Capping IT Off

Capping IT Off

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

In The Big Data Era, CMOs Must Find Balance Between Using Customer Data For Profit And Data Privacy

Big Data has made customer information easier to acquire and easier to share – or sell.   In this age of Big Data, information on each of us is more readily available and more easily collected than ever before.  The new normal in customer and consumer behavior – that of being always-connected – creates volumes of interaction, behavior, and sentiment data which can be sold to those that want us to buy their goods, visit their venues, eat in their restaurants, and use their services.   Big, private data, is just as disruptive and innovative a force as the technology that enables its collection and availability. It is all but traded as a commodity. That has both negative and positive consequences. How annoying is it to receive a text or call from a marketer trying to sell you a product or service that you have no interest in buying?  Conversely, how great is it when you receive an email from a products or services company that can help you maximize your purchase and/or minimize your cost?
Companies have been leveraging customer data for internal marketing campaigns or selling this data to third parties for many years.   Large banks have sold their customers’ transactional data to outside groups that use this data to collect and analyze consumer spending patterns.  Facebook makes ~ 3 billion dollars in advertising revenue alone, which is ~85 percent of their overall revenue.  How?  By selling their most valuable commodity, ad space,  to companies that want to reach millions of global Facebook subscribers.  When a user indicates that they like a certain product, musician, or movie, that  data is analyzed and made available to  those companies that have spent advertising dollars with Facebook so they can target prospective customers and get a better return for their advertising dollars. 
But, what about securing your permission to use the data you generated about yourself?  There are some laws in place that are designed to protect your privacy and secure your personal or activity data.  However, wherever there is a rule, there are usually people looking for ways to bend these rules and skirt the system to profit from the value of the data they collect and sell.   Some large companies see their customers less as individuals and more like dollar signs or inanimate ‘assets’ when it comes to the rich personal data they can collect and sell to the highest bidder.   Some have complex customer agreements that are vague and ambiguous.  These agreements  seem to protect personal information, yet many times serve more as a legal “release” that allows the company to use this data surreptitiously or sell it for profit.  Let’s face it, the web has made the collection of data on a mass scale easier than ever before and the means to collect and analyze this data (leveraging Big Data and Advanced Analytics solutions) have matured greatly in recent years.   The profits are huge and, while there may be some ancillary benefits to consumers in terms of being the beneficiaries of some directed promotions, there is no true financial benefit in it for those whose data is being used.  Therein lies some of the resentment and backlash we see around data security and data privacy (or lack thereof.)   
While a majority of companies have invested in wide ranging customer experience programs,  Big Data and Data Mining programs seem to be run almost with impunity with very little focus on bringing their Customers and Clients along this profitable journey.   If we were compensated for our data (financial, credit, spending habits, etc.) when it was used or sold, would we have as much of an issue/concern over data privacy?  I’d argue no.   If we had a feeling of power with respect to how (or who) was permitted to use our date, would we have as much of an issue/concern over data security?  I’d argue no.  But this simply is not taking place on a large scale and Joe Q Public is not in control of who get his data and how it is used.
According to a recent Forbes article entitled “Why CMOs Need To Get Real About The Policy Implications of Big Data,” by Steve Olenski, relatively few CMOs are thinking about the profound policy implications of big data — especially those relating to privacy and security.  Less than one-third considers it necessary to change their privacy policies despite the numerous ways in which customers’ privacy can now be compromised.  This is a bit surprising and I firmly believe that consumer backlash and outrage is on the horizon.  Social media is fueling the fire and blurring the lines of consumer privacy. Is it that companies are really trying to gauge customer sentiment or just invading consumer privacy for to increase their profits at their customers’ expense?  A marketer’s goal should be to strike a beneficial of balance between the use of customer data to drive engagement, increase customer retention, and grow sales with (what some call) a value exchange where the customer also benefits in ways other than giving more money to the marketer.  Allowing customers to opt-in and share data or opt-out and keep their data private will allow the customer to feel more engaged and comfortable and actually increase customer loyalty.   
Today’s CMO has a real challenge on their hands deciding how to best balance the needs, wants, desires, and concerns of the customer with the potential benefits that can be derived from leveraging that customer’s data either internally or externally – or both.   Now is the time for CMOs to formulate the right strategy, strike a balance that engages their customers and gives them a sense of comfort with the needs of the company to spend their marketing dollars more efficiently so that they are well positioned to leverage the vast quantity of rich consumer data available and do so without alienating their customer base.  Further as described in this article, the ability to improve customer engagement and improve value from Social Analytics and Mining are not contradictory but go hand in hand. As in other areas, CMOs who increase customer engagement are best positioned to leverage the vast quantity of rich consumer data available and do so without creating negative brand perception and without alienating their customer base.  CMOs must be aware of prevailing federal, state, local and corporate policies governing privacy. 
To efficiently corral such a huge topic, CMOs should leverage the collective knowledge of the organizational Data Governance board. They hold the keys to data knowledge and exist to enable CxOs to authoritatively and confidently use corporate data.  The consequences of circumventing corporate data governance vary: legal impacts, loss of customers, mis-targeting customers, negative Twitters, etc. The consequences of marketing using trusted data are equally compelling: the right ad to the right customer at the right time, increased share of wallet, new and innovate product development opportunities, Facebook "likes", etc. 
The richness of available personal data makes mining it compelling. But, as rich and sexy as Big Data has become, it still boils down to the basics of blocking and tackling data. If the data has a high level of quality, a CMO can trust it to yield accurate results. If the domains of data have been identified and mastered, the integration of demographic, weather, mobile, etc data under a program of business analytics becomes a sound basis for decision making: new products, new channels, new customers or a way to tell a new story to valued customers.  The ability to weave together the strategic business value of Big Data for a CMO combined with the ability to execute and deliver the analytic technology platform that delivers insights on the data is a powerful combination.

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