A Booming Market for Mobile Commerce Where Trust is Essential
Online retailers were predicted to benefit from a $43.4 billion holiday sales season as shoppers increasingly relied on social networks and mobile devices to find and buy merchandise.
Online sales also grew strongly outside the US, accounting for 10% of all retail sales in Great Britain last December, according to the British Retail Consortium, with the biggest area of growth on mobile devices.
However, consumer trust remains fragile, and new TrustArc research shows ongoing concerns about privacy and the ability to protect personal information online.
Before digging into the practical privacy steps to win consumer trust, first explore why consumers are concerned.
The research findings in the US and Great Britain were similar, revealing that consumer mistrust and the potential negative impact on business are growing compared with 2012 findings.
- 43% of internet users in the US and Great Britain don’t trust companies with their personal information.
- And 89% of internet users in the US and 91% in Great Britain said they avoid doing business with companies where they have privacy concerns.
Concerns Rise Where the Stakes are Highest
Online shopping and using social networks top the list of both US and British online privacy concerns:
89% of US and 88% of British internet users worry about their privacy when shopping online, and 87% of US and 86% of British internet users worry about their privacy when using social networks.
Some of this retail concern may be because consumers visit a wide range of sites for online shopping, frequently for single transactions, and have to take a new leap of faith each time.
However looking in detail reveals that the depth of concern rises where the stakes are highest.
35% of online banking customers in the US and 27% in Britain were always concerned when banking online and 30% of online shoppers in the US and 18% in Britain were always concerned when shopping online.
So even though concerns about retail banking may be lower than those about online shopping, the people who are concerned about online banking are very concerned.
Sharp Rise in Mobile Privacy Concerns
Concerns are also rising as the market shifts. Mobile privacy concerns increased sharply over the last year and 72% of US smartphone users are more concerned about privacy on their smartphones than they were a year ago.
Significantly for businesses, 81% of US smartphone users said they avoid using apps that they don’t believe protect their privacy.
In the UK the levels of concern were slightly lower with 66% of smartphone users more concerned than a year ago.
However the potential business impact was nearly the same with 79% avoiding apps where they had privacy concerns.
Whether you run an e-commerce website or a mobile app, you cannot succeed without a healthy data relationship with your users.
And the more people trust companies, the more willing they are to share data. Reassuring users about mobile privacy is clearly a key priority to ensure continued online growth in 2013.
Raising the Bar
The proportion of internet users who don’t trust companies with their personal information is the same in the US as in Great Britain (43%) but British users feel slightly more confident (75%) than US users (71%) that they know how to manage their privacy online.
96% of British users wanted the ability to control who can collect their personal information and who can track their activities online – now a legal requirement in the EU under the Cookie Directive that has been enforced in the UK since May 2012.
The introduction of the EU Cookie Directive has helped to raise awareness as to how consumers can gain transparency and control over online tracking and as a result, many websites have taken steps to comply.
Despite these measures privacy concerns remain high; the problem may be that increased consumer awareness is raising the bar for what companies need to do to stay ahead of the game.
Behind the Statistics – Responding to EU Consumers’ Online Privacy Concerns
Behind the headlines what are the key insights from this study for companies doing business in the EU?
We found that the majority of EU consumers are highly knowledgeable about online tracking and are aware of the pay-off between online targeting from advertisers and receiving free online services and content.
However they have high levels of privacy concerns and across all four countries surveyed, an average of 83% thought that companies should get their permission before tracking them online.
The consequences of getting this wrong for business are significant with 36% in France choosing not to visit a company website due to concerns about their privacy online and 34% in Germany not using a smartphone app due to online privacy concerns.
Across all four countries an average of 68% expect companies to comply with the recent EU Cookie Directive and an average of 41% plan to only visit websites that do.
With the top 50 websites in France and Germany having taken no action to inform visitors on their home page about cookie use and tracking on these sites they appear to be out of step with the concerns of their users.
According to EMOTA, the European Multi-channel and Online Trade Association and the European Digital Media Association, e-commerce will reach a turnover of €300 billion in the EU this year.
Thus, data protection is a must for e-commerce organizations.
The role of trustmarks to address consumer privacy concerns has been the subject of much recent discussion in the EU.
The EU Cloud Computing Strategy highlighted the importance of EU-wide certification schemes for trustworthy cloud providers and the revised EU data protection framework proposals include provisions intended to encourage the take-up of privacy seals, certification mechanisms and trust marks.
The UK ICO is currently conducting a survey to gather organizations’ views and practical experiences in using and operating seals and trustmarks. The deadline for responses is 30 November 2012.
Looking at the data more closely it is striking that privacy concerns are very high across all the countries we surveyed except for the Netherlands where just 48% were concerned about their online privacy.
