As previously published on Managment.co.nz
A new study has found that many consumers are asking if they can trust the technology companies designing, developing and deploying digital services. Do these companies understand their responsibilities? Russell Craig says many organisations do not make the cut.
Interactions and transactions today are becoming digital. This is especially true of New Zealand, one of the most digitally active nations in one of the world’s most digitally active regions.
In the Asia Pacific retail sector alone, consumers are already spending more on online retailing than North America and Europe combined, accounting for nearly half of the world’s business-to-consumer e-commerce market in 2017, according to the United Nations Economic and Social Commission for Asia and the Pacific, Embracing the E-Commerce Revolution in Asia and the Pacific.
However, this also presents challenges for all organisations offering digital services, particularly when it comes to creating trust and protecting consumers’ personal data.
What the Microsoft IDC study, Understanding Consumer Trust in Digital Services in Asia Pacific, shows is that there’s huge opportunity for organisations to establish themselves as preferred retailers or service providers if they focus on making their digital platforms more reliable and secure.
As consumers’ reliance on digital services continues to climb, organisations have unprecedented access to personal data. While this data fuels the growth and evolution of digital services, consumers are also increasingly becoming aware of the risks involved. Their personal data can be used maliciously not only by hackers and criminal organisations, but also abused by organisations holding on to this data.
Many consumers are asking if they can trust the technology companies designing, developing and deploying digital services. Do these companies understand their responsibilities?
Many organisations do not make the cut. According to the study, barely more than a quarter (27 percent) of Kiwi consumers believe that their personal data will be treated in a trustworthy manner by organisations offering digital services.
This is more than just a perceptual issue as 85 percent of respondents would either switch to another organisation (56 percent) or reduce their usage of the digital service (29 percent) if they had a negative experience.
A critical competitive advantage
Working with IDC, Microsoft has defined five elements of trust that consumers consider when they use digital services: privacy, security, reliability, ethics, and compliance.
The study reveals that the top three trust elements that cause consumers to stop using digital services are security (57 percent), reliability (55 percent), and privacy (53 percent).
While the consequences of the loss of consumer trust can be severe, the upside of having a trusted digital platform can be significantly rewarding.
The study found that only six percent of Kiwi consumers prefer to transact with an organisation that offers a cheaper but less trusted digital platform. On the other hand, 62 percent of consumers highlighted that they would recommend a trusted digital service to others, even if the cost is higher.
This has significant implications for organisations looking to use cost as the primary differentiator for their digital services. For organisations that are planning to monetise their digital products further or introduce premium services, it is evident that fostering trust needs to be an integral part of their strategy.
Building trusted digital services takes planning, time and commitment for organisations to get it right. It is not an easy feat, but here are five strategies that will help:
- Embed trust at the core of digital transformation plans: Organisations should seek to address the policy, regulatory, and ethical issues that digital technologies raise while achieving the highest compliance with data protection laws and standards.
- Prioritise security and privacy: Start building a trust framework by prioritising cyber defence strategies, as well as defining what type of data is critical to protect.
- Collaborate with the government, tech companies and industry stakeholders: The study showed that 39 percent of Kiwis feel the government should take the lead in building trust, followed by technology companies (35 percent). A broader debate that involves all appropriate stakeholders is necessary to ensure the interests of our society are protected.
- Create an ecosystem of partners that value trust: Organisations should only work with partners that respect customers’ privacy, giving customers control over their data and demonstrating transparency on the processing and storage of data.
- Host digital services on trusted cloud platforms: As organisations increasingly rely on cloud for their digital services, they will need to ensure their cloud platform is built on the five elements of trust: privacy, security, reliability, ethics, and compliance.
Today, more than ever, organisations’ long-term success depends on their ability to build consumer trust in their digital services and the technology they use. If organisations can bridge the vast consumer trust chasm that exists today, the fruits of their labour will be incredible – meaningful brand differentiation, customer loyalty, and ultimately, a stronger bottom line.
Russell Craig is the chief technology officer at Microsoft, New Zealand.
Tags: Consumer Trust, Digital Services, Digital Transformation