Brands that are open about the value of the consumer data they use can expect to reap the rewards, writes Sam Zindel, senior data modelling analyst, iCrossing UK.
As EU data regulators and the UK government are looking to implement new laws to provide consumers with greater control of the data that organisations hold about them, it is worth taking a look at the fundamental pillars of a successful brand/customer relationship.
This relationship can be reduced to two factors that ultimately allow a customer to form their perception of a brand - trust and experience.
In a world where data collection and interpretation is the new backbone for competitive advantage, the best brands recognise the value of a customer relationship based on an exchange. Furthermore, they recognise that transparency and data control are key terms of engagement in marketing communications and the customer purchase journey.
In a recent study by SAS, highly targeted supermarket discount vouchers based on shopping behaviour (captured using loyalty cards) were rated the best value marketing communications by customers. Supermarket coupons demonstrate a very clear example of a trade that benefits both parties: customer data exchanged for relevant discounts and financial rewards.
In this instance, few customers complain that their buying behaviour is being tracked because the reward for providing data is clear. The exchange also appears to be transacted within a one-to-one brand/customer engagement - reinforcing the trust pillar.
A more subtle example is deployed on the Ocado website. Widely regarded as a market leader for customer service, Ocado studies its customers’ baskets in order to provide a better user experience when ordering online.
One great example is the algorithm it uses to filter out meat-related offers for returning users whose buying behaviour identifies them as vegetarians. It may be a less obvious exchange than discount coupons, but it reinforces the notion that Ocado provides a user experience that is a cut above the rest.
In both of the above examples, there is value for both sides of the relationship. Brand perception is positively reinforced (good value/great usability) and so the brand can consider its data-driven initiative a success - mainly due to the fact that the customer was placed at the heart of the strategy. When consideration of the customer is a mere afterthought or even worse disregarded completely, things can become a lot less amicable.
What riles consumers the most is when their data is blatantly repurposed. By that I mean when a customer provides information (knowingly or otherwise) that is then used in a way that is perceived to be outside of their expectations. This commonly involves a third party who purchase data from an organisation who originally collected it.
One such example is when insurance providers sell claims data to legal firms who then contact the claimant in an attempt to encourage them to instruct legal action. This represents a breach of trust and as I speak the government is pushing through legislation to make this practice illegal.
The online advertising model is built upon a foundation of customer data collected using cookies. Retargeting consumers based on their browsing history divides opinion between those that feel their privacy is being invaded and those that see relevant advertising as a positive step in the evolution of more personalised internet use.
The majority of consumers fall into the former category and dislike the sense of being watched online. Targeting too well can do more harm than good in many cases and brand perception can be one of ‘desperation’ and ‘covert’.
Both the insurance and online advertising examples provide a lack of clarity for the customer of the value that they are getting from use of their data. There isn’t a clear exchange, with only perceived value existing for the brand.
In these cases, the brand could do more to offer value to the customer. For example, asking for permission and incentivising a policy holder by providing free legal cover or retargeted adverts carrying an exclusive offer.
Many brands are focussed on converting a quick sale. While some would argue this model is suitable for homogenous products like insurance and utilities (after all we are increasingly a nation of loyalty through apathy in these sectors rather than brand engagement) the best brands recognise the lifetime value of their customers and target incremental gains through repeat sales, upsales and sales to customer networks as a result of brand advocacy.
The message for brands is clear. The big data world is laden with insight-driven value and it’s important to recognise the partnership that exists between brand and customer. If handled well, the value can grow on both sides - but the onus is on brands to manage their pursuit of data-driven sales with transparency and customer-centric messaging.
By openly recognising the value of consumer data and sharing the rewards, data can provide the foundation of a beautiful, long-lasting relationship.