We’re all doing it: We’re collecting loads of customer data; we’re determining which of that data matters; and we’re using the most relevant data to improve our services, marketing, and KPIs.

But beyond “just” the data (and the numbers), some of us CMOs are realizing that this data is completely changing our relationship with our customers—or rather, that it is within our power now to make it do so!

The times, clearly, they are ’a-changin! Now that customers are more data savvy, it is critical for all CMOs to ask: How should we present this kind of activity—our data collecting activity—to our customers? How do we want to be perceived? What level of relationship do we want to foster?

At Roojoom, I’ve had the great fortune to work with small innovative start-ups and large Fortune 500 heavy hitters. Based on the insight I’ve gleaned from these projects, I’ve come up with three classifications for one of the most crucial ways a company can control its customers’ perception of its brand: the difference lies in how companies use customer data.

1. The Magicians

No company on Earth is more magical than Disney. At Disneyworld, we wear our magic bracelets and voila: We can cut into long rollercoaster lines hassle-free, we never have to remove our wallets from our pockets, and we never miss a front-row seat at a special show. We know the benefits and we know our every move is being tracked. We don’t understand exactly how Disney does it all, and we don’t care, because we walked through their sparkly gates specifically to reap the benefits of the suspension of reality.

The Magicians are companies that collect and use vast amounts of customer data. They have a deep understanding of their customers’ behavior, but their customers are unaware of the extent their data is being used. These companies like it this way: they try to spin personalization as a magic trick. Disney, Apple, Google, and Facebook are prime examples of Magicians.

 

The Magicians might have some (or all) of the following traits in common:

  1. They do not make it clear to the customer when and what data is being collected.
  2. They purposefully remain vague about exactly how customer data is used.
  3. Their customers may not be aware of how much of their data is being shared/sold to third parties.
  4. Their customers do not have good control over what data is collected and for what purpose.
  5. Customer data is used to improve the product and creative innovative features and services.

Though at first glance these traits may seem like shortcomings, these companies mostly use customer data in a way that legitimately benefits the customer (or, at least, the customer feels they are being benefitted). With Magicians, even if some customers sometimes feel uneasy with their loss of control over sharing data, the benefits of doing so override any shortcomings (for now). Customers feel the sharing and the magic that ensues is okay, as long as it aligns with—and continues to align with—their interests.

Case(s) in point: Remember when Facebook users felt uneasy when they learned that Facebook was importing their WhatsApp contacts in order to recommend new friends? Instead of making this practice transparent to the customer, Facebook enjoyed the “magical awe” they had created. Google “wows” the average Internet user too, by magically showing the search result they was looking for. Jane Doe types in “Where was…” and Google autofills: “Sasha last night?” Jane Doe just finished live streaming Barack Obama’s farewell address, but, “Hey, how did Google do that?” And “How does Apple know where I parked my car, even though I never told them that I was driving?”

2. The Good Samaritans

The Good Samaritans provide clear visibility on how, when, and why they use their customer data. Amazon and Netflix, for example, make evident what algorithm was employed to provide personalized product recommendations. There is no magic in their messages to customers: “Because you watched Game of Thrones, you might like…” and “Customers who bought X also purchased Y and Z.”

The Nike+ app collects customer data and immediately presents it back to the customer, together with performance analysis. It is quite clear why The Good Samaritans want my data, and I am eager to feed it to them because I know doing so will make my life easier.

The Good Samaritans show that they care about customer needs before their own. They go beyond the immediate and obvious measures to use customer data responsibly. Rogers Communications, is exemplary here. This Good Samaritan sends customers an SMS the moment they connect to a network overseas to notify them about that country’s calling rates. At that moment, the customer realizes that their location data is being collected and acted upon, but this use of data is perceived to be in the customer’s best interest, as roaming charges can be very expensive. Rogers Communications puts the customer’s interest ahead of their own, they are transparent about the way they are using customer data, and the customer is always free to opt-out of such notifications.

Obviously, despite what it might sound like, earning the Good Samaritan label does not come at the expense of the company and does not only apply to NGOs and non-profits—Amazon, Netflix, and Nike are doing pretty damn well. Good Samaritans are not only forthright about their handling of customer data, they also provide simple controls over data sharing—one way they do this is by encouraging their customers to be visible to one other. When we use Yelp, we see how they use other customers’ reviews and this helps us understand how our own will be used.

Trip Advisor used to be like Yelp, but our perception that they are Good Samaritans is slipping away ever since they started trying to sell us stuff. Customers were used to a certain relationship with Trip Advisor and now they worry that their data may be used to manipulate search results and the kinds of reviews they see in order to grow sales.

