GDPR: Are we on the verge of a new era of data-driven marketing?
RMDS has published an Insight Report designed to help marketers recalibrate their approach to customer data in light of the imminent enforcement of the General Data Protection Regulation (GDPR). The report draws on findings from RMDS’s research and discusses why data quality is such an issue for today’s businesses, the impact of the GDPR on the use and management of customer data, and how organisations can use the regulation as a catalyst to improve marketing performance.
Poor-quality customer data is a problem that has blighted business for years.
Without accurate information on the people who buy their products and services, how can companies hope to maintain and develop meaningful relationships with them? How can they make their customers feel valued if they haven’t spelled their names correctly? How can they anticipate their customers’ needs if they have no insight into the major events in their lives?
However, poor-quality customer data is also about to become a major compliance issue with the coming into effect of the GDPR.
From 25 May 2018, any organisation that is found to be using inaccurate or customer data or processing data without a legal basis, such as consent, could face the prospect of a significant fine: up to 4% of global turnover, or €20 million, whichever is greater. And there’s the additional threat of consumer litigation.
For many companies, getting their customer data in order presents a major challenge. But what are the reasons behind this state of affairs?
Impact on the bottom line
It’s easily done. Data may be inaccurately recorded at several different points in the data-capture process: the point of data entry, database conversion or database consolidation. Alternatively, it may be that information simply isn’t being kept up-to-date or validated correctly.
For example, recent research from Royal Mail Data Services (RMDS) shows that while 87% of organisations use websites as their primary channels for customer data collection, only 44% automatically validate it at the point of online entry.
The research also indicates that the biggest contributors to poor-quality data are incomplete, out-of-date or duplicate records, with seven out of 10 marketers complaining that this is the main reason they are not able to do their jobs properly.
In short, many companies simply aren’t running effective data management programmes. This means inaccurate information can clutter up their systems, while the cleansing of databases is either irregular or non-existent. According to the RMDS research, over 60% of companies have no formal processes in place to cleanse data, only clean their data annually, or are unclear on how they keep their customer data clean and up to date.
Overall, less than one in five firms addresses the issue of data quality with daily or continuous data cleansing.
Ultimately, this isn’t just about good practice – it’s about the bottom line as well. The RMDS research shows that the average cost of poor-quality customer data to UK organisations is now running at a staggering 5.9% of annual revenue.
Consent is key
However, such a figure could pale into insignificance compared to what flouting the rules of the GDPR might mean. There are various stipulations that organisations need to follow in order to be compliant. Data accuracy certainly needs to be addressed, with any incorrect customer data erased or rectified as soon as possible. But it’s the ways in which the new regulation aims to put consumers in control of their own data that dramatically impacts on how organisations hold this information – and what they can do with it.
Unless certain exceptions apply, customers may not be subject to automatic decisions, including by profiling (such as customer relationship management technology) and may request a copy of their data in an easily accessible format – they also have the right to opt out of any type of direct marketing (and organisations will continue to require their opt-in consent to electronic marketing). For those organisations that are not already efficiently managing their customer data, identifying and potentially deleting duplicate customer profiles across multiple databases presents a major technical and logistical challenge.
But perhaps the most far reaching of the GDPR’s stipulations centres on the requirements for valid customer consent. Organisations need to demonstrate that, where they are relying on consent as the basis for processing, they have permission to use a customer’s data, and that the customer understands how their datait is going to be used. For those companies that haven’t previously sought consent which meets the requirements of the GDPR, the implementation of an extensive programme of repermissioning may be required – yet the RMDS research shows that nearly half of all firms (48%) either have no plans to conduct a repermissioning exercise or do not know whether they will seek fresh permission from their customers.
Those companies already handling customer information correctly for postal-marketing purposes may, following a review against the requirements of the GDPR, determine they are able to continue to claim they have a "legitimate interest" for the processing and avoid this process. But again, this places the onus on maintaining data accuracy at all times – if customers aren’t being accurately communicated to, it’s difficult to claim that you have complied with the GDPR.
However, it is challenging to meet the GDPR requirements when using third-party customer data for marketing purposes, which means organisations must assess any external data they use to ensure that use is GDPR compliant. Evidence suggests that marketers are already becoming increasingly wary of using data sourced from third-party providers. The RMDS research shows that nearly half (49%) of organisations now rely solely on customer data they have captured themselves. This compares to just 39% of organisations relying solely on their own data in 2014.
The RMDS research shows that nearly half (49%) of organisations now rely solely on customer data they have captured themselves. This compares to just 39% of organisations relying solely on their own data in 2014.
The GDPR opportunity
While the GDPR represents the biggest shake-up in customer data for over a decade, it would be wrong for organisations to merely regard it as a regulatory headache. At the heart of the GDPR is a push to improve the accuracy of customer data, something which will be of vital interest to organisations everywhere.
As such, the GDPR should be seen as an opportunity to reinforce the strategic importance of building strong, sustainable relationships with customers.
Enriching existing customer data
After basic data accuracy has been achieved, the next stage of building trusted relationships with customers is to personalise communications in a meaningful way. Organisations may be reducing their use of third-party data providers in order to promote GDPR compliance, but this could also mean that new marketing opportunities arising from customer life events – such as moving house, acquiring a mortgage, getting married and having children – are being missed.
61% of marketers consider enhancing customer information with life-event data useful for nurturing customer relationships, as it presents both a reason to engage with customers and new sales opportunities.
By using properly permissioned and GDPR-compliant third-party data sourced from trusted, reputable providers, marketers can improve the performance of their campaigns while, at the same time, ensuring that their data is up-to-date and of the highest quality.
A new era in data management
The GDPR should herald a new era of robust customer data management, with organisations approaching the capture, storage and use of data with sufficient rigour to be compliant with the new regulation, while enhancing their own marketing operations.
The RMDS research reveals that some companies are still struggling to meet the GDPR standard. But the GDPR does present an opportunity for organisations to update their data hygiene practices and become leaner, cleaner data-driven marketing machines.
RMDS recently published a new Insight Report designed to help marketers recalibrate their approach to customer data in light of the imminent enforcement of the General Data Protection Regulation (GDPR). The report draws on findings from RMDS’s research and discusses why data quality is such an issue for today’s businesses, the impact of the GDPR on the use and management of customer data, and how organisations can use the regulation as a catalyst to improve marketing performance.