The proliferation of of personal information management services is having a profound impact on CRM. So is it time for organisations to implement a volunteered personal information (VPI) strategy? Alan Mitchell explores.
What would you do if you lost your mobile phone or Blackberry? Never mind the hassle of replacing the device, there’s all that data you store on it and now take for granted: names and contact details of friends and business associates, sent and received texts and emails which form your own mini-interaction history.
Starting with the PC in the late 20th century and now, continuing at an ever accelerating pace with the growing flood of digital devices, individuals are fast becoming data managers in their own right.
Data management – once an exclusive activity reserved only for organisations with big budgets and white-coated experts – is now becoming an everyday activity for individuals. Indeed, it’s becoming the focus of an entire new industry of ‘personal information management services’ (PIMS) – services which help individuals gather, store, make use of, and share the information they need to organise and manage their daily lives.
The implications for CRM are profound.
CRM was built on the dream of ‘know your customer’. Its heart was in the right place, but it suffers from a series of intrinsic structural flaws. The data organisations gather about their customers quickly becomes out-of-date and inaccurate, for example. That’s because customers’ lives are always changing, but organisations’ data gathering processes are based on one-off snapshots.
The dream of using rich data to generate deep insights into customer motivations and intentions is tarnished by the silo-based nature of organisations’ data.
Amazon knows what books I purchase from Amazon, but it doesn’t know what I purchase from
Borders,
Barnes & Noble,
Waterstones or
WH Smith. That’s why its highly sophisticated recommendation engine is still wrong more often than it is right.
Also, the context of customers’ lives are always changing – getting jobs, being made redundant, getting married, having children, getting divorced, moving in, moving out. Traditional data-gathering techniques can only guess at these significant events, usually long after the event.
Finally, creating predictive models of what customers are going to do next on the basis of this partial and often-flawed data is still more guesswork than science. In the end, customers know their future plans and intentions much better than any model, no matter how sophisticated. Wouldn’t it better if they simply told us?
VPI's transformational role
Until recently, that was just a rhetorical question. Now, thanks to individuals’ increasing digital data empowerment it’s becoming a practical question instead.
Google is a multi-billion dollar business driven by just one tiny piece of volunteered information – the individual’s search term, which signals ‘what I’m interested in right now’. The personal profiles individuals upload onto Facebook contain information traditional interaction and transaction data could never reach. The idea of volunteering information as a means of achieving goals is no longer alien. It’s becoming natural.
But there’s a limit to which organisations can simply ‘harvest’ this data behind individuals’ backs or without their knowledge or consent. When this happens, privacy concerns grow, and trust collapses. As Doc Searls points out
in his recent interview about vendor relationship management (VRM), individuals will only share sensitive, valuable personal information on an ongoing basis if they have control over what information they are sharing, with whom, for what purposes, under what terms and conditions.
Assuming this increasing personal digital data empowerment, just how much information could individuals volunteer about their changing lives, circumstances, goals, plans and intentions, and how valuable would such volunteered personal information (VPI) be?
Ctrl-Shift's research has concluded that over the next 10 years VPI’s role will be transformational because of three things.
First, the more we use digital devices a medium for organising our daily lives and for researching, making and implementing decisions, the greater the number of touchpoints or events at which it becomes possible to volunteer information – either by giving chosen organisations permission to collect data, or by specifically volunteering a new piece of information.
Second, these different scenarios generate many different types data with different uses. They include expressions of interest beyond search (e.g. “I’m generally interested in golf, so send me information about golf, but don’t bother with sailing or skiing”), forward looking plans (“I intend to buy a car/move home some time over the next six months”), opinions (including product and brand preferences), contextual information about the individual’s lifestyle (“we’re getting married”; “we’ve had a baby”), explanations as to why the individual decided to do X but not Y, administrative data (“my new address is …”), advice seeking questions and organisational arrangements.
Third, when you look at this data in the round, it connects with every customer-facing function from market research and customer insight through marketing communications to sales, customer service and ongoing relationship management. What’s more, the data ticks every priority box:
- Improved operational efficiencies, by helping the company keep its data more up-to-date and accurate and removing guesswork.
- Deeper customer insight, from access to information that was previously unavailable.
- Improved revenues, from the combination of the first two: an increased ability to offer the right things to the right customers at the right times, increasingly in response to their own signals of intent and desire.
