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Reshaping Customer Engagement & Data Management Strategies: A necessity in the post-GDPR era

When the European Union ushers in General Data Protection Regulation (GDPR) on 25 May 2018, it will represent one of the most critical developments and the biggest shake-up in the use and management of customer data over a decade. This has been specifically designed to ‘harmonize’ consumer rights across the continent and will consecrate stringent rules that put consumers in control of their own data as well as bolstering their rights around how data is collected. The eye-watering penalization that the organizations will invite for non-compliance has caught the imagination of the corporate world. Businesses that are in breach of the GDPR regulations will attract fines of up to 4% of global turnover or €20 million – whichever is greater – and it doesn’t stop there. There is also the case of potential consumer litigations that will come their way if negligence and blatant incompetence are suspected. Please click here to read a summary of the GDPR requirements, deadlines and other facts.

All of these changes and the high penalties are aimed at attenuating the use of personal information by business organizations. Wherever the businesses consider this data as a necessary ingredient, they should use tools and techniques to reduce the risk of misuse or breach of the data. These include the use of pseudonymisation, encryption and/or anonymization. All of these techniques are cited and encouraged in the GDPR.

In today's world of ever-increasing personalization, with consumers expecting the level of service where each and every one is recognized as individuals, it is startling how numerous brands and companies are still inept at adequately overseeing and corroborating the accuracy of their most important asset – the customer information they hold. I’m not even hinting at the advanced analytics of a customer’s past interactions with the brand – I’m referring to basic contact data.

The data to work with will be less

The existing customers may not be correctly approved for receiving communications from the business organizations. This goes on to suggest that the companies may have to secure opt-in consent from the customers in their books by enforcing repermissioning strategies. At the same time, GDPR also specifies that businesses can maintain lawful processing of personal data from their existing databases if they can demonstrate ‘legitimate interest’. According to Recital 47 of the GDPR, processing of personal data for direct marketing purposes may be regarded as a legitimate interest. The aforementioned represents an extenuating situation for marketers who'll be allowed to interact with their customers where an existing relationship has been established. Consequently, companies that are found lacking to move ahead to enhance the quality of their customer data can look forward to a shortage in permissioned, usable customer data when the GDPR kicks in.

Using third-party data for marketing will be more challenging

While GDPR treats engagement with existing customers as a legitimate interest, there are no such interests when using third-party data. Companies must ensure GDPR compliance when using any third-party data. There is no doubt that, the volume of third-party data that companies will have access to, will go down as a result of the GDPR. But on the bright side, whatever data that remains from a third party perspective will be of superior quality and will provide more value to the businesses. With third-party data suppliers coming under heightened scrutiny from their clients, the onus lies with the business organizations to engage with reputable, trustworthy vendors with the requisite processes, technologies, and systems in place that ensures GDPR compliance. Marketers will have to adopt a more proactive, personalized approach where they express the value exchange involved and the advantages of listening to them, rather than bombarding customers with hundreds of emails and other communication methods and hoping stickiness with a few.

The age-old practice of customer retention will become more decisive

The GDPR will fortify the strategic emphasis of building firm, sustainable customer relationships. The regulation will demand organizations to assess whether the value exchange they offer their customers is balanced more in favor of the business or the customer, and how they will convey their claim for acquiring customer data. And since GDPR asks of the companies to ensure that, it is as easy to withdraw consent as it is to give it, the responsibility lies with them to not only earn this consent in the first place but also to maintain a high level of trust on a continuous basis. While the regulation acts a catalyst for organizations to put greater attention on developing customer relationships, it also provides other reasons why this is beneficial for the businesses. Once you develop a relationship with the customer and communicate accurately as well as give them the opportunity to opt-out each time you engage with them, there is a greater chance that the customer will come back to you with more business. There is always higher value in developing a customer that you have already than acquiring a new one. 

Substandard practices will go down and marketing performance should improve

With the Regulation making sure the prevalence of better data management, all kinds of marketing actions by the businesses should perform better for them. Companies will recognize the need to focus on the expensive problem of poor-quality data and make sure that they utilize the customer data in hand in a cleverer manner. While there will be a potential case of a lower volume of data to use, there is higher certainty that the available data will be much superior in quality. What's more, adopting a higher-quality but lesser volumes of data equate to cost savings for marketing function of the organization. Above all, it is also important to acknowledge the benefits of being an organization with a more transparent and ethical marketing function, something that precipitates trust and improves the rates of customer retention. Forward-looking companies are evaluating ideas on how they can utilize this process of securing GDPR compliance to their advantage for expansive enhancements in customer engagement and marketing. GDPR will serve as a catalyst for the businesses to re-engage with customers, amass consent, and analyze and overhaul data collection, cleansing, and management processes.Compliance with GDPR is mere table stakes! The eventual winners are going to be those that double down on the data activities being initiated to achieve operational excellence and improve customer outreach.

With the enforcement of the GDPR fast approaching, the long-standing issue of data quality has now become a subject of higher magnitude. Companies are now being compelled to confront their data quality challenges head-on, with hefty financial penalties looming for those that are not compliant with the regulation deadline. Having said that, the smarter businesses will see the GDPR as an ideal situation to refine and enhance their wider marketing and customer engagement efforts. They would want to go beyond compliance – tackle the data quality challenges once and for all, and become a flag bearer of customer engagement and marketing excellence in the post-GDPR era.

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Sayed Ali Sharafudeen

Sayed Ali Sharafudeen

Senior Manager, Customer Analytics

Genpact

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17 Nov

Location

Bangalore

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