Customer data is becoming an increasingly important marketing currency but as its business influence grows, so consumers are becoming more willing to probe how their private data is collected, used and stored. Some are now considering whether the rewards they get for disclosing it to marketers are sufficient.
Exploring these attitudes, a study by research company Future Foundation has found that there is a growing desire for consumers to police their own online information and get more value from providing their data.
Future Foundation’s Consumer Capital report reveals that more than one-third of consumers already see personal information as a commercial asset. Women are slightly keener than men to hold on to their own personal information and exchange it for services when they choose to, while those aged over 45 are more likely than younger consumers to want more control of their data and to be able to decide when and how they exchange it.
Josh McBain, senior analyst at Future Foundation, says that in future, consumers will refuse to be passive bystanders with little capacity to control the flow of their personal data. Indeed, he points out that they could soon be newly empowered by new data legislation proposed by the European Commission.
The General Data Protection Regulation, if passed in its current form, would require explicit consumer consent before companies are able to use personal data. This would not necessarily mean an ‘opt-in’ rule, but consumers would have to act in a way that indicates they want the brand to make use of their data. Other proposals include defining IP addresses as personal data, allowing people to see the data held on them for free and giving consumers the right to be ‘forgotten’ by companies which must delete all the information held on them.
McBain says the regulations would radically alter the current ecosystem of data exchange in Europe, imperilling some of the targeted services companies currently offer. “Brands need to shout louder about the benefit or service they are already giving consumers in exchange for their data or they need to start incentivising people to share their information,” he argues.
Alex Bannister, head of customer marketing at Nationwide, says that brands can’t be complacent about customers’ increasingly sensitive attitudes to data privacy. He says the economic downturn has made consumers think carefully about what personal data they share with financial services brands, for example.
“People can be coyer about what information they reveal if they think it will affect which product or service they will be able to get, such as an overdraft.”
By the same token, DIY retailer Wickes closed its loyalty scheme in July after recognising that its regular customers would prefer it to invest in better prices in these tough times, rather than in rewards targeted according to the data they share. Natalie Henty, head of data, direct and digital at Wickes, says any new data protection regulations from Europe must find a balance between giving consumers more control and supporting brands to give customers what they want.
“Brands are more interested in profiling customers based on how they act rather than what they say and this is the real science the industry needs to protect,” she says.
Pete Markey, chief marketing officer at RSA Insurance Group, which owns the More Than brand, says if more privacy rules come in, its brands will have to communicate their positive data messages differently depending on a person’s attitude to data controls.
“Consumers are saying to brands ‘give me a reason to share my valuable data with you or I will ask you to delete the information you hold’,” he says. “We must convince people that by sharing data with us we will price their insurance correctly and save them money.”
There is a view that news stories about social media privacy settings and personal information being used for commercial purposes are making consumers nervous, and regulators more cautious, about how data is used by marketers.
But responding to these voices, there are already numerous online tools to help consumers take more control. Your Online Choices is a one-stop shop launched by the industry for people to manage their online data preferences, while the website Allow lets consumers track how their data is being used by companies and whether their Facebook profile puts them at risk. They can also opt out of various online databases.
For Allison Wightman, Virgin Atlantic’s head of ebusiness, this whole debate comes down to trust: “We all need to remember that the online and mobile worlds would not be the places they are without the data brands collect, but marketers must take consumers with them on the journey,” she says.
“Passengers are happy to give us their mobile numbers so we can tell them if their flight is delayed, but trust would be lost if we used that data to sell them products.”
Wightman also acknowledges consumers want brands to respect their tracking wishes, which means companies must ensure the right website ‘tags’ are added, removed and managed to meet any new laws. Tags are pieces of computer code that enable analysis of users’ on-site behaviour, and tag management platforms enable marketers to keep control of tags themselves.
Laura Paterson, head of data marketing at Dennis Publishing, has noticed a shift in attitudes towards the ownership of personal data, with consumers asserting more control in the relationships with brands that hold it. She wants any new laws to take a common-sense approach, especially as the practicalities of the internet could arguably make being ‘forgotten’ by brands unachievable.
She says a balance must be struck between giving consumers power while maintaining a usable database of consumer leads and prospects. In return, Dennis uses the customer data it holds to offer additional content such as entries to exclusive competitions.
At Alliance Boots, whose brands include high street chemist Boots and Boots Opticians, director of loyalty and multichannel Ruth Spencer has also observed a gradual change in attitudes among customers who now expect brands to collect their data and use it appropriately to make relevant offers.
“There was a time when people were surprised we collected their data but now they expect us to use it,” says Spencer. “There is no evidence yet customers are interested in directly bargaining data for discounts. Rather they are savvier about how our brands use their information to make deals more personal and relevant.”
Spencer cites the transition to targeted, personalised coupons as one example. “Historically we provided every customer with the same coupon offer and now we can utilise the information we have on a customer’s Boots Advantage Card.”