A broader, bigger customer data strategy
We valued this information by looking at how many people are likely to volunteer how much of it, how often, in what circumstances – and by comparing it to what organisations currently pay for these or similar bits of data. The final number surprised us. Within 10 years, the UK could have a market for VPI worth £20bn, covering a range of sub-markets for information about ‘who I am’, ‘what I want’, ‘what I want to find out’ (online search accounts for about 15% of the £20bn total), and ‘what I think and believe’ (e.g. my preferences).
But this figure is based on the biggest word in business – ‘if’. For VPI to happen, a whole series of ‘ifs’ need to be addressed. Individuals won’t volunteer sensitive personal information, for example, if the process of doing so isn’t incredibly easy; if they have any doubts or suspicions that the information they volunteer will be misused or abused; or if they don’t get anything in return.
Even then, the new market looks very different to today’s CRM market because, in many circumstances, the natural forum or conduit for VPI lies outside the direct buyer/seller relationship, and will not therefore be generated via traditional CRM processes. In fact, when we analysed the 16 most important ‘feeds’ of VPI, we found that only a third of this information is likely to be generated via traditional ‘one-to-one’ company/customer relationships. Most complaints and suggestions naturally fall into the company/customer relationship, for example. But most ‘intention to buy’ signals are generated when individuals are scanning the marketplace as a whole.
The bottom line: thanks to intrinsic data and relationship limitations, CRM will never achieve its hoped-for goals. Looking forward, CRM will become part of a much broader, bigger ‘customer data’ strategy. A central (if not the central) plank of this customer data strategy will be a VPI strategy – what data do we want to elicit from our customers and potential customers; what’s the best way of doing this; via which vehicles (including directly through touchpoints we control and through third parties in the broader data ecosystem); and how best to use this data once we have it?
Developing such a VPI strategy won’t be easy: it requires the development of different mechanisms, the adoption of different attitudes and policies (e.g. a willingness to ‘hand over control’ to customers), and different types of value-sharing relationship. And it needs them all, all at the same time. However, not having a VPI strategy will end up being even harder – because in the emerging environment, organisations without a VPI strategy won’t have a customer relationship strategy at all.
Alan Mitchell is director of strategy and delivery at Ctrl-Shift.
Alan also serves on the steering committee of Harvard University Berkman Center’s Project VRM.
Replies (2)
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VPI has always been available via direct customer interactions but is not often gathered and maintained in a way which improves business performance. We have previously found, on the web or via telephone conversations that 75% of customers are happy to reveal details which are very strong indicators of interest in products and services; yet many organisations simply don’t ask. In our experience the most useful information on any given customer is contingent upon certain key facts gathered or known about that individual, so the goal isn’t complete sight of all data volunteered by a customer, but the ability to identify the key pieces of data which define the customer’s demand for your products.
The best route to identifying and collecting these is by using intuition backed up by test-and-learn to target those pieces of information which are most directly relevant or predictive of demand for your products. It is certainly true that digital data expands the horizons of what information is available but as well as all the extra needles, the haystack has grown much larger too. This means data disciplines are more important than ever to understand which data make a difference, and how to interpret and use them to change the customer experience and improve sales performance. This is particularly pertinent since customers have more control over how they present VPI, so the data are often unstructured and in a much more difficult format to use than when an organisation designs the data processes for its own use.
Our approach, which has been built into our Digital Brain tool, is to support the use of VPI across media and channels via a series of components, so an organisation can introduce separate pieces of the puzzle as they become available. For example Digital Brain Search allows an organisation to understand and value all of the search engine interactions which are relevant in the context of the customer's journey to purchase. Similarly, other components of the Digital Brain are targeted at making much greater use of data captured from customers’ website sessions in the context of overall customer behaviour, not just to supply basic web analytics. Taking this kind of piecemeal approach to VPI can help build the case to gather or source more data whilst delivering improvements in the short term.
A VPI strategy is a natural consequence of building success by scaling the gentler lower slopes first, rather than facing the sheer rock face of trying to implement a complete VPI policy from scratch.
Thanks (0)Some really good points Malcolm, in particular: "digital data expands the horizons of what information is available but as well as all the extra needles, the haystack has grown much larger too... customers have more control over how they present VPI, so the data are often unstructured and in a much more difficult format to use than when an organisation designs the data processes for its own use."
There is work being undertaken to enable selective disclosure of personal data by customers, including "Personal Data Stores" that can be replicated with trusted "fourth parties" . Providing these are built so that the data is structured then it will both of benefit to customer and company.
Thanks (0)