And AirBnB, though it encourages a “Yelp-like transparency,” is somewhat sketchy in many customers’ eyes, simply because we wonder: “What happens to me if I leave a bad review? Will this data be used against me when I go to rent my next vacation home?”

3.The Evil Shadows

Yup, they’re out there—The Evil Shadows! With these companies, customers are completely unaware that certain data is being collected and used. These brands keep their personalization efforts and activities very secretive, or completely hidden—mainly because they consider their customers “just a number” to profit off of as quickly as possible.

Customers of Evil Shadows often only discover how their data is being used when a PR crisis occurs. Of course, the company’s instinct in these cases is to downplay or hide the problem, which only makes it worse. Think: Yahoo! “Oh, we lost a billion passwords, but don’t you fret!” Right? Next point.

The Evil Shadows see customer data as an asset that can be traded and sold like any other asset. Customers are often forced or tricked into sharing personal data that can be sold to third parties. Companies that assume Evil Shadow status are typically operating in a saturated market and have peaked in terms of growth, so instead of choosing to reinvent themselves or create a new product line, they simply try to max out customer value in any way they can. If they suck, too bad! They know they’ll lose and gain the same number of customers every month, and that they’re essentially playing the game of “This quarter, our company may suck slightly less than the only other three options. Winning!”

Casinos are the ultimate Evil Shadows. They know a whole lot about their customers, but they use that data obsessively to try and get them hooked on even more losing streaks. Some casinos find out what line of credit is available to the customer, and relentlessly max it out.  They will even arrange for a home equity line for “VIP” gamers.

Evil Shadows are not really all EVIL. But their personalization efforts are perceived in a negative way and customer trust is low.

Take Verizon, for example. Verizon knows a whole lot about their customers: address, preferred television shows and websites, what hours they are at home, and where they travel to. Now with Verizon taking over many of the world’s content sites, from AOL to Yahoo, what might their mission be? Hint: It is not to become a Magician or a Good Samaritan. Verizon is reportedly looking to offer new advertising services that will use a customer’s data primarily to target them with relevant ads on sites they visit. (Yes, Google uses customer data for targeting purpose too, but in return they provide many free services, such as search and email.)

So, what do The Evil Shadows have in common?

  1. They collect data that is not directly related to their offering.
  2. They are secretive about how they use the data.
  3. They sell the data to others or make it available to partners.
  4. They are perceived as wanting to use data in order to take advantage of the customer.
  5. They think they have the right to collect customer data and see it as a free resource.
  6. They make few or no attempts to pay-back by using the data to better their service.

How companies use personalization is not the largest influencer on profit and growth. However, it is quite clear that customer loyalty, evangelism, and value are increasingly related to brand perception—and customers now and in the near future may ask more of us when it comes to our handling of their personal information.

 

It bears repeating: As wise as many consumers have become to data sharing, collection, and use, personalization can still seem scary, creepy, or even harmful. Target infamously dropped the ball years back when it accidentally snailmailed a pregnant teenage girl coupons for all things maternity—and her father intercepted the envelope. Whatever family drama may or may not have followed, the Target error led to dozens of articles outlining exactly how the error occurred—bottom line: carelessness with data!

Such blunders can lead to massive costs (for example, PR has to scramble to either cover things up, or apologize profusely). Data blunders can lead to potential irrevocable losses. These risks alone provide a strong incentive for businesses to keep their personalization efforts in the dark. But on the other hand, gaining a customer’s trust by disclosing how one collects and uses their data can be beneficial in terms of increasing loyalty and understanding, especially if and when things do go wrong.

How a company or brand chooses to present itself in terms of customer data transparency is no simple task, but it does seem to be mostly in the brand’s control. Given all the factors we marketers cannot control, don’t these three models seem worth discussing? Have you discussed them with your teams yet?

 

 

  • Mengying Chen

    “They collect data that is not directly related to their offering.”-interesting but not surprising. So, what rule would it be to decide which irrelevant data to be collected then?

    • Daniel Glickman

      That would depend entirely on context. A credit card provider that collects info about your annual income may use it for qualifying prospects or may use it to sell to data aggregators. The latter would be an example of data that is not directly related to their offering.
      Therefore creating a rule is difficult.
      Remember, my article also relates to perception: It is how customers PERCEIVE the intent of the data collection that might count here more than the reality.

      • Mengying Chen

        i see. I think nowadays customers perception has been changed from a negative to a positive way. Why I am saying that is because more and more times customers have received benefits provided and better customer experience has been generated dramatically than before. The way of providing how much you understand your customer is critical.