How can companies use customer data in a way that customers feel good about? Or at least aren’t disturbed?
The solution, as so often, is a matter of balance. It comes from the right proportion in the triangular relationship of:
- The intensity of customer data usage
- Transparency in what data is used and how it is collected
- The customer (!) receives added value from the data’s use
The relationship of these dimensions is obvious. The more data a company uses for its business purposes, the more transparent it must be. And the more clearly recognizable and tangible added value it must create for its customers from that data. For many years, many data protection officers have been struggling to increase the data transparency for customers through dashboard solutions. Graphically presented as coherently as possible, customers can see in these personal dashboards what data the company stores and for how long. Ideally, the company even explains why. The sad thing is there are hardly any companies that have built these solutions. This is a wasted opportunity for companies to distinguish themselves.
Businesses must earn the right to use customer data!
This is an attitude. This attitude forms the heart of wise data handling because it leads to data strategies and application solutions that customers actually want. This attitude, and only this attitude, leads companies closer to their customers. Only this attitude will lead companies on their journey through digital transformation at the pace they need to take.
We call this attitude: Earned Data
In the summer of 2013, at the height of the Snowden affair, the term “Earned Data” haunted much of social media with its vague content and limited data, particularly through many American data blogs. Europe failed to echo the term and it was also soon forgotten back on the other side of the Atlantic. Too bad. It is time to make a tangible concept from a term that strikes at the heart of the matter — that smart data companies can serve as instructional guides.
Smart companies deserve the right to use customer data when all the analytical efforts are addressed: What data do we need to create more customer use? German data protection law is based on the principle of data parsimony. Technical reality has overtaken the legal one. Earned Data, however, does include the principle of proportionality and leads to the most important distinction from usual big data methods.
For big data collects as much data as possible, aggregates it in as large a pot as possible and then lets the algorithms go to town — in the hope of being able to derive valuable insights for data-intensive enterprises. Earned data doesn’t focus on the volume, but rather on the right data — that which customers consciously and gladly share because they can rely on it: earned data is a mutual affair. The company uses it to represent my interests. It understands that this is the only way to increase customer value for aware consumers over the long term.
Digital transformation creates a new relevant set for customers. The decisive question in this set is no longer: What three brands come to mind first? This was why you’d stand at the supermarket shelf staring at one of these three brands, without quite knowing why.
The relevant set in the era of smart data revolves around the question: What three companies do you willingly share the most personal data with? Or figuratively speaking: For what companies do you swipe right? Not because you have to. But because the benefit is recognizable to you. Without feeling disturbed, since earned data resolves the paradoxes in data-driven marketing. So a high benefit combines with a good feeling.
This is the only way to create data strategies that truly benefit companies — because customers really want them.
This blog post is an excerpt from the book: Smart Data. Datenstrategien, die Kunden wirklich wollen und Unternehmen wirklich nützen (Smart Data: Data Strategies That Customers Really Want and Really Benefit Companies) by Björn Bloching, Lars Luck and Thomas Ramge, published by Redline Verlag.