Most customers say they have avoided a brand because they didn’t trust how it handled their data. The Foster School’s Robert W. Palmatier wants companies to see that fact as an opportunity.
Palmatier, the John C. Narver Chair in Business Administration, has spent nearly a decade building the research case that data privacy belongs in marketing, not legal. When companies treat privacy as a risk to minimize, they hand it off to lawyers and IT and declare the problem managed. His argument is that this framing leaves a significant opportunity on the table. New research published with his former PhD student, Natalie Chisam, in the Journal of Marketing and now featured in Harvard Business Review shows that companies that treat privacy as a genuine strategic commitment experience stronger customer loyalty and measurably better financial returns.
Microsoft was paying attention. The company approached Palmatier after the publication of his earlier privacy research. Next, they collaborated with him on large-scale studies with business customers in the U.S. and Germany. David Evans, Director of Market Research on Microsoft’s Research + Insights team, says the work reinforced something the company already believed.
“Microsoft has always done well by doing good,” Evans says. “This research provided empirical support for that worldview.”
A contradiction at the heart of marketing
Palmatier’s interest in privacy grew from a tension he kept encountering in his own field. His research on relationship marketing shows that trust is the foundation of lasting customer relationships. But standard marketing practice says to collect as much customer data as possible and use it to target people more precisely. Those two instincts, he noticed, pull in opposite directions.
“Consumers don’t like to be targeted,” he says. “They feel it’s unfair and relationship-damaging. There’s a real tension between saying ‘build strong relationships’ on one hand and ‘collect all the data you can’ on the other.”
The research introduces a concept Palmatier and co-authors call customer data privacy stewardship: a proactive approach to data management built on three commitments. First, privacy practices must be visible to customers, not buried in fine print. Second, they must reflect genuine accountability for customer data rather than just legal compliance. And, lastly, they must be embedded in how the business actually operates, not issued as a one-off statement.
Apple’s App Tracking Transparency feature, which asks users directly whether they want to be tracked across apps, is a recognizable example: a deliberate, visible, opt-in decision that puts the customer in control.
From risk management to marketing strategy
The shift Palmatier is advocating is less about specific policies and more about mindset. Risk management asks: What do we have to do to avoid a problem? Marketing asks: What can we do to earn a customer’s trust? Those questions lead companies to very different places, including in how they communicate and manage privacy.
The research analyzed the language in hundreds of company privacy announcements and found a stark divide. Companies that frame privacy around defense and threat tend to make customers more anxious, not more reassured. Companies that use forward-looking, care-oriented language see meaningfully better outcomes. That difference in language, Palmatier argues, reflects a deeper difference in orientation: one is the voice of risk management, the other is the voice of marketing.
The performance gap is significant. Only 26% of companies use the optimal communication approach, but those that do see 122% higher financial returns than average and 371% higher than companies using the least effective approach.
“Privacy is a competitive strategy,” Palmatier says. “But most companies are still communicating it like a legal disclaimer.”
Real-world impact: Microsoft and the AI era
At Microsoft, Palmatier’s research has had tangible effects, shaping the company’s global privacy page, the marketing of products like Microsoft Purview and Priva, its approach to customer communications about new features, and investments in proprietary research and external thought leadership. Microsoft formally measures customer perceptions of trust, societal impact, and even willingness to forgive the company for missteps as brand metrics. Privacy stewardship is treated as a business discipline.
Evans says Palmatier’s research also influenced how Microsoft thinks about AI.
“AI is changing the world, but it doesn’t change our commitment to protecting privacy,” he says. “We differentiate on trust.”
Palmatier sees data privacy stewardship as increasingly central to the AI conversation. As AI systems require massive stores of proprietary data, and as more companies move toward closed, in-house models, access to that data will depend on trust. Vendors and partners that handle data responsibly will be invited in. Those that don’t will find themselves locked out.
“Good data stewardship,” Palmatier says, “is going to be the price of admission.”
This fall, Evans will host a summit at Microsoft on the psychology of privacy in partnership with the Society for Consumer Psychology, with Palmatier’s research featured prominently.
For Palmatier, the HBR feature is validation that the field is catching up to the idea. Companies like Apple and Microsoft, which have chosen not to monetize customer data the way others do, are making a long-term bet on trust. The research shows that bet pays off, and that the companies that treat privacy as a marketing question rather than a legal one will be the ones that pull ahead.
About the research
“Customer Data Privacy Stewardship” by Jordan W. Moffett, Kelly D. Martin, Natalie Chisam, and Robert W. Palmatier is published in the Journal of Marketing.
Read the Harvard Business Review article here.
Robert W. Palmatier is a Professor of Marketing, the John C. Narver Chair in Business Administration, and the Research Director of the Center for Sales and Marketing Strategy at the Foster School of Business.