How to Overcome Challenges of Data Privacy in Loyalty Programs

It’s time to explore how to mitigate the risks related to data privacy in loyalty programs. In this article, not only do we reveal how you can protect your clients’ data more effectively, but we also highlight what you should be looking for in a modern customer engagement platform (as far as security is concerned).

What are the types of customer data and why protecting it is important?

It's essential to build a trusting relationship with your customers. The rule is quite simple: when they feel confident in your brand, they will continue to come back to you. Securing customers’ data is just one way to demonstrate that you take their safety seriously and create a bond of trust.

There are mainly three types of customer data you can collect:

• Zero-party data – is information customers intentionally and voluntarily share. For example, forms to share their name or surveys to share what they're interested in. 
• First-party data –  the data that comes from customer web activity, such as search engine or products view.
• Second-party data – is obtained from partners you cooperate with, for example in a multi-partner program. The partner is linked to the subject that uses the data.
• Third-party data – the data collected externally, such as through a research company, credit card transactions; often purchased from the vendor.

Customers worry about data privacy and so should you

Regardless of the type of data you collect, customers are wanting to know more about how their information is being taken care of. According to a KPMG survey, an overwhelming majority of 86% of consumers are expressing greater worry about data security. Another research from Tableau indicates that 48% of customers have backed out of purchasing from a company because of privacy worries.

And as loyalty programs are also storing a lot of customer data, they are a good target for any type of cybercriminals. So how as a loyalty program manager can you build trust around this issue? Here are 6 things you can do to protect your customers’ data privacy.

6 things you can do to protect your customers’ data privacy

1. Be as transparent as possible

First of all, establishing trust requires openness. Keep your customers in the loop about how their data is going to be used and what they will be getting in return. Show them how they can opt out of having their information monitored or ask to have it removed. Your customers are much more likely to feel secure sharing their data with you if you are transparent in your dealings.

2. Ask for extra authentication when making especially crucial processes

Don’t be afraid to ask for more secure, stronger authentication. You can use the native technology for smartphones to secure a mobile application, use biometric such as face recognition or fingerprint scanner for customer authentication. For other channels, you can easily use multi-factor authentication. Ask for an extra short code to be typed in when you are making especially those crucial processes: redemption, points transfer, or reward transfer. 

3. Partner with those who care for security standards

Make sure that the vendors and partners that you work with around your loyalty program are also compliant with all the security standards. Feel free to ask for the certification or security procedures. Find out where the data of your loyalty program is stored. How well their data center is protected. What is its rating in data center tiers? Is it tier 3 with multiple paths for power and cooling and systems in place to update and maintain it without taking it offline? Or is it the highest tier 4 – a data center built to be completely fault tolerant with the redundancy for every component? It’s the details where the devil usually is.

4. Address the human side of risk

Focusing on the human aspect of risks related to data privacy is a highly effective but often underestimated approach. Unfortunately, it is quite common for employees to click on phishing links, fall victim to social engineering attacks that manipulate them into providing access and sensitive information, use weak passwords, or unintentionally download malicious software. Human error accounts for 88% of security breaches. Make sure your staff is trained to follow safety procedures. In order to enhance the retention of training, you can implement gamification methods and personalize it on a larger scale. This can effectively reinforce desired behaviors and encourage increased engagement.

5. Always protect your data proactively

And lastly, make sure that you are proactively protecting your data. There is a technology that can help you: artificial intelligence, machine learning algorithms that could constantly monitor certain processes around the loyalty program could help you detect any type of attacks or at least tries to attack your data. Which leads us to the last step…

6. Choose a reliable loyalty platform provider

Go for loyalty management solutions that not only help you protect your assets, but also your reputation. Best tools, such as Comarch Loyalty Marketing Platform, are able to ensure that your program members’ data is fully secured. They use safety protocols, certificates (such as ISO, ITIL, PCI DSS, CCAP, and GDPR – loyalty programs and platforms that are not GDPR compliant simply cannot exist on the market), penetration testing and monitoring, as well as multi-factor authentication methods. Modern loyalty management tools also utilize AI/ML-powered technology to detect anomalies in your customer’s behavior and stop fraudulent activities before they are able to cause any harm to your business.

Key takeaways

The customer data you collect provide you with great opportunity and a responsibility. If you cover all the bases we’ve mentioned in this article, you are on the best way towards keeping customers’ private data safe and sound. The stakes are high, so instead of risking anything in this field, turn your data protection measures into a business advantage.