Building a Trustful Data Environment with Customer Data

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With consumer trust and understanding of customer data use confused at best, it is imperative that companies build a trustful data environment to strengthen their customer relationships…

The Customer Data Relationship

There is an ambivalent relationship between customers and business in relation to the handling of data. One the one hand, users increasingly do entrust person-level information in exchange for services, online shopping, and to optimise their user experience. For instance, a recent survey showed that ‘nearly half of consumers would allow banks or insurers to use their data to recommend relevant products and services’. On the other hand, most surveys indicate a sense of eroding trust towards what companies do with customers’ data, a downfall compounded by some spectacular failures of data protection occurred in recent years.[1] In the next future these two facets of the question no doubt will continue to shape how do companies plot strategies for a transparent, secure and efficient use of customer data.

Consumer Trust of Data Use

Source: Amaze One, FairTrade?, 2016

Sensibility around data-handling is not limited to compliance with the law, which in Europe is evolving into a more stringent one, but in which customers are not always fully conversant; it concerns also customers’ ‘common sense’ about sensible ways to treat personal and behavioural information. Customers have an innate sense of the threshold of ‘digital creepiness’, in the apt phrase coined by Forrester Research, that companies should never trespass. As mobile’s share of online advertising grows, companies would want to leverage on a wealth of data points from a medium that is closer to the personal life of the customer than any other before. Furthermore, the Internet of Things is heralding a new world of connected devices producing user information. However, this data can be mobilised only within a Trustful Data Environment. In this scenario, gaining and maintaining trust should not be seen as a hurdle, a compliance problem or a PR facade, but as a business opportunity. In the mobile ecosystem, only those companies who will design a trustful environment for their customers will prosper. The others will not so much (or only) be struck down by the Law, but abandoned by the public.

“To ensure the continued growth and sustainability of the data-driven economy we need to, as an industry and society, find the right balance between privacy and commerce”

Chris Combemale, CEO of the DMA

Building a Trustful Data Environment

There are clear signs that the market is rewarding brands that are transparent about the use of data and offer control to the users–without hiding behind lengthy and obscure Terms and Conditions. The real ‘contract’ about the use data is not spelled out in legal jargon and hidden from view.  This requires a degree of user education about the different kind of data collected, whether personal (i.e. provided voluntarily by the user at the point of registration), created by the ‘digital exhaust’ (such as browsing) or profile and behavioural. In the UK the Guardian educates its users spelling out in a video and in clear privacy policy how each piece of information is collected, for what purpose, and how it can be controlled by the user.  A Harvard Business Review analysis suggests that customers are happy to share their data if they see clear value in the trade-off.[2] For instance, Disney World Resorts offer the popular MagicBand wristband with which customers can personalise their experience by handing over their data in return for quick check-ins at attractions and restaurants and customised deals. A transparent policy governs the transaction. The Guardian and Disney have created a Trustful Data Environment.

 

While the use of the Facebook social login is still popular (customers opt in to hand over their data to a company that thrives on them in exchange for avoiding the tedious act of registration), the backlash has begun and lately the company has been forced to turn away from its byzantine privacy policies to provide clearer information and control to user about their data. Its New Privacy Basics website, launched in January 2017, provides a transparent guide, with reassuring headings such as ‘You’re in charge’ and even — ok, it’s a bit hidden — the chance to opt out from targeted ads. While the aim of Facebook is to strengthen the appeal of its social login and maintain market dominance, the industry is now ready for identity management solution that is agnostic and fully transparent. At Teavaro we are working hard to provide just that.

 

Negative stories about the use of data have dominated the press and informed policy and legislation, and for good reasons they will continue to do so in the next future. Rather than be reactive to the latest media scare, forward-looking brands will need to design their services within a Trustful Data Environment with technical solutions, policies and business models based on a transparent exchange of value for consumer data.

Footnotes:

[1] Such as the Annual Track 2016 by the Information Commission Officer https://ico.org.uk/about-the-ico/our-information/research-and-reports/information-rights-research/

[2] Timothy Morey, Theodore “Theo” Forbath, and Allison Schoop, ‘Customer Data: Designing for Transparency and Trust’, Harvard Business Review, 2015.

 

Posted by Nico Pizzolato

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