This is interesting, given that more top Dutch websites were using pop-ups, banners or a tab to inform users about cookies and tracking compared with the UK, France and Germany.
The Netherlands is also the only country in the EU with four active trustmarks currently in use. Does this help explain the lower level of concern around privacy among the Dutch?
If so then this is yet another example of how good privacy practices can have a positive impact on consumer engagement online.
Six Practical Steps to Win EU Consumer Trust
In this data-driven world, businesses must know how to win and maintain consumer trust online.
In the EU this can sometimes seem even more complicated because of the increasing complexity of privacy regulations and the different approaches to implementation across 27 Member States.
With the introduction of the EU Cookie Directive and the proposed EU Data Protection Regulation, there have been concerted efforts by regulators to set common standards for data privacy across the EU.
But as anyone doing business in the EU should be aware, there are still markedly different approaches to compliance and consumer attitudes across key EU markets.
Based on our comprehensive research and analysis, here are six practical privacy steps you can take to win the trust of EU consumers:
Audit the Tracking Activity on Your Website
You’ve worked hard to bring engaged visitors to your website, but chances are you’re not the only one greeting them when they arrive.
Most websites today have invisible third-party trackers that collect data about site visitors.
In order to comply with the EU Cookie Directive, and provide transparency and choice for customers, you must first have a thorough understanding and awareness of the trackers that are on your site.
We used the TrustArc Website Scanner to provide a snapshot of cookie usage on the homepages of the top 50 websites in France, Germany, Great Britain and the Netherlands in November 2012.
We found that French websites were dropping nearly twice as many third-party cookies (434) on their homepages as websites in the Netherlands (237).
Do you know what’s happening on your site?
Check the Exact Compliance Requirements of All the Countries Where You’re Doing Business in the EU
Since 2009, all but two EU Member States have passed their own Cookie Laws that implement the Cookie Directive.
However, these Cookie Laws are not uniform, and t vary in the standard of consent required – reflecting the differences between each Member Countries’ data protections laws.
This in turn has resulted in a confusing patchwork of compliance obligations.
If your business is operating in more than one EU country, then you need to ensure that you are compliant with the different requirements of each of the countries.
Provide Users with Notice of Tracking on Your Site & a Way to Opt-out
It is not just a legal requirement under the EU Cookie Directive, our research has shown that EU consumers have high levels of privacy concerns and 83% of them thought that companies should get their permission before tracking them online.
The consequences of getting this wrong for businesses are significant.
Tools such as the TrustArc Consent & Preferences Manager make it simple to give notice and offer users a way to opt out of the tracking on your site.
Work with an External Privacy Management Expert to Review Your Privacy Practices
Depending on the size of your organization, and its privacy expertise, you may find it helpful to consult a privacy expert who can ensure that your traditional website and mobile optimized privacy policies are fit for purpose.
A review of your privacy practices can also help identify any potential privacy threats or risks to your business that you might not be aware of.
Let Your Customers Know How Good Your Privacy Practices are by Displaying a Privacy Certification or Seal
One of the most straightforward ways to win trust is to be transparent and reassure your customers that you use best practices for protecting their privacy.
Research in July this year found that 60% of UK users look for privacy seals on a website.
In our EU research, 62% of French consumers, 57% of German and British consumers and 49% of Dutch consumers trusted a website more if they saw a certification or seal.
There are a number of different privacy seals available in the EU, but research has shown that TRUSTe is the #1 online privacy brand in the UK with 50% consumer awareness.
More than 5,000 online properties worldwide display the green TRUSTe Certified Privacy Seal ® on their websites or in their apps – including businesses in the UK, France and the Netherlands.
Ensure Any Digital Advertising is Compliant with the Latest EDAA Guidelines & Consumers Can Opt-out through the Interactive Icon
October saw the launch of the European Interactive Digital Advertising Alliance (EDAA).
The EDAA is responsible for the licensing of an interactive icon to identify ads on all websites that are delivered to internet users through online behavioral advertising (OBA), as part of the pan-European self-regulatory program.
Consumers will be able to access a preference manager directly from the interactive icon on the online ad allowing them to opt out from OBA.
Our research showed that 79% of UK consumers are aware of online behavioral advertising (OBA) and 53% of do not like it.
However, the research also showed that good privacy practices make a difference and 42% of consumers were more favorable about advertisers if presented with the EDAA program.
You can find out more information at the EDAA website.
Over the past six months TrustArc has conducted comprehensive research into the attitudes of EU consumers to data privacy, and the tracking activities and compliance on top EU websites, and reviewed the business impact of robust privacy compliance solutions.
Data Privacy is Complex, Here’s How Other Businesses are Responding
Find out how your organization’s privacy efforts compares with your global peers, read the latest Global Privacy Benchmarks Report.