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From hoarding to sharing: CRM and the democratisation of data management

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30th Nov 2011
Managing editor MyCustomer.com
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Will developments in personal data management make businesses rethink the value that they hold in their customer data? 

Customer data has always been the lifeblood of CRM. But what if there was more value in that data than many of us had ever dare dream of?
 
Developments this year have pushed this possibility to the fore – and promise to change the way that businesses use customer data in the future.
 
Back in April, the UK Government launched a new consumer empowerment strategy designed to encourage businesses to release their customer data back to them so that consumers can use this data for their own purposes.
 
The Government boasted that the ‘midata’ project would “turn the existing approach towards consumers on its head” with "a shift away from a world in which certain businesses tightly control the information they hold about consumers, towards one in which individuals along or in groups, can use their data or feedback for their own or mutual benefit".
 
And while only a voluntary programme, by the time that the initiative moved into its first phase of implementation earlier this month (November), heavyweights including Google, Lloyds Banking Group and British Gas were among the businesses that had signed up to the programme.
 
With the first half of 2012 the target date for the first releases of data, Ed Davey, Minister for Employment Relations, Consumer and Postal Affairs said: "We are getting behind a radical shift of power. For years, skilled business have realised the value of good consumer management. We’re trying to shift to a world of what you might call vendor management where consumers have control over their own data."

A control shift in personal data 

With the cost of producing, storing and sharing data having come down so dramatically in recent years, individuals can now afford the tools and technologies to manage their data. And Alan Mitchell, strategy director of market analyst Ctrl-Shift and a member of the Midata Project Board, believes that the initiative is a necessary response to the ‘control shift’ in personal data that is occurring.
 
“For 50 years, since the invention of the computer, governments and companies have been managing customer data. Now that individuals are beginning to manage their own data, we’re into a whole new ball game,” he explains.
 
“The crucial thing is that if you think about the whole history of CRM, it was about gathering as much data as you can, mining it for as much as you can and then sending a message through to the customer based on the analytics you have done. And basically what we are talking about here is fundamental changes in a) the processes of what is going on and b) in the purposes of what is going on. Because the process is increasingly that the individual is also collecting and managing data and because of that they are in a position to share data. So we are now in a very different situation.
 
“And the second thing is that it is not only about a message going through to the customer, it is also that the organisation needs to be creating some sort of value in the information sharing – why should I share information with you? It is not just about receiving messages, it is about getting some sort of value from the process. And that is what has been really interesting about the midata programme, which says OK companies have got all this data, how could it be useful to the customer? And that is fascinating because once you start thinking about the value of the information that is held by an organisation and how that could add value to the customer, then we’re moving into a whole new area of value creation as well.”
 
The new personal data landscape
 
New research published by Ctrl-Shift, which has been advising the Government on its midata programme, has shed light on the changing data scenario. The paper, called ‘The new personal data landscape’, demonstrates that the trend towards individuals managing their own data is mostly happening beyond the radar of organisations’ existing concerns but is nevertheless changing the environment in which they operate, including customer behaviours and expectations.
 
In the modern digital world, individuals are integrating many different streams of different types of data in order to manage their lives better – from P2P info sharing (i.e. peer reviews and online communities) to information as a tool (i.e. information from the market on what is available). Additionally, consumers would also benefit from personal data handbacks from organisations about their transactions, behaviours and usage, etc, which is where midata is looking to encourage information sharing.
However, the paper emphasises that the shift from ‘data gathering’ to ‘data sharing’ is going to herald both opportunities and threats for organisations.
 
“The opportunities fall into a number of categories,” explains Mitchell. “The most basic category is that if you are sharing data then you can keep it accurate and up to date. That is really simple today, but a huge amount of money is being spent by companies simply trying to keep their data up to date and accurate so just making the data more accurate and up to date is a huge benefit.”
 
He continues “Then there is the issue of the timeliness of communications, of talking to the right person at the right time, and so there are huge efficiencies in terms of not only marketing communications but lots of other communication as well. And then on top of that there are the insights that come because if you have a richer data sharing relationship with a customer then they can tell you things that they you would never have otherwise got to know - what my future plans are, what I plan to buy, when I plan to move, reasons why... So you get a rounder picture of the customer.
 
“But the downsides are that if you’re not playing the game, if people don’t trust you, if you haven’t set up the mechanisms for data sharing and you’re not moving with the times then you are basically out in the cold. Those processes will create a relationship which is not trusting and which doesn’t move down this information sharing route. People will continue doing mining and analysis and those kinds of things, but they will be doing it in a completely different way. It is a bit like the horse and cart and the motor – it is a leap forward in terms of the process and the technology and the people that don’t move are really going to be losing competitive advantage.”
 
As such, businesses like Google, Lloyds Banking Group and British Gas that have already signed up to the midata initiative are stealing a march on competitors that have yet to key into the advantages of this new data sharing relationship. And with the project aiming to have all organisations and companies holding customer data in the UK involved in releasing their data back to customers within the next two or three years, the onus may therefore be for firms to act sooner rather than later.
 
The starting point
 
So where should they start? What preparations should organisations be putting into place? Mitchell believes there are numerous things they need to do, with the first being to understand their customers’ information needs.
 
“It sounds like a silly thing, but the way we have evolved historically is that the company really tries to understand the customer’s product or consumption needs, and they gather the information, mine it, and do the targeting, but the information they provide is not seen in the same way as a source of added value for the customer. Whereas now what we’re saying is look at the information you have and think about what the customer could do with that to gain insight into their own lives, to make a better decision, to organise something better, so that it becomes a new way of adding value.”
 
Secondly, Mitchell recommends creating the information sharing relationship, to which there are three elements – the trust element, the mechanism element (the process element) and the actual value (what value the company and customer gets so that it is a win-win).  
 
Mitchell continues: “The trust element is really important and that works across terms and conditions, privacy policies, actual data policies, data management policies, customer training, staff training, staff incentives, and so on. So it is actually quite a good programme of change across a number of areas – the trust, the mechanisms, and the value. And that is why we are saying it really is an evolution, but it is happening already.”
 
Indeed, the change is already happening, heralded by the personal data ‘control shift’, by new information sharing mechanisms, by low cost technology, and also by the midatda initiative. As Mitchell highlights, moving from just the organisation managing data to both sides managing and sharing data is a long-term change that is still going to be happening in 10 years time, perhaps even 20 years time. But there are benefits and motivations for businesses to start acting today.
 
“The crucial thing about midata is that it is a) concentrating companies minds that it is real and happening, but it is also enabling the infrastructure, because once you start creating an information sharing relationship with one customer by handing data back to them, then you have got a trusted mechanism for doing so again. And if you are letting customers access data to have a look at what you hold about them then they can look at it and say that if is not right – that they moved home or that they have changed their email address, so you are creating a two way flow of information.”
 
Mitchell concludes: “So the midata initiative is significant on two levels, firstly it is mindset - there is another way of thinking about the whole area of customer data - and also process - there are actually things that we can do to make it happen. The Government is calling it a platform for innovation and I think that is exactly right - it is creating a platform for companies to do new things with their data.”

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