The tug between protecting privacy and building brand loyalty

The tug between protecting privacy and building brand loyalty

November 3, 20203 min read

The coronavirus pandemic has put much of normal life on hold, but it hasn’t stopped hackers. According to, in the first quarter of 2020, more than 8.4 billion records from healthcare institutions, technology, software, social media, and meal delivery companies were exposed — a 273 percent increase from Q1 2019.

While data breaches are costly to companies — a recent Ponemon Institute data breach report found that data breaches cost organizations an average of $7 million in the U.S. — their frequency is enough to cause some consumers to wonder if their private information is safe with their favorite brands.

The increase in data breaches is concerning, noted Jesse Bockstedt, associate professor of information systems & operations management, but several studies have found that the out-of-pocket expense to consumers due to identity theft is less than $1,000. “Which isn’t zero, but it’s not like a few years ago when [identity theft] ruined your life and destroyed your credit,” Bockstedt said. As for the companies, he added, “It’s not a brand killer anymore.”

Yet despite consumers’ growing unease, Goizueta faculty say the relationship between privacy and brand loyalty is a bit more intricate. While a data breach can nick a firm’s reputation, it’s the data that is purposely collected beyond the name and vital statistics that worry consumers more.

Our experts found the following key points were necessary when it comes to finding the safe ground between privacy and brand loyalty. In fact, we have an expert from Goizueta who can explain each one:

Building digital trust

“Companies are increasingly worried that people will buy less from their brand if they’re perceived to be fast and loose with customer data,” said Daniel McCarthy, assistant professor of marketing.

For instance, after political data-analytics firm Cambridge Analytica secretly collected data on roughly 87 million Facebook users, back-lash followed. In an effort to regain users’ trust, Facebook founder and CEO Mark Zuckerberg laid out a “privacy-focused vision” for Facebook, but those efforts were widely criticized as not going far enough. Advertising boycotts followed.

Trust: the key to customer loyalty

Minus regulatory guardrails, the differentiating factor is trust, explained Jagdish Sheth, the Charles H. Kellstadt Chair in Marketing.

“Trust is built over time by doing what you promise to do and by company behavior that is considered appropriate or right,” Sheth said. Loyalty programs such as those with airlines, hospitality companies and grocery stores are founded on a relationship between a consumer and a brand. “Loyalty programs mean relationships, and in all relationships, trust and commitment are key,” he added.

Let’s make a deal

“Brands that are able to deliver a personalized experience in a privacy-friendly manner will have a competitive advantage,” explained David Schweidel, professor of marketing, in a recent “Goizueta Effect” podcast.

“Putting a premium on privacy means forgoing the benefits that come from allowing organizations to collect data they use to deliver a better experience. From a commercial standpoint, the onus is on the marketers to make the case that the benefits outweigh privacy concerns.”

We’ve attached a full article with even more advice and helpful information from our experts – but if you are looking to learn more or cover this topic, we can help.

All of our faculty are available to speak with media, simply click on either expert’s icon now – to book an interview today.

Connect with:
  • Jesse Bockstedt
    Jesse Bockstedt Senior Associate Dean for Graduate Programs and Professor of Information Systems & Operations Management

  • Daniel McCarthy
    Daniel McCarthy Assistant Professor of Marketing

    Marketing expert focused upon methodologies and frameworks for predicting customer behavior to better understand firm-level outcomes

  • Jagdish N. Sheth
    Jagdish N. Sheth Charles H. Kellstadt Chaired Professor of Business

    Globally known for his scholarly contributions in consumer psychology, competitive strategy, and geopolitical analysis

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