Alan Mitchell explains how new information services have the potential to improve customer relationships.
Changes in the personal data landscape will have major implications for the business world, whether brands like it or not. And if you are one of the many businesses whose model is built around gathering and mining customer data and then applying analytics to generate a set of actions, then you’ll have already noticed that there are problems. Consumers are now increasingly unwilling to share their data, while estimates indicate that some of the big companies have as much as 40 or 50% of customers opting out of receiving marketing communications. Trust, particularly in industries such as financial services, is at an all-time low, so winning permissions is proving particularly challenging. Individuals have the ability to volunteer additional information that could update the accuracy of records, help to generate new pieces of insight, and create opportunities through more accurate targeting, for instance. But how can brands persuade their reticent customers to part with this data? The solution, according to some, could be found in the development of personal information management services - a field that dovetails with the progress of the personal data market, promises to provide brands with additional customer data, and yet still has the potential to enhance customer loyalty, trust and satisfaction. Too good to be true? Not according to Alan Mitchell, strategy director at market analyst and consulting business Ctrl-Shift. “If a company is able to produce an information service which uses the individual’s data, but which also requires the individual to input a bit of data, then you’re creating a potential win-win, where both sides are getting extra value from the data,” he explains. “You’re creating a data sharing relationship.” Different types of value Suffering with particularly poor customer relationships at present, banks are all too aware of the need to rebuild trust, and research by Ctrl-Shift indicates that they are exploring the use of information services. Mitchell points to the Lloyds Money Manager as an example, a service that sorts customers’ financial data to provide an overview of how they spend their money, shown in a calendar and a ‘category breakdown’ pie chart to pin point where their money goes. “At the moment they are helping you to visualise and analyse and put spending into buckets and so on,” he explains. “But the next steps could be looking at your budget, whether you’re looking to get rid of debts, if you’re looking to go on holiday, and they could help you create tools to help you along the way. So that is an interesting area where the provision of a service, using information, creates a reason for the customer to pay attention to engage and then at certain points add in more of their own information , thereby creating a new win-win. “The interesting thing about it is that it is not only supporting information sharing but it is also generating the added value which could be a reason to actually join that company, and if you like the Money Manager it could be a good reason to stay, so it also feeds into loyalty.” Mitchell believes that there are two distinct types of value that information services can provide to customers – convenience-driven value, which allows customers to get things done easier and quicker, such as administrative services and planning; and decision-making value, which provides insight into behaviour, helps the customer change their behaviour so that they can for instance save money, or helps them find the most appropriate service or product. The potential for information services can be found across the board. In the energy industry, the move towards smart metering and onwards to smart homes could see the emergence of services to help households monitor and change their energy consumption to save money. In the health sector, doctor data could be linked to personal data about calorie consumption or fitness activities to create health management services or diabetes management services. While auto firms are likely to capitalise on the emergence of the car as a data gathering device. “If it’s gathering data about where you drive, how you drive, when you drive and soon, you can see the way that data can be used to link to the servicing of the car, to the insurance of the car, and managing repairs and finance and so on,” says Mitchell. “Car companies are understanding that this is a completely new relationship that they could have with the customer. Whereas before they would sell the car and then lose contact with the customer until five or six years later when they were back in the market for a car again, now they can create a data service about the use of their car and use that to help interact with all their suppliers in relation to that car, turning a one-off sale into an ongoing relationship. And that relationship can go from the purchase of the car to its disposal. So it could be a big strategic shift for the car manufacturers.” Challenges and advice There are still challenges ahead, of course. Some industries still have some obstacles to overcome before these information services can be fast-tracked – car manufacturers and energy companies need the technology to mature to fully benefit from smart meters or car's gathering data, while telcos have to negotiate permission to capitalise on the sheer amount of data that they’re collecting about people, from location data to smart phone data and so on. And Mitchell warns that a great deal of thought must go into such programmes. “It involves rethinking the trust issue and privacy and therefore what the small print says, because if people suddenly discover they have been sharing information and you have given yourself power to use it ia way they don’t feel comfortable with, then it could backfire,” he says. “There are also a lot of process issues, like user interfaces – how does the customer get to access the service, how do they use it? Then there is the issue of exactly what value you are providing and what data you are sharing and collecting – the whole data strategy around it. And of course you need to consider how it links into your existing infrastructure and existing CRM system, so there is a technology bit to it. So once you start looking at the details it becomes a big task. You need to track out a journey, because there are a lot of things you can’t do tomorrow. You have to set out a timeline for it.” For those organisations keen to persevere, Mitchell has the following advice. “The first thing to consider is the simple mind shift that must occur – what is the value of our data to the customer, rather than what’s the value of our data to ourselves. Ask yourself, what could we do to use this data to add value to the customer? Once you start asking that question, then what is the potential data benefits that could be created for both sides – what extra data could we access if we were providing these services? Where are our data weaknesses and holes because you could use information services to address those.” He continues: “There is the value – what value are we going to deliver – and then there is the process, which is considering what it means for your customer database, what it means for your rules and policies, what it means for your infrastructure and for your customer interfaces. And that is the evolutionary journey that you need to start on.” The key, he says, is to ensure that a strategic approach is taken to information services, rather than a tactical point solution approach. “A lot of companies are producing an app here or a promotion there, but the potential here is much bigger and more strategic,” Mitchell adds. “Once you see the strategic potential of it and see it as a journey to a new type of relationship, it really does have huge opportunities.” He concludes: “Companies have been collecting all the CRM data and mining it for their own gold - but actually if you look at the same data and then remine it you can find diamonds for customers and use those customers to create added value.” login or register to post commentsAdd to a social bookmarking siteTags: All tags: CRM CRM software customer data data Login or register to tag items Create your free accountAccess all articles in fullView multimediaReceive email bulletinsPrivate messagingRegister nowLogin Username:
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