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Building relationships for a new data age

Posted on: Thursday 10th of January 2013

When we researched the changing personal data landscape a year ago we identified two underlying trends.

Historically, organisations have acted as the data manager and user. But now individuals are becoming managers of their own data and using information as a tool in their own hands. These trends are creating a hotspot of innovation – aspects of which include midata data releases to individuals, personal data stores and PIMS (information management services that help individuals make better decisions and manage their lives better).

These trends are creating a dilemma for organisations. On the one hand, far-sighted managers recognise the ground is shifting under their feet. If they don’t adapt they risk medium to long-term isolation and marginalisation.

On the other hand the current scale and impact of this shift may seem too small and uncertain to deserve immediate large scale investment.

The danger is that organisations adopt a wait and see attitude only to find themselves on the back foot racing to catch up when it’s already too late to adapt in time. So, given where most organisations are starting from today (i.e. with some sort of CRM system) what should they do?

An information sharing relationship

The challenge (and opportunity) is to start building an information sharing relationship with customers where both sides use data sharing to save time, cut costs and be more efficient – and to add new value.

In a world that’s rapidly going digital, an information sharing relationship makes it normal for individuals to provide the organisations they deal with new, additional and updated data, and for organisations to also routinely provide customers with additional data or data-based services.  Information sharing relationships and services are becoming a key influence on which organisations customers choose to do business with, and how valuable this business becomes.

The question is, how do we get from A to B? From today’s ‘one way’ norm where organisations collect data about customers and send messages to them, to a more equal and valuable information sharing partnership? There are three key pillars to an information sharing relationship:

  • establish a trustworthy ‘default setting’ for the use of personal data
  • give users/customers control
  • earn VPI (volunteered personal information) via new information services.

The default setting

We all know nobody reads privacy policies and terms and conditions even though they routinely tick a box saying they have done so, and agreed to what the small print says. This incentivises companies to draft the small print in a way that maximises their freedom of manoeuvre and their ability to monetise the data they collect.

However, customers are often surprised and dismayed to discover what these T&Cs say, leading to a loss of trust.  According to research by Boston Consulting for example, individuals with high awareness of organisations’ data practices are 26% less willing to divulge personal information than those with low awareness.

That takes us in one of two directions: 1) encourage and trade on customers’ blissful ignorance, or 2) create terms, conditions and policies that customers would feel entirely comfortable with if they did read them. The choice is by no means easy: many companies make a lot of money out of ‘blissful ignorance’. However, going forward, what T&Cs say will become a litmus test of trust, an important means of signaling benign versus malign intentions.  Information sharing relationships need trust, and the best way to build trust is to create default settings – standard policies, terms and conditions – that signal trustworthiness. For organisations, the watchword is becoming “no unpleasant surprises”.

This requires:

  • a thorough review of the content of privacy policies, terms and conditions
  • an equally thorough understanding of customer attitudes towards the issues they raise and how these attitudes are changing
  • making (and communicating) the necessary changes.

The user in control

In Europe consumers are now used to tick-box permissions where consumers give or refuse permission to be contacted for direct marketing purposes or to have their data shared with third party direct marketers. Looking forward, individuals will expect to have much greater and more granular control over what data organisations gather and what they use it for. Just look at the privacy and preference dashboards now being developed by mobile phone companies, for example.

Giving the user control means making it as easy as possible for individuals to make, and change, their permissions and preferences settings to as high a degree of granularity that they want.

For some companies this is a terrifying thought: ‘if we gave customers the option to not have their data collected/used they might “go dark” on us!’ It’s true. They might. But, as the BCG research also found, the opposite is more likely. The more users feel in control, the more relaxed they become about sharing their personal data. Indeed, the BCG research finds that consumers who are able to manage and protect their privacy settings are up to 52% more willing to share information than those who aren‘t.

Earn VPI via information services

Getting default settings right and giving users control only create the context needed for a healthy information sharing relationship. They don’t actually get the information flowing. To do that, organisations need to:

  • elicit valuable additional information from customers
  • release and provide customers with additional information and/or information based services that help them make better decisions and make it easier for them to get stuff done and achieve their goals – i.e. services that add new value.

In theory, eliciting VPI and offering added value information services are two separate things. But in reality they are likely to advance hand in hand: with individuals offering additional information (in an environment they can trust because of default settings and user control) as a way to get additional value from information-driven services.

An evolutionary journey

Each of these pillars of a healthy information sharing relationship (default settings, user control, eliciting VPI via information services) is a journey in its own right. Changing privacy policies and terms and conditions takes time to implement and may require several steps (as, for example, some data practices are wound down).  Likewise ‘user control’ can start with a few simple tick boxes at one end, grow into sophisticated My Account facilities such as those offered by Amazon, and progress even further to midata data releases and providing customers with personal data stores.

Completing each of these journeys, building customer trust and changing customer data habits will all take time. That’s why organisations need to start now. It’s no good discovering in three years time that you need to do something that takes three years to do; and that you should have started doing it three years ago.

Also, all three pillars need to be built together. Getting default settings right helps remove resistance to data sharing. It reduces trust barriers but it doesn’t, in itself, kick-start information sharing. Giving users control generates customer involvement and builds confidence. But it’s the provision of new information services that actually gives consumers a reason to take note and act.

Alan Mitchell