Nationwide’s Bannister says the building society uses customers’ personal data to give people an overview of their relationship with the company. In the financial services sector, consumer trust has eroded since the banking crisis so it is crucial brands in this industry can demonstrate a strong value exchange.
“They can change their information online and when someone comes into a branch to see an adviser they are shown on the screen the data we have on them, including previous conversations and whether they have complained to us,” he says. “The information also tells them whether they are likely to be accepted for certain products without us having to sell to them.”
Nationwide’s direct marketing programme was created partly by agency Kitcatt Nohr Digitas, including the launch of a rewards scheme and financial statement programme. Customers are signing up in increasing numbers for the SavingsWatch offer, where in exchange for volunteered information Nationwide emails them new interest rate or savings deals. “They want to be in control of the messages they get from us and self-select their channel preferences, which we must respect,” says Bannister.
Brand owners and their legal teams are keeping a close eye on data protection debates in Europe, although Simon Morrissey, partner at law firm Lewis Silkin, says brands as well as consumers should welcome clarification in the law and standardisation across the continent.
“Brands are also sensitive to data controls, with many marketers perceiving the current rules as unjustly fettering their ability to reach consumers,” says Morrissey. “There are also many brand owners who see the commercial advantage of adopting a gold standard of data compliance on the basis that it associates the brand with an ethical approach to data handling.”
UK businesses that want to resist the threat of additional regulation from Europe do have the support of the UK government. It opposes a single EU data protection regime and would prefer a new cross-border data protection directive to give countries more flexibility locally.
But brands can’t afford to hold out in the hope that nothing will change. Instead, they may get better results by focusing on young consumers, who have a more relaxed attitude to sharing data than their parents, according to Future Foundation’s research. They are likely to be happier letting brands use their personal details for targeted marketing, but might be more aware that they don’t need to give their data away for free.
Middlesbrough Football Club
Professional football clubs have little trouble fuelling customer loyalty but even in this industry consumers are demanding a greater value exchange for sharing their data.
Anthony Emmerson, head of supporter services at championship side Middlesbrough, says the club obtains data from people who are passionate about the brand and, although they may be loyal for life, they increasingly want more in return for sharing valuable personal information.
The club uses data to create a picture of the experience fans are enjoying – or enduring – on match days and throughout the week. The data includes ticket information, transactional data from the club shop and information on which of the third-party services, such as catering, different supporters are using.
“We need to relate different data to different parts of the business such as corporate and non-corporate,” says Emmerson. “We can log the feedback we are getting, look at the complaints versus compliments, and make business decisions and improve customer service.”
Middlesbrough uses the mycustomerfeedback.com website, which brings together various sources of feedback that are available, including from social media. It provides Emmerson with a clear record of any interaction that a customer has with the club.
The fan experience does impact on loyalty and the data people are prepared to share. It affects how often they come to matches and how much they spend when they do. This is influenced by how engaged they feel with the club as well as the results on the pitch.
Emmerson adds: “The ‘fanbase’ comprises thousands of individuals who act differently when it comes to data. Some want to restrict what they share, but we do need a certain amount of information so we know who is in the stadium. People can then opt in for other valuable content such as exclusive videos from the training ground and interviews.”
Top five findings from Future Foundation’s Consumer Capital report
- More than one-third of UK consumers already see personal information as a commercial asset.
- Eighty-four per cent of 16-24 year olds want control of their online privacy, yet 27 per cent do not take steps to ensure this.
- Ninety-three per cent of over-55s want control of their online privacy, yet 17 per cent do not take steps to ensure this.
- Almost 90 per cent of UK consumers want more control over the personal information they give to companies and the way it is stored.
- More than 80 per cent would prefer to hold their own personal information and exchange it for services when they choose to.
More than 80 per cent of UK consumers are happy to share their information with brands across at least one channel, according to a study by YouGov for Experian Marketing Services. The so-called ‘Facebook Generation’ of 18 to 24 year olds leads this trend, with 38 per cent of this group happy to share across multiple channels compared to 27 per cent of the population overall. Some 43 per cent will share data with brands they trust and 13 per cent will share information to get a better customer service.
Separate research by Experian shows that 84 per cent will no longer buy from an organisation which ignores their preferences, purchasing history and other customer information.
Business consultancy Deloitte says consumers are demanding more transparency. Its Data Nation 2012 report found that 82 per cent of the population know data is collected by organisations but only 29 per cent are confident they will not sell or share it. Just 40 per cent believe companies keep data secure and 54 per cent want stronger regulation to protect their information.
Business advisory firm CEB questioned 7,000 consumers globally and discovered that four out of five have already taken action to restrict brands’ access to their personal information, including not joining a site which asks for certain types of data, not signing up for a brand’s newsletter or entering a contest.