6th May 2011
Alan Mitchell explains why the UK Government's new 'midata' initiative will create a new work/thinking agenda for CRM.
The press didn’t make much of the Government’s new consumer empowerment strategy, launched in April. But it could mark a sea change in the evolution of CRM.
The strategy, called 'Better Choices: Better Deal' mixes a number of elements – empowering consumers with more information, encouraging collective purchasing, improving consumer feedback, but two things stand out.
First, the Government is encouraging a new market-based – rather than regulatory – approach to consumer empowerment, especially with its focus on a new market in 'choice tools' which help individuals gather and use the information they need to make better decisions. This is intended to compliment rather than replace existing consumer regulation. As the Government points out in its paper, once such a market for consumer empowering services gets established "the applications … are potentially limitless".
Second, via its ‘midata’ initiative, the Government is encouraging companies with large customer databases to release the data they hold on customers back to them in a portable, reusable (i.e. standardised electronic format) so that consumers can use this data for their own purposes – including giving it to third party intermediaries and app providers to ‘mash’, analyse and ‘crunch’ the data on the consumer’s behalf.
This is a potentially momentous departure both in principle and in practice. In principle, the Government is embracing the idea that consumers should have more control over and access to their personal data. In practice, it opens up a plethora of new ways of using this data. Thus, for example, consumers could take data about their energy usage data to services specialising in energy consumption advice. They could take their mobile phone usage data to a comparison service that slices through the million-plus tariffs on the market to find the one that fits their actual usage. Or they could mash data from a range of different financial service providers to analyse their spending habits and trends, set savings and other goals – and create new services focused on better money management.
Not pulling punches
The Government is not pulling its punches here. While it’s backing a self-regulatory, voluntary approach, it’s also boasting that its new strategy "will turn the existing approach towards consumers on its head". In particular, it’s backing "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".
Or, as Ed Davey, Minister for Employment Relations, Consumer and Postal Affairs said in a speech about the strategy: "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."
For the last few years, this notion of VRM or vendor relationship management – where individuals are equipped with tools to manage their suppliers, as distinct from companies being equipped with tools to manage their customers – has languished on the margins as the plaything of a few visionaries. Now it’s moving to the centre of the policy stage.
For CRM practitioners, the midata initiative creates a new work/thinking agenda:
- First off, every company with a significant customer database needs to develop ways to release data back to customers in a portable re-usable form. This is a big change which practitioners need to start working on, now. As part of the mydata initiative a number of companies, including Barclaycard, Mastercard, HSBC, RBS Group, Lloyds TSB, John Lewis Partnership, Groupe Aeroplan (Nectar), Home Retail Group, Centrica, Southern and Scottish Energy, Everything Everywhere (T-Mobile/Orange) and Google, have already joined working parties to agree ways to do this.
- Second, every data holding company – and CRM manager – will need to look at their data they hold afresh, from a new angle: what potential value could this data have if it were redeployed as a tool in the hands of the customer (perhaps in combination with data from other sources)? And what new services could we offer our customers to realise this value?
- Thinking more strategically, how could/should this new approach to sharing data with customers affect our relationships with them? Could we, for example, use the same information sharing infrastructure and mechanisms to encourage customers to share more of their information with us – to elicit increasing amounts of volunteered personal information (VPI) from them? How could such increased information sharing impact on costs (e.g. of ensuring data quality and accuracy), in marketing efficiency and effectiveness, and innovation?
Alan Mitchell is strategy director of Ctrl-Shift and a member of the Midata Project Board. For a free Ctrl-Shift briefing on ‘mydata’ and its implications, click here.