Businesses are deluged by data – a wave of information that has opened up new possibilities for a far-sighted few, writes Marcus Leroux
The proliferation of connected devices, from tablet computers to the internet of things, saturated broadband coverage and the rise of the mobile internet has all lead to reams of information about customers. At the same time, improved software platforms and analytics better enable this information to be harnessed.
A better use of the wealth of data lurking in the cloud, in customer relationship management systems and in sales figures can improve customer retention and satisfaction – and, ultimately, the bottom line.
But there are inherent challenges and tensions in using data. First, customers can find it unnerving if a company knows too much about them. Second, the security of data is a major concern as high-profile data breaches appear all too common for the public. Most recently, J.P. Morgan Chase fell victim to a hack that compromised the accounts of 73 million American households.
Getting hold of the data can be is as big a problem as keeping it safe. Asda’s challenge has historically been that it lacks a loyalty card, unlike its two biggest rivals Tesco and J Sainsbury. If a company has no way of tying baskets of goods to particular individuals, then it must rely on batch-processed, top-level, aggregated data, an approach that many have already consigned to the 20th century.
Part of Asda’s attempted solution has been to find ways to tempt consumers into making that link. Last year the supermarket group introduced a trial run of a technology that allowed customers to scan products as they go around the aisles using their smartphones, making the check-out process redundant. According to Asda chief executive Andy Clarke, the need to gather data was a key part of the motivation.
TWO NEW TRENDS
Chris Nott, IBM’s chief technology officer for big data analytics in the UK, says he has observed two new trends in recent months. “Firstly, organisations are taking a much more rounded view of customers, and trying to understand their current context so they can be much more personal and individual in their interactions. They want to be much more seamless across channels and they also want to be much more in-the-moment in terms of applying insights,” he says.
“That’s driving demand for real-time capabilities. They want to use data while the customer is with you, rather than after they have left.”
The key is in asking the right questions – data is a means, not an end in itself
Social media represents the second new frontier, but is an awkward part of the jigsaw to integrate with other data sources. “There are some technology components which will help you to realise that single view of the customer,” says Mr Nott. “It’s also about having a coherent approach to technology across the organisation so that you can take on increasing numbers of data sources, such as website activity, mobile app usage or social media, which you need to be facilitated into the structure if you want to build up that richer
picture of how a customer interacts with you.”
Consumers appear to be showing an increasing willingness to let companies share their information by signing in to services or online stores via their Facebook or Twitter accounts.
Some 84 per cent of 18 to 34 year olds use social login when registering or signing in to websites, allowing brands access to some of their profile data, compared with 59 per cent for the population overall.
Patrick Salyer, chief executive of social login and consumer management technology specialists Gigya, says that allowing sign-in through social media yields better data and a better relationship with customers. “Personalisation depends on access to high-quality and authentic data about customers. If you ask customers for permission to use their data and explain what you are going to collect and why, you will learn more and establish a foundation of loyalty and trust,” he says.
The advantage of superior data, pioneered through supermarket loyalty schemes such as Tesco’s Clubcard in the late-1990s, is the ability to target customers with offers tailored especially for them.
The next phase of the development, for retailers such as Kroger in the United States and Metro of Germany, is targeted offers that arrive on a mobile device as a shopper strolls through the store. This capability to offer a promotion to a consumer at precisely the right moment in the shopping journey is already standard among grocery websites, such as Ocado in the UK and Fresh Direct in the US.
In the cut-throat world of mobile phone network operators, better targeting of offers and marketing can prevent customers defecting. Pakistan’s Ufone at one point had a churn rate of 3 per cent a month, which meant that it had to replace nearly one customer in every 30 monthly just to stand still. It shifted away from conventional marketing campaigns – flyers, TV advertising and so on – in favour of a more targeted and analytical approach. It found that customers who were under-using their pre-pay packages were more likely to leave, and so it developed offers targeted at particular types of user, which increased customer satisfaction scores and reduced churn.
In the insurance industry, Infinity in the US used analysis of fraud cases to reduce the workload of its loss adjusters by weeding out certain low-risk accidents, which cut costs radically and speeded up payments. The return on investment was more or less instant and customers were less agitated by delays in payments.
Such virtuous circles – saving money by using data to give the customer what they want when they want it – will become increasingly common for businesses at the vanguard of unlocking data. But experts say that the key is in asking the right questions – data is a means,
not an end in itself.
Gigya’s Mr Salyer concludes: “Organisations must reject the outdated, and quite frankly careless, notion of asking as many questions and collecting as much data as possible, then sorting through it later.”