Is your strategy based on five basic data assumptions which it is time to question? Alan Mitchell, strategy director, Ctrl-Shift considers how changes in consumer attitudes and new regulatory demands are creating a new paradigm for data-driven business.
Are big assumptions about big data risking harm to your business? A mantra of “the more data, the better” has grown up in the last few years with promises of better analytics, sharper insights and turbo-charged data monetisation. But, in the excitement, have the risks, downsides and alternatives been fully considered?
This question is becoming urgent as the very trends that underpin today’s quest for more data - the plummeting costs of data gathering, storage and transmission - are now working to flip the market onto a different course. The faster data processing costs fall, the more it becomes possible for individuals - consumers, customers, citizens - also to collect and use their own data for their own purposes. Over the last few years, over a hundred different services have sprung up in the UK to do exactly that - help individuals gather, store, manage and control the sharing of their own data.
These services are working to a very different paradigm. Instead of seeing data solely in terms of its value as a tool in the hands of organisations, the new services view data (including personal data) as a tool that can be deployed by individuals, under their own control, to pursue their own personal goals. Today’s paradigm focuses on organisations collecting and managing customer data. The emerging paradigm embraces customers collecting and managing their own data, and asserting much more control over who it is shared with and for what purposes.
It’s a perspective shift that is attracting the attention of a growing number of organisations including the 80 household brand names that attended a Ctrl-Shift conference on this subject last December. And it is beginning to change the dynamics of the market. With this shift in mind, let’s return to some of those big assumptions.
1. Do you really want to collect ever more data on your customers?
At first blush, the obvious answer is yes, precisely because of those opportunities for analytics, insights and monetisation. But the price of such data gathering is a growing privacy backlash, growing customer distrust and intensifying regulatory scrutiny. “Gather as much as you can’” data strategies may be harming customer relationships. That’s a big downside - especially if there is another way to have your cake and eat it.
2. Do you really want to hold this data?
As hacking and data breaches accelerate, a growing number of companies are beginning to wonder whether the data they hold is more of a risk and a liability than an asset. Some are initiating a new sort of data audit, a) to assess the relative sensitivities of the different classes of data they hold, and b) to ask, “is there any way we can mitigate risks by getting somebody else to hold this data, in a way that we can access and use it as and when we need it?” For example, by enabling customers to hold sensitive financial, health and other information in their own personal data store and building data sharing agreements with them, risks could be mitigated without opportunities being lost. The added bonus - such an approach aligns perfectly with looming EU requirements for data portability.
3. Do you really need this data to achieve your objectives?
One step further is to ask, “do we really need this data to achieve our objectives?”. Take age verification. Do we really need somebody’s date of birth to know they are over 18? Numerous trusted institutions (banks with Know Your Customer processes, credit reference agencies, etc) have already done extensive checks on customers. They can verify attributes without the need for the data to be collected (again) or transferred. Such “zero knowledge” data operations have widespread potential, including in direct marketing and targeted advertising, and they’re getting a major boost by the UK Government’s Verify programme, which is encouraging the trust-based exchange of verified attributes.
4. Is that dream of a genuine single customer view really realistic within today’s set-up?
Most companies’ hard fought-for single customer views are really nothing of the sort. They may achieve a single view of that particular company’s dealings with a customer, but they do not create a fully rounded picture of that customer - one that encompasses purchases from other companies in the category, related purchases in other categories, or the fuller context of their lives. In fact, most single customer views extrapolate forward from data points that focus on a just a small sliver of the customer’s life.
The problem is that anything else requires a panopticon data harvesting operation that runs straight into privacy concerns and data protection regulations. However, with the personal data services that are now emerging, it’s becoming possible for customers to build rich, rounded pictures of their own lives - pictures they can share with providers if they see good reason to.
5. Can you ever really achieve relevance in marketing communications?
Sorry to say it, but much of today’s quest for relevance in marketing and advertising is based on guesswork mitigated by the addition of new data points. Sure, these guesswork mitigation strategies can and do deliver incremental returns. But they don’t really guarantee relevance, which can never be fully delivered via profile data alone. For any customer at any point in time, relevance is also driven by current mood, mode, purpose and (contextual) priorities - things only the customer knows. Real relevance is only truely possible when customers are involved in saying what they want right now. Such “intent casting” is now the focus of multiple new initiatives and start-ups, such as people.io.
A new personal data strategy
The above five questions demonstrate two simple, but profound points. First, many of the assumptions and promises behind today’s data paradigm are questionable, if not flawed. Second, alternative models are emerging which not only address these questions and flaws, but which positively enable richer, more trust-based relationships with customers.
The biggest assumption behind today’s dominant data paradigm is the non-participation and non-involvement of the customer. Under this model, organisations collect data about customers and use it to do things to and at them. The customer is always the passive data subject - the target. Today, however, every legal, technology and consumer opinion trend is pointing in a different direction, towards customers as active participants and data users. In such a world, brands need to build trusted data sharing relationships with customers – where the company shares data with the customer and the customer shares data with the company to mutual benefit. This means putting data relationships with customers on a new and different footing.
Companies that stick blindly to the mantra, “the more data, the better”, are potentially exacerbating operational and reputational risk, creating unnecessary cost, undermining customer trust and limiting options. Does your company have a clear, future-proofed personal data strategy?