The ongoing process of data protection legislation compliance should be seen as an opportunity not a chore. We advise our clients to think economically and apply the principles of Return on Investment to their spending on compliance with international data protection obligations. Let’s take a closer look at the economics of ROI and how spending a little on shoring up privacy and data protection can yield big returns for your company.

Return on Investment

Economics already had a one-hundred-and-fifty-year pedigree (stretching back to Adam Smith’s sketching of the early international market system in The Wealth of Nations) when Donaldson Brown first took his seat in the treasury department of the DuPont Company in 1914. DuPont were diversifying from explosives manufacture into other technologies, such as plastics, lacquers and the emergent automobile industry. Brown came up with a formula that enabled the company to compare the performance of these apparently disparate acquisitions. The DuPont Method for Return on Investment is still taught in undergraduate economics classes.

Variants on ROI

The Dupont Method is basic ROI – you plug the numbers in and you come out with a percentage that enables you to compare investments. Modern economists have taken the idea much further. Concepts such as Return on Advertising Spend, Social Return on Investment and Return on Newly Invested Capital all expand upon the basic concept of ROI to allow more precise or more informative comparisons. In this spirit, we have developed our own Return on Privacy Investment calculation to help organisations understand how having strong data protection procedures in place will quickly show economic benefits.

Return on Privacy Investment

So how will investing in privacy and data protection yield big returns for your organisation? Here are some of the ways that we’ve identified:

• Improved brand perception. Customers are increasingly privacy-savvy and actively choosing to engage with brands that demonstrate respect for their data.
• Improved customer satisfaction. As we detailed in a recent blog post, customer satisfaction builds trust. Customers who trust your brand are more likely to repeat spend and recommend you to others.
• Streamlined data collection practices. Why are you collecting so much personal data and who are you paying to do it?
• Search Engine Optimisation. Removing third party cookies and other marketing technologies from your website will improve its loading speed – a factor that Google takes into account when ranking sites in its search listings.
• Competitive advantage. TalkTalk lost over 100,000 customers following a data breach. You need to be ready to reassure customers of your data secure practices when they walk away from your data insecure rivals. 

For a calculation of your own organisation's likely Return on Privacy Investment, please call priviness on 0203 2878 243 or email us at info@priviness.eu

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