll out a comprehensive data protection plan

To maximize the security and privacy of your customer data, you need to roll out a comprehensive data security plan across your organization, including protections like:

  • Cybersecurity software (antivirus, antimalware, antispyware, etc.)

  • Password managers

  • Organization-wide cybersecurity education

  • Pop-up blockers

  • Next-generation firewalls

  • Multifactor authentication

  • Mandatory software updates

  • Endpoint detection and response (EDR) tools

  • Data encryption

  • Spam and phishing filters

By taking a holistic approach to protect consumer data, you can reduce the risk of it being exploited in a cyberattack or other privacy threats.

12. Review compliance with data protection laws

Depending on the location of your business and your customers, you’ll likely need to follow data protection laws and regulations. These laws protect consumers, and following them can help ensure your organization is on the right track to use and store customer data safely.

Before collecting customer data, do your research to determine which laws apply to your business. In some regions, you may need to give customers specific data rights, such as opting out of data collection or requesting data access. Because managing these privacy requests can be time-consuming, you might consider using a CX tool with privacy workflow automation features to streamline the process.

Key consumer data privacy standards and regulations to know

Consumer data privacy standards and regulations vary around the world and even differ state by state in the U.S. Here are some common data privacy laws your business should be aware of when dealing with customer data.

GDPR

The General Data Protection Regulation (GDPR) is a privacy and security law that protects people’s data within the European Union (EU). The law applies to all companies within the EU and any company that targets or collects data involving people in the EU.

Simply put, GDPR compliance helps ensure lawful, transparent, and fair data processing practices. One of the most notable aspects of the GDPR is that it requires consumers to provide “freely given, specific, informed, and unambiguous” consent before their data is collected. The GDPR also gives consumers specific privacy rights, including the right to object data collection.

Those who fail to comply with the GDPR will be subject to harsh fines, with some up to 4 percent of a company’s global revenue. Additionally, those who had their data misused also have the right to seek compensation for damages.

U.S. data privacy laws

Unlike the EU, there is currently no unified data privacy standard at the federal level in the U.S. Instead, there is a collection of laws at both the federal and state levels that are related to customer data privacy and security, including:

  • The Privacy Act of 1974: This federal law governs the collection and use of personal information, including names and Social Security numbers used in government records.
  • Children’s Online Privacy Protection Rule (COPPA): COPPA is a federal law that protects the data privacy of children under 13 years of age.
  • Gramm-Leach-Bliley Act (Financial Modernization Act of 1999): This federal law ensures financial institutions explain their data collection practices and safeguard sensitive financial information.
  • California Consumer Privacy Act (CCPA): The CCPA is a law that regulates the data collection of consumers located in California. The law gives consumers certain rights, including the right to opt out of the selling and sharing of their personal information.
  • Consumer Data Protection Act (CDPA): The CDPA is a law that protects the data privacy of Virginia state residents. Like the CCPA, CDPA gives consumers certain rights, including the right to have their data deleted.
  • Colorado Privacy Act (CPA): The CPA protects the personal information of Colorado residents and gives consumers multiple privacy protections, including the right to know when their data is collected and the option to opt out of the sale of their personal information.

When doing business in the U.S., you must ensure you comply with all privacy laws, both where you and your customers are located.

Industry-specific privacy standards

Similar to how privacy standards can vary depending on your location, your organization may be subject to industry-specific privacy standards, such as:

Determine what industry-specific privacy stands may apply to your business to ensure your customer data is protected.

Frequently asked questions

Secure customer data with Zendesk

To protect your customers and build trust, use tools that offer a secure CX. Without the proper tools or protections, your customers may not trust your business with their personal information.

With trusted customer experience software like Zendesk, you can secure your customer data with bring your own key (BYOK) encryption. Additionally, Zendesk complies with industry-accepted data privacy frameworks and includes customer data privacy protection features like custom data retention policies, ensuring you only keep the data you need.

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