The recent outrage over Cambridge Analytica’s use of Facebook data has put data-driven marketing teams in the hot seat. Many people are questioning whether the way marketers and researchers harness and analyze consumer data is ethical and beneficial for consumers. The call for more transparency in how customer data is collected, used and sold has never been louder.
Marketing leaders should pay attention. While it’s too early to know the exact repercussions of this scandal for the marketing industry, leaders should take this time now to re-examine their practices and clean up their act. More than ever, consumers expect action—not just from governments, Cambridge Analytica and Facebook, but also from the marketing industry.
Our actions as an industry today will determine the quality of data and insight we get from our customers and our ability to make insight-driven business decisions in the future.
A wake-up call for data-driven marketers
While many people were shocked when reports about Cambridge Analytica’s “breach” first came out, most marketers were not. Reaction from the industry has been a collective shrug.
The deafening silence isn’t surprising: as a MarketingWeek article points out, most marketers have no option but to keep quiet—because the practices that Cambridge Analytica has gotten in trouble for are common practices in the industry.
To be fair, marketers began employing increasingly sophisticated ways of collecting customer data because business reality demanded it. As technology rapidly changed, so did customer expectations. To deliver what customers wanted, companies committed to becoming insight-driven—a strategy that required the use of customer data.
"Marketing has gotten used to a self-centered approach to data collection, often failing to consider what’s best for customers in the process."
But in their pursuit of more data, marketers have pushed the boundaries of what’s acceptable. As an industry, marketing has gotten used to a self-centered approach to data collection, often failing to consider what’s best for customers in the process. The Cambridge Analytica scandal is a reminder that this widely-adopted approach is ripe for disruption.
Consumers want—and deserve—more
Even before the Cambridge Analytica scandal broke out, there were already clear signs that customers wanted a more mutually-beneficial approach to the way businesses gather data. A 2017 study from SAP SE showed a majority of consumers expected brands to be more transparent in how data was used. A separate study released in 2016 showed that young consumers in particular wanted more control over how brands used customer data.
Our own research shows that not only do customers want transparency when it comes to data sharing, they expect value out of the exchange. Our study, which we shared this week, shows that 66% of consumers would feel more comfortable sharing their personal information if brands proactively told them how it would be used.
Along with more transparency, consumers expect that sharing their personal information will add value to their overall experience as a customer: 41% of consumers we engaged with said they’re willing to share personal information to get more personalized service, offers and for faster issue resolution.
How you get customer data also matters. Only 17% of respondents are comfortable with brands using information acquired indirectly through third parties—the approach that Cambridge Analytica used that is now under intense public scrutiny. In contrast, we found that 80% of consumers are comfortable with brands using information they’ve shared directly to better personalize messages.
A relationship-based approach to data-gathering
There has never been a better time to adopt a mindset shift—to move from a “data extraction” mentality to one that considers what customers want.
Alexandra Samuel, a technology researcher, a former colleague of ours here at Vision Critical and a special guest in our webinar, recently wrote a piece for The Globe and Mail about Cambridge Analytica, and she makes many great points. According to her, smart businesses recognize that “real insight comes from getting to know your customers, which means building a continuing relationship with people who will share their feedback over time.”
Alex goes on to argue that treating customer data with respect makes business sense because as you retain your access to that data, you also preserve the ability to make better decisions. “You're turning data into insights that will help you offer customers the specific products, services, information and deals they want.”
"Smart businesses recognize a deeper truth: Customer insight is worth more than customer data. And real insight comes from getting to know your customers, which means building a continuing relationship with people who will share their feedback over time."
- Alexandra Samuel, technology writer, researcher and speaker, in The Globe and Mail
I echo Alex’s perspective. In fact, at Vision Critical, one of the biggest lessons we’ve learned working with more that 700 global brands for almost 20 years is that prioritizing customers is an effective strategy that benefits both businesses and consumers. We call it a relationship-based approach—and it is at the core of our customer intelligence platform.
The traditional way of gathering data is often an impersonal process that keeps customers in the dark about how their data and feedback is used. In contrast, adopting the relationship-based approach means engaging only with customers who explicitly agreed to be part of the process. It’s about turning that feedback into customer intelligence, using that intelligence to deliver more value to customers and being transparent with customers about how their participation helped shape business decisions.
The relationship-based approach to customer intelligence isn’t theoretical. As I discussed in a recent webinar, it’s an approach that delivers quantifiable ROI to many insight-driven businesses.
Change must happen now
The wave of public outcry triggered by Cambridge Analytica is only the beginning. Consumers are increasingly becoming more aware of the value of their own data, and they are becoming more savvy when it comes to controlling what and how they share data with businesses.
Customers, rightly so, are asking important questions. Why should they participate in your surveys? Why should they allow you to track their activities and access their user data? Can I trust your company to keep my data safe? These are fair questions that marketers must contend with. Customers need to see what’s in it for them: they need to see the value of their participation.
"The wave of public outcry triggered by Cambridge Analytica is only the beginning...Ultimately, the marketers who figure out a more customer-centric way of gathering data will create a competitive advantage for their company."
With regulations like the General Data Protection Regulation (GDPR) coming into effect in the European Union in May, brands will need to prove to their customers that not only are they limiting the data they collect, use, and store to what they really need, but also that they are committed to delivering personalized, valuable experiences to customers in exchange for that data and their opinions.
The business world will not—and should not—stop using data to make better decisions. But we have to move to a more authentic and transparent way of doing it with customers. It’s time we slow down, think hard about our actions, and build better, more authentic transparent practices with our customers top of mind.
Ultimately, the marketers who figure out a more customer-centric way of gathering data will create a competitive advantage for their company because they’ll continue to get quality insight and customer feedback. That’s why the time to invest in nurturing customer relationships is now—your ability to make insight-driven decisions depends on it.
To learn more about this scandal's impact on marketing and research, watch our webinar A turning point in data collection.