Customer experience management (CXM) begins with customer data. Ultimately, it also ends there. While CXM can gather insights from consumer data garnered around individual behaviors online, if the consumer is not prepared to provide certain data voluntarily, the picture is incomplete. A recent report by Forrester shows that acquiring that data is increasingly problematic.

The report, entitled Personal Identity Management Success Starts With Customer Understanding, shows what many suspect: Consumers, or customers, are increasingly unwilling to give out certain kinds of information to online sites, and that some of that information could be crucial in understanding what your clients are thinking.

Yes, there are tools that can offer profiles of your customers -- and we saw last week in our Customer Experience Tweet Jam that analytics is considered key -- but technologies like analytics are not everything. The Forrester report looked at how customers are willing -- or not, as the case may be -- to provide information.

Data, Privacy, Breaches

The crux of the report is that, with all the coverage of high-profile data breaches and the Federal Trade Commission rulings that hold Facebook, Google, and Twitter accountable to strict privacy guidelines, customer attitudes to privacy and personal data sharing is changing.

Written by Fatemeh Khatibloo and based on Forrester’s Consumer Technographics, it shows that the way consumers view and protect data is dependent on consumer age and the type of personal data involved. The result is a paradigm of consumer behavior where no one type of analysis fits all.

The information for Forrester’s Consumer Technographics comes from a survey of 37,350 US and Canadian online adults between the ages of 18 and 88 and was carried out in August 2011.

Forrester says that, after taking numerous variables into account, it is 95% certain that the data gives a clear picture of the entire North American online population within that age group with a precision that is statistically accurate to within 0.51%.

In other words, it’s just about certain that the picture it has drawn paints the North American population in general. And if this is complicated, imagine the difficulty for global CXM professionals that are trying to analyze worldwide audiences.

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Personal Data Viewpoints

The first thing the Forrester report underlines that is that consumers look at different sets of personal data in different ways, and as a result, CXM professionals should do so too. There are four identified sets of personal data.

  • Individual identity data
  • Behavioral data
  • Derived data
  • Self-Identified data

Asked about the understanding and protection of these sets of data as well as its collection, sharing and use of this data by companies, it is clear that consumers have different attitudes to all of the different sets.

For example, it seems that consumers are considerably less concerned about access to social profile data than they are about access to credit card numbers. There are two implications from this:

1.  Consumers have shown themselves to be 24% more likely to be concerned about companies accessing their identity data than they are about them accessing their behavioral data. Companies, Forrester says, should as a result rethink the kind of data they collect from individuals, and, more important, how they present those findings to their customers. It adds that, as most companies collect more data than they need, they need to look at how that data is captured and refine it to capture only the information that is relevant and inoffensive.

The survey shows that, as older consumers -- those in the 65+-year-old bracket -- are less likely to interact with social sites, it would be better for companies to interact with them using traditional media.

2.  In the age group below -- those between the ages of 55 and 64 -- there is considerably more concern about access to the kind of behavioral data that is available through the use of social sites. There is also a much higher level of concern in this group about access to personal identity information, again a result of their increased likelihood to interact with social sites.

Personal Data Blockers

One of the technologies that are emerging at the moment that will have considerable impact on this is the personal data blockers (PDLs), which will enable consumers to decide what data they want to share with companies and what data they prefer to keep secret.

The development of PDLs is based on the belief that consumers will be willing to share information based on incentives offered by the company prospecting the clients in question.

The significance of these elements was assessed by Forrester, which questioned the survey participants about the value of cash rewards, loyalty points and customer experience. The results showed that:