AUSTRALIA | Changes to Australia's privacy laws are due to be tabled in draft form in the federal parliament next month.
According to world-leading trust, customer experience and consumer behavioural expert Lyndall Spooner, many businesses are asleep at the wheel, unaware of the significant impact the upcoming privacy law changes are likely to have on their operations, future and viability.
"The proposed changes to the Privacy Act are some of the biggest reforms we have ever seen in the area of consumer privacy. They aim to put the power back into the hands of consumers to decide where and how their personal data is used," Spooner said.
"One of the key themes of the new legislation is that it aims to better inform consumers of their rights around how their personal information and consumption behaviour is collected and used by organisations, from small businesses through to major companies and government departments. "
She added that the scope of the new realms of augmented privacy control extends into the area of anonymised information and consumer cohort trends, which effectively eliminates the ability for businesses to engage in the manipulation and interrogation of big data to create granular insights and predictive modelling without the receipt of specific consumer approval.
Lyndall Spooner is the founder and CEO of Australian strategic research and consulting agency, Fifth Dimension and leading authority on brand trust. Fifth Dimension's groundbreaking Trust Matrix centres on the premise that trust in brands has its foundations laid in two traits - the capability of the brand to do what it promises and the character of the brand to operate in an honest and ethical manner. Fail on both trust traits and brands risk losing a customer they have let down for life and weakening brand growth due to the legacy of a proven poor reputation. Fifth Dimension works with many of the globe's leading brands including top tier financial institutions.
Spooner explained there are three angles to consider in relation to the impending privacy law changes.
First, businesses will have to conduct a detailed internal review of all the ways in which they are using consumer data for sales and marketing purposes and confirm they have permission to use the data they have collected for each of those purposes.
"Some leadership teams may not be completely aware of just how much data is being used across their business for a multitude of purposes, including the requirement of data for streamlining digital interactions and services."
Second, as businesses undertaking that review and seek informed consent from their customers, consumers are going to be made brutally aware of just how much of their data has been used by companies, including having their data sold to third parties.
"Consumers are not completely ignorant that their data is used to market to them, but they will be surprised just how much of their data is being used to influence their choices and to provide seamless digital interactions and that could impact their perceptions of the integrity of the businesses they deal with."
Third, if around one in every five consumers refuse to allow companies to use their data beyond what is necessary which is a realistic and conservative estimate, this could result in a significant decline in the effectiveness of automated sales and marketing activities and a greater need for businesses to go back to the fundamentals of marketing to reach potential audiences.
"The new legislation will address the clarity of collection notices and consent requests, to improve consumer comprehension. There will also be an enhanced legislative definition of consent, which will require that consent be voluntary, informed, current, specific and unambiguous."
She said very few companies have started to update their consent requests. This won't be a single statement asking for broad consent with the option to go and read an even long set of terms and conditions as has been the case in the past. Consumers are likely to be asked to consent to five, 10, 15 or more specific uses of their data, and potentially be continually asked to update their consent over time.
"The reality is that many Australian businesses are not ready and nor do they understand what they need to be ready for, or naively think they already have captured consent from their customers. The new laws will apply to all businesses, including small businesses."
This is a fundamental shift."The proposed changes to Australian privacy legislation will have a profound impact on how organisations collect and use data for marketing purposes.
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