Consumers know their personal information has a value. Does that meant buying into a whole new model of data collection, or can marketers get permission in other ways, asks David Reed.
Has the logic of direct marketing been turned on its head? A lot has been said about the shift from push marketing - where brands make contact to their own timetable - to pull marketing - where consumers dictate the pace, place and even price. What has been less commented on is how this might be reflected in the way data is used and shared by both parties. While the idea of a value exchange is now generally accepted, it is usually interpreted to mean providing an incentive during data capture. Downloads might have replaced discount vouchers as the premium of choice, but the method essentially follows the same model.
One current view is that the balance of power might have shifted even further in favour of the consumer to a point where individuals not only control their personal information, but actively trade it for a cash value. Permission marketing becomes access marketing with brands limited in their prospecting to only those consumers who have specifically requested contact. Alan Mitchell, strategy director at Ctrl-Shift, describes these new data sets as Volunteered Personal Information. In this model, companies elicit information from individuals which they then act on, rather than gather information about customers before sending messages to them. The key difference is in both the permissioning and the cycles involved.
“In the 20th Century, every bit of information flowed top down from the organisation to the consumer. In this Millennium, it is happening the other way around,” he says. Technology is undoubtedly one of the key drivers for this. Social networks have had several major effects, firstly in making consumers far more visible than ever before and secondly in influencing how they feel about the way personal information is used. “A major change is the consumer’s desire for control. In that respect, technology is working on the side of the individual,” he says. As research carried out by the Information Commissioner’s Office revealed, 96 per cent of consumers are concerned about their data being passed or sold to other organisations, while 88 per cent feel too much personal detail is being requested. Offsetting that, 79 per cent agree that in today’s world, their personal information has significant commercial value, according to research from Mydex.
The consequence of both of these concerns is the emergence of VPI models which create central privacy controls that filter and feed marketing. Public sector interest in this concept is strong, with the Government discussing how “personal data handbags” might simplify access to services (and ease identity verification issues for those service providers). Using a VPI service, the individual will tell the marketer what they want to buy and when. Such services could also be used for specification building, where the consumer inputs a range of constraints, such as budget, required features, preferences, etc, to return a suite of highly personalised propositions. “That requires many different types of information. The user is the point of integration,” says Mitchell. In existing DM models, it would be individual brands which attempt to integrate their knowledge of the consumer with their product range in order to make personalised pitches.
For Mitchell, this way of gaining access to consumers is better suited to modern life. “The idea that you are ‘a customer’ is a mistake. We act in roles - householder, parent, football fan. The information that matters is not individual, but role-based. And only the individual can know when and why they are behaving in that role,” he says. Early models and tests of VPI engines are already in the market. A number of important dimensions need to be tested and proven. Usability is one, with Mitchell arguing that privacy controls will “have to be as easy to use as Google”. There is also a double tipping point that needs to be reached - sufficient volume of registered volunteer consumers to make the system attractive and worthwhile for marketers and sufficient brands signed up to VPI to make it work for consumers.
Mitchell believes that, “every DM organisation will need to decide on its VPI strategy and focus on the feeds that really matter.” It is also likely there there will be multiple versions of these permission engines in the marketplace. Two are already in play. ALLOW has created a consumer-driven data trading platform with the proposition: “Personal information like your name and address is being traded for profit everyday. Now you can stop this trade and turn your data into cash for yourself with ALLOW’s new, free service.”
Mydex has developed from a different environment, based in the Young Foundation (originator of the Open University and Which? magazine) and operating as a social enterprise. It is being tested with a variety of stakeholders, including the Department of Work and Pensions and the Government’s “Tell Us Once” programme as well as Brent Council, with support from the Direct Marketing Association. One reason why co-founder William Heath believes consumers will adopt VPI engines is because, “it takes a householder 1.5 weeks in a year to keep organisations up to date if they move house or their circumstances change.” Using a portal that validates the individual’s identity and then distributes updated information to multiple data controllers could be appealling, especially as the company estimates that the average consumer has relationships with 200 different organisations.
“If it is convenient and links to people’s lives, they will use it,” says David Alexander, another co-founder of Mydex. Another crucial aspect of the spread of data outwards from the individual consumer is the 300 life events which his business has mapped. “We can build apps to help people get things done and we already have 4,500 attributes in our data model,” he says. Marketers may see VPI as a barrier between themselves and their customers, or it could prove to be an enabler. If consumers do become active data managers at key life stages, such as moving house, having a child, applying for planning permission, then it removes a lot of the uncertainty about those life stages and what permission a brand has to talk to the individual.
For the moment, this model is more potential than actual. In the short to medium-term, marketers need to work out how to respect consumers’ concerns about their data with the need to maintain profitable business activities. Existing models for data collection are clearly struggling to deliver this match.
“Permission is a key driver of the data asset and its value,” points out Rosemary Smith, director of Opt-4. She notes that pending reviews of the Data Protection Directive “may have a big effect on the value of that data and how much you can do with it. But the idea of a consent statement written by a bureaucrat in Brussels makes my blood run cold.”
To avoid that particular nightmare, data managers need to get better at gaining consent and driving up their permission to market rates. As Smith points out, many data owners do not even know what level of their customer data is marketable or use this as a key performance indicator. Without better awareness and practice, a data set can quite rapidly become worthless as a marketing asset. “Unsubscribe rates for email average 1 per cent. How many campaigns do you do in a year and how rapidly are they eroding your permission rate?” asks Smith.
A number of techniques can be applied to soften negative responses from the consumer and even improve the level of opt-in (or reduce opt-out). One of these is to word permission statements in the tone of voice of the brand - Smith points to Top Gear as a good example. Its online registration form says: “Want to be part of Top Gear? Then you need to register - and that’ll mean you can sign in and add comments wherever there’s a conversation. It’s a bit like being in the telly audience, but on the interweb.” That could have come out of the mouth of any one of the show’s three presenters.
Options to reduce opt outs
Using the right privacy statement could reduce opt-out rates by as much as 17 per cent. That is a key finding from the DMA Data Tracker consumer research. It offered four alternative statements from a fictional travel company and asked which would lead the consumer to tick the opt out. The best performer had an opt-out rate of 51 per cent, the worst 68 per cent. It is notable that the highest opt-out rate was for a statement making it clear data would be shared with third parties.
These are the wordings used:
Option 1: “The ABC Household Name Company would like to keep you up to date with special offers about our bespoke holidays. Please tick here if you would prefer not to receive these messages from us.”
Option 2: “We’re sure you won’t be disappointed with the messages we’ll send you (and we’ll make it easy for you to change your mind later on if you no longer find our offers and promotions useful) but please tick the box if you would really prefer not to receive them.”
Option 3: “The ABC Household Name Company would like to keep you up to date with special offers about our bespoke holidays. We will also share your data with our carefully selected partners who will also send you marketing messages. Please tick here if you do not want to receive these.”
Option 4: “Please tick the box if you would prefer not to receive the latest special offers, promotions and product information from The ABC Household Name Company.”