3 reasons we're missing the true cost of tracking personal data

Businesses today are collecting more and more of our personal data. But is it a losing game?

It’s been going on for a while now, a gold rush to hoover up as much data as possible from customers. And it’s happening across every conceivable digital touchpoint - every scroll, tap or stroke of the keyboard. Every transaction. Every message. Every connection.?

The story goes that it’s all in service of understanding the customer better. More personalisation. Improved customer experiences. Reduced fraud.?

Really, it’s to improve businesses performance: more revenue, at lower cost. Few can quibble with that - on the surface, it makes complete business sense. But there’s an irony that most can’t see: once the business gathers up all our data, it’s?just the start?of more cost and waste inside the organisation, and potentially large negative ones outside it.

Here are just three:

1. Making sense of the data

There’s a huge amount of work (and $) to make sense of customer data once it’s collected.

Often to create a ‘single view of the customer’. Vast data processing systems across different departments, spending $MM to combine datasets, to slice and dice, to build ‘rich ‘customer insights’.

But what happens with all those insights??

It’s normally used to ‘cross-sell’ and ‘up-sell’, hoping to reach the right customers at the right time. To push out smarter and more relevant offers, hoping that some will stick.?

Yet online customer conversion is still only about 2-3%. That’s a pretty terrible return, and yet is normalised across the digital advertising industry. Facebook, the world’s leading advertising engine, gets a mighty 9-10% (and is why they are a money-printing machine, accruing much of the marketing dollars from CMOs).

But when you can’t increase conversion further, what do you do? You turn to volume: attempt to reach more people, more eyeballs, using more insights, in more ways and more places. More ‘spraying and praying.’

For sure, with digital tracking we get better attribution of customer journeys and data sources. But what’s the real return on that investment when you add up all the costs to make sense of the data?

2. Handling the data

Then there’s all the costs of handling the data in these various systems. The cleaning, insuring, storing and securing. The updating, the synthesising, the analysing. And of course, unless the data is constantly updated, validated, preened and polished, it simply decays.?

CRM and customer data systems are actually where data goes to die.?

These costs are rarely captured and compiled as part of the businesses, much less understood.

3. The intangible ‘second-order’ impacts on trust and brand

Finally, few recognise the sizeable but usually hidden impacts on customer trust.

When businesses ask for too much data. Or when they use dark patterns to collect it anyway. Or when (not if) the business gets hacked. There’s plenty of evidence now that brands take a huge market hit if they are exposed to a data breach.

Who is accounting for these further costs? Who is adding them to the business case to collect all this data in order to generate growth??

My guess is there isn’t one.?

Because different departments are doing different things with customer data, these overheads, these costs are missed, and likely ignored.?

Here’s the point:?collecting personal data like this is a losing game.

It’s because the only real 360-degree view of the customer *is the customer*.?

A true view of the customer can’t be amassed by anyone else, because - by definition - the business view has to be much narrower, more constrained, and can’t collect everything it could want to create these ‘rich insights’ (and won’t get the consent for that anyway).

But there’s another approach coming. A smarter way.?

A way which?engages?customers, rather than tracking them. A way which?builds?trust, rather than eroding it.

What if businesses could request data directly from customers? What if companies could ask for what they need, and get verified, clean and consented data immediately? And what if this was cheaper, faster, and more trusted? Well, that would be quite something.?

No more inference. No more guessing. Higher conversion with lower costs. And most importantly, avoiding the?hidden?costs of collecting personal data, like those above.

It’s an exciting future, and it’s coming soon. You can learn more about this and much more at www.customerfutures.com.