IF you rate customer data as merely ‘important’ to your firm you are probably just about to go out of business.
That’s because new draconian EU regulations come into force on 25 May next year which completely reverse the power relationship between a customer and a firm.
By now customer data should have already moved up your board agenda to the category of ‘Critical Issue’ where it is no longer about compliance but about everything you do: product design, marketing, cash flow, processes, systems; you name it.
The driver for this change is the GDPR (General Data Protection Regulation) which will soon allow your customers to take everything you know about them away from you and give to a competitor whenever they want.
Customers will also get much enhanced powers to know what data you hold about them, anywhere, and the right to have themselves wiped from your records and platforms.
They will also have the right to an explanation as to why your algorithms have handled them in a certain way.
And the punishment if you fail to meet the new regulation? Up to 4% of your turnover.
‘End of inertia sales’
In this blog, the first of three about challenges brought to us by technology – and our response – I want to use GDPR as an example of what we might call ‘The End of Inertia Sales’ or, as someone has described it, ‘Business on Ice’.
So, what is happening? Essentially the regulators have caught up with the value of any individual customer’s data and decided to give it back, 100%, to that customer, no strings attached.
This gives existing businesses in mature areas like financial services a very big headache as many have grown near monopoly positions by keeping their customer data hidden all over their business so that even if a customer stopped buying one product, they could be chased down for another. And this applies to you even if you are not based in the EU but have a customer there.
A date with data
Once upon a time, literally from the Middle Ages on, your name was written in a ledger alongside an amount and an address. Any new transaction to do with you was copied by hand into another part of the ledger. Tens of thousands of copyists were needed to run the banking sector in a city like London right up to the 1930s.
Thanks to computers, by the 1990s the use of large datasets for customer profiling and direct mailing were commonplace. Now businesses of all kinds collect key customer data at every point of contact and some make more money out of selling on their insights than they do from their own original business.
If you know someone’s gender, age, basic shopping habits and geographic location you can guess half of the rest. If you actually know some of it, for example, what kind of TV they like or music they listen to and how they spend their leisure, then you are very powerful.
One of the major drivers of transport platform Uber, for example, is that the behavioural data it collects will be worth a fortune – not just for distributing well-priced rides more efficiently, but to restaurants, shops, cinemas, clubs, property developers, even recruiters who want to know where people go and what they do.
If you know how someone moves about their city you can provide them with everything they need, adapting in real-time. It’s a lot of power. GDPR gives that power back to the customer and makes it easy for them to deploy it. It’s not just the new rules, it’s the fact that a market of 500m across Europe will adopt them and this alone will increase business disruption and new competition.
Businesses that could rely on a certain percentage of return business now risk losing that cash flow as their customers find it easy to switch and take their data (and money) away.
Delight conquers all
We can expect a lot of passive resistance. Firms will make it hard for you to go and they may use analogue methods to slow the digital flood. You can expect some firms to try asking you to fill in a piece of paper in ink as that will slow down your departure, or even stop it. But the enforcers will squash that and, in any case, your focus should not be on resisting your customers but in delighting them. Being that special something and holding onto your customers will be everything. If you are a garden centre, for example, and a customer complains that their garden hose has broken after just a week, you might replace it the next day while at the same time gently reminding them that they didn’t buy it from you at all but from ‘Smiths’. But no matter, they are ‘your’ customer so you have sorted the problem with a new hose and will leave them to pay you, or not, as they choose. Or you might invite them to give you the right to act for them in getting a refund from the other party.
In other words, some businesses will start to adopt the approach of a five star hotel, just to hang on to your goodwill. A business that you rate highly for one service may offer to take on all kinds of your other requirements.
For example, I use a very efficient local gas repair and inspection firm. ‘Gas & Gas’ (as I will call them) are staffed by people who always go the extra kilometre. I usually deal with them at the same time every year and the experience is a pleasant one. They have my data – and my trust.
Now, if ‘Gas & Gas’ offered to do my electrical work and my plumbing this would be unsurprising. But if they started offering to arrange a sitter for my pets, an airport car for that big overseas trip, well I would be surprised but not, given how much I trust ‘Gas & Gas’, dismissive. That’s because they delight me and I trust them.
Call to action
So the ‘What to do?’ for firms facing this new era of ‘unsticky’ customers? The ‘Action’ already well under way, I hope, involves gearing your entire business up to face the pressure from your existing customers who will find it much easier to leave you on 26 May 2018. Whatever business you used to be in, you are now in the delighted customer business.
And as for the ‘What to Do?’ for customers. This is something I will talk about in my next blog: about identity in a world with increasingly fewer fixed points.