Fascinating research by Moffat et. al. on Customer Data Privacy Stewardship (July 2025, Journal of Marketing) set out compelling evidence that data privacy practices are not just a compliance activity. They can also generate meaningful business growth.
The paper highlights that putting in place privacy systems both increases costs and reduces the scope for data exploitation. However, the research found that the right customer-facing strategic approach, which they call data privacy stewardship, can have a positive impact which outweighs the operational and opportunity costs.
In short, companies should put in place a deliberately customer facing assumption of responsibility for data privacy.
How Does Data Privacy Stewardship Positively Affect Performance?
By mitigating vulnerabilities taking people’s privacy concerns seriously organisations can be perceived more positively by customers. As people are more inclined toward brands that they feel share their interests and concerns this can translate into more business opportunities. Conversely organisations that the research calls “data dependent” – they do the minimum necessary to collect and process personal data that they need to deliver their services – have lower levels of trust and are perceived to be more risky.
To test this the research explored:
- Any correlation between financial performance and public declarations about responsible data stewardship at firm level
- Customer perceptions of the motive for and risk of processing their personal data at brand level
- How privacy concerns affect purchase choices at the customer level
The research found that
- Privacy stewardship was positively correlated with financial performance
- A 12.3% increase in “customer patronage” of brands with higher levels of privacy stewardship
- positive customer choice based on trust related to data privacy
The effect is lower in more regulated industries such as law or healthcare, where people already have higher privacy expectations and the scope to demonstrate privacy stewardship may be lower.
What Has the Greatest Impact?
Examples of things that have a positive impact include:
- openness about data collection and the purposes for it in, for example, targeted advertising
- comprehensive but clear data privacy and security statements (you can read ours here)
- website trustmarks
Things that hurt trust include:
- being highly data dependent. For example, companies that rely on selling data as an income stream
- dense or unclear privacy information
- having experienced a data breach
The research found overall customers value:
- clear communication
- openness about the use of their data
- assurance around data security
- companies that prioritise responsible data use over organisational gain
- feeling their data are actively protected
What Are the Benefits?
Good privacy stewardship is linked to customers being more positive about how an organisation treats all stakeholders, and more trusting of the organisation’s products and services (“this company cares about me”). Conversely people are more likely to have privacy concerns about organisations and brands they have negative views of generally.
One of the other benefits of privacy stewardship is that it can improve performance to the point where it outweighs privacy compliance costs because it reduces barriers to purchase and improves brand loyalty.
However, organisations must consciously work to make data privacy an intrinsic value which is harder to do if your organisation is highly data dependent or highly regulated.
Conclusion
The research shows that privacy enhancing activities that are demonstrably in customers’ interests (rather than firms simply mitigating risks) are in a good position to gain trust and loyalty that outweigh the costs of that approach.