With the EU’s General Data Protection Regulation (GDPR) going into effect this May, companies are scrambling to make any remaining changes needed to meet its guidelines. The regulation, which aims to strengthen and unify data protection regulation within the EU, gives customers control over their personal data and applies to any company that holds or processes personal data of individuals residing within the EU. Failure to comply with GDPR could cost companies up to €20M or 4 percent of annual global turnover.
To avoid steep GDPR fines, many companies are installing new processes and technologies with the hope that such tools will help them revamp the way they handle customer data. In fact, recent research shows that organizations are allocating millions of dollars on technology for GDPR. Still, confusion remains regarding which technologies to implement to ensure compliance, and many companies view the looming regulation deadline purely as a cost avoidance problem.
Rather than viewing GDPR solely as an enormous fine or lost business waiting to happen, companies should consider the regulation a revenue-generating opportunity. When adhered to correctly, GDPR can create a mutually beneficial data exchange between companies and their customers and provide individuals with explicit choice over their preferred customer experiences.
Making the Most of Customer Data
GDPR regulations require companies to obtain explicit consent to use customer data they collect. Additionally, they need to be clear about the purpose for which the customer data will be used. To abide by this mandate, companies need to be well-versed in the different types of data most marketers use to attract new customers, including:
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First-Party Data: Customer and prospect information collected directly from your channels. This data is used to support customer relationship management along the entire customer lifecycle.
Second-Party Data: Somebody else’s first-party data. Often, it’s obtained from trusted partners who are willing to share customer data. From the right partner, second-party data can be a great source of additional prospect data to help acquire new customers.
Third-Party Data: Data Management Providers and Data Service Providers sell third-party data. The benefit of third-party data is the sheer volume of accessible user data; however, competitors can also gain access to this data.
Companies need to remember that the available volume of third-party data may be impacted by GDPR, since customers may choose not to give their data to third-party sources. Second-party data relationships will remain important, however, it’s worth noting that companies will need to explain to their customers which partners they intend to share their data with (and for what purpose), so advanced data management and security capabilities may be necessary. First-party data, then, will be a prime source of attainable, affordable customer intelligence once GDPR goes into effect. Companies should therefore integrate primarily first-party data into each customer interaction to derive maximum value within the boundaries of GDPR compliance.
Centralization is Key
To approach GDPR as a revenue-generating opportunity, companies need to start centralizing all of their customer data in one location and build holistic views of every individual customer. This type of granularity will impact how effectively companies can proactively manage their customer relationships, so it’s important to keep this information complete, accurate and up-to-date by incorporating machine learning and prescriptive analytics technologies.
Also, by having your customer data in one location, customer consent is easily extractable and evidenced. For example, marketers can quickly reference how and when a specific customer’s consent was obtained, and for how long the consent is applicable. And when a customer decides they do not want to maintain consent for a particular activity, marketers will be able to easily erase that customer data from one location.
The Customer Experience Opportunity
GDPR has introduced new operational and technological challenges for companies across the globe, but the underlying reason for the regulation shouldn’t be forgotten: to give customers better control over their personal data privacy. If companies can stop viewing GDPR as an expensive burden and instead use it as incentive to productively leverage their existing customer data, both businesses and individuals stand to benefit.
For customers, GDPR creates a legal framework for them to share their data, offering them a new level of protection and transparency that did not exist previously. Customers know exactly how and why their data will be used, since they have the right to give or reject consent before that information can be used. As a result, customers may be more likely or open to sharing their information since they have more autonomy over its use and will be fully protected. In turn, with more focused data available, brands become more knowledgeable about each customer and can therefore create more relevant interactions and offers.
Ultimately, since the cost of ignoring GDPR is too high – between fines, and the loss of customers who do not feel their data privacy is respected – brands are forced to reevaluate the way they handle customer data, and to install new processes and technologies enabling the customer’s right to “own” their data. This is a good thing, as brands and customers will be able to, in essence, collaborate on personalized interactions based on what the customer wants. The result is well-timed and relevant customer connections that reinforce customers’ trust in the brand and allow companies to optimize its customer engagement strategy, entirely in the spirit, but far beyond GDPR compliance.
GDPR will see companies treat their customers with renewed respect by providing them with the explicit choice over the customer experiences they want to partake in. Compounded with the predicted decline in availability of third-party data, companies will need to refocus on building and nurturing long-term customer relationships and make customer centricity their ultimate goal. By centralizing customer data and truly listening to customer preference, brands can generate long-term loyalty and drive their bottom line by providing customers with more personal, engaging experiences — all while complying with GDPR.