There are roughly 2.9 billion Facebook users around the world, but Colorado State University marketing professor Kelly Martin definitely isn’t one of them.
It’s probably not a surprise given what she studies for a living. Martin is an expert on customer data privacy. She studies how marketers use customer information and the impact of the firm’s data privacy practices on both customer behavior and firm performance.
These topics have dominated headlines in recent years, and her 2017 article in the Journal of Marketing called “Data Privacy: Effects on Customer and Firm Performance” was recently recognized with the Sheth Foundation Award for its continued impact on both academic and practical understanding of the topic.
Martin discussed this paper and her continued research into data privacy with SOURCE.
Read a Q&A below.
SOURCE: Tell me about the Sheth Foundation Award-winning paper and how it shed new light on the study of data privacy.
Martin: It was one of the first articles that blended in the marketer-side perspective of what is happening with data privacy, with insights about how companies can do a better job of managing data privacy interactions with their customers.
We also looked at these questions through a lens of customer vulnerability and investor perceptions. We tested what both customers and investors thought about companies with regard to their data privacy practices. The findings were interesting, because we were able to show through both consumer experiments and actual firm data what happened to a company’s stock price, and other performance metrics, after a data breach or other privacy failure.
What we found was that companies that were really transparent about their privacy practices, and gave customers some control over their personal data, were able to offset financial performance losses, and to keep customers more loyal, more connected, and less likely to switch to rival firms.
Through multiple studies, the research shows that it benefits companies to be good stewards of their customers’ data.
How did you choose this field of research?
I was always interested in the ethical side of marketing strategy, and about 10 years ago, my career led me toward questions of privacy, because that seemed like one of the most pressing areas to marketing.
After all, marketing managers will have to ask: How do we keep their customers’ data safe? They should be thinking about these things, and shouldn’t leave it up to customers to keep themselves safe.
I think this is part of a bigger societal conversation that’s been happening over the last couple of years about the role companies play in privacy, and that it’s too complex of a topic for customers to figure out on their own.
I imagine you look at big tech companies like Facebook and Google as you do this research?
Big tech is really its own separate research area, and then every other company is its own separate area. The ways in which Meta – formerly Facebook – and Google, for example, use customer data are just so much bigger than any other company people interact with.
Think about the way Meta buys up smaller companies to collect more customer data and unique types of customer data. They sort of have their fingers in all elements of our data, even if you’re like me and don’t have a Facebook account.
They’re one of the biggest players in the privacy conversation. Conversely, you see Apple coming out a couple of years ago saying that they’re a big player in collecting data, but they also want to be a big player in privacy.
That’s been a really interesting shift in the conversation, and we’ve seen companies taking those ideas in a new direction.
Do you think there’s an incentive for companies to tell customers about their privacy efforts?
What I’m working on right now actually deals with that question, because we do believe there is a benefit for companies to lead on privacy.
What we’re trying to do right now is quantify the impact, and identify effective marketing strategies, since there are lots of ways for companies to talk about doing a good job with privacy.
We’re looking at the specific approaches that resonate most strongly with investors and customers and we’re finding quite a few novel insights. Hopefully there will be more to share soon.
This was a big conversation when you first wrote the paper in 2017, and it feels like an even bigger conversation now. Were you expecting that?
Yes. It’s super interesting and impacts everyone, right? My co-authors and I saw this and thought it was going to become a bigger and bigger deal.
At the time, we were looking at the broader portfolio of ethical questions and marketing, and it was an area where I thought we could use more work on the marketing side, because most of the research at the time had been focused on either the technology itself or people’s perceptions of their privacy.
For the latter, I thought that the proverbial ship had already sailed and our data is already out there. So, what can we do to provide companies with the best practices around keeping personal information safe and doing the right thing moving forward?
What’s next for you and your research?
I am currently working on a variety of privacy-related research questions. For example, we look at how companies are using privacy as a differentiator to get ahead of their competitors, and ways they can go above and beyond for their customers because it’s becoming a more prominent topic.
Another project I’m working on is in the same vein, but it looks at the security and safety side of privacy. We are looking at the extent to which firms protect the vulnerable customers who use their platforms from other customers that potentially might take advantage of that vulnerability, whether that is financial vulnerability, age, geographic location, etc …
We look at the firm side and the law enforcement side, because sometimes privacy regulations conflict with law enforcement and make it harder to keep vulnerable populations safe, even though it sounds counterintuitive.
It ultimately comes down to how marketers can protect the privacy of all of their customers, even if one person happens to be threatening the safety of other customers. So, it’s fascinating that these tensions exist, and on the privacy- firm side of marketing research, there hasn’t been a ton of investigation into the role law enforcement plays.
What do you tell consumers who aren’t really worried about this topic because they don’t feel like they have anything to hide?
Even if you feel like you don’t have anything to hide, your rights and privileges to be able to keep things private and secure can begin to erode. If everyone has this mindset, it’s kind of like a tragedy of the commons, and then firms and governments can chip away at privacy rights to the point where you end up with large-scale, societal-level harm. It’s a slippery slope.
You told me you don’t use Meta. What do you and your family use, if anything?
We’re all Apple users, because I really value their ability to have straightforward controls, which I think is a big part of this whole conversation. One reason it’s so hard to understand our privacy from the consumer side is it’s just so complex. Apple does a good job of making it simple for the user.
As you might imagine, I live a pretty simple technological life.
About CSU’s College of Business
The College of Business at Colorado State University is focused on using business to create a better world.
As an AACSB-accredited business school, the College is among the top five percent of business colleges worldwide, providing programs and career support services to more than 2,500 undergraduate and 1,300 graduate students. Faculty help students across our top-ranked on-campus and online programs develop the knowledge, skills and values to navigate a rapidly evolving business world and address global challenges with sustainable business solutions. Our students are known for their creativity, work ethic and resilience—resulting in an undergraduate job offer and placement rate of over 90% within 90 days of graduation.
The College’s highly ranked programs include its Online MBA, which has been ranked the No. 1 program in Colorado by U.S. News and World Report for five years running and achieved No. 16 for employability worldwide from QS Quacquarelli Symonds. The College’s Impact MBA is also ranked by Corporate Knights as a Top 20 “Better World MBA” worldwide.
