For many companies, customer privacy is often seen as a regulatory burden that limits data use and personalization rather than as a business opportunity. Research by Natalie Chisam at the University of Nebraska–Lincoln reveals companies that handle customer data with transparency, care and clear communication can gain a measurable competitive advantage through what researchers call privacy stewardship.
The research, published in the Journal of Marketing, draws on large-scale studies and experiments and finds such strategies lead to stronger customer patronage and higher financial returns. Co-authors include Jordan W. Moffett of the University of Kentucky, Kelly D. Martin of Colorado State University and Robert W. Palmatier of the University of Washington. The research also will be featured in the May issue of Harvard Business Review.
“Privacy doesn’t have to be a constraint. It can be a catalyst,” said Chisam, assistant professor of marketing. “When companies treat privacy as more than a compliance checkbox, framing it as a meaningful commitment to data protection and customer care, they can unlock measurable business results.”
The findings suggest prioritizing privacy can benefit both customers and companies’ financial performance.
“Trust is a scarce resource,” she said. “Brands that signal they care about privacy can differentiate themselves in a crowded marketplace.”
The research reveals a clear pattern: Customers reward brands that manage data privacy responsibly. Yet many companies struggle to implement privacy stewardship effectively.
“Organizations either underinvest or pursue initiatives that fail to resonate with customers,” she said. “The key is to match privacy efforts to what customers expect and the level of risk they perceive.”
Chisam noted privacy stewardship may be less effective for companies that rely heavily on monetizing personal data, such as social media platforms, where customers may question the sincerity of privacy commitments.
“Customers frequently view privacy pledges from these firms as reactive or insincere,” she said.
In highly regulated sectors like health care or finance, privacy stewardship also may have less impact because customers generally assume strong protections are already in place.
“Privacy stewardship is more effective for high-affinity brands with strong reputations, such as Patagonia or Unilever, which are seen as genuine in their privacy commitments. It also resonates in high-risk situations, such as after a data breach or in industries where misuse of personal information is common,” Chisam said.
The study offers actionable guidance for companies seeking to align privacy initiatives with brand reputation and risk exposure. Chisam said data-dependent companies operating in a high-risk environment should emphasize their ability to safeguard customer data, while a beloved brand in a low-risk setting can highlight its commitment to customer-first values.
“Privacy stewardship is most powerful when customers believe it’s authentic and when they need it the most,” she said. “It’s not just about legal compliance. It’s about building trust and turning privacy into a competitive edge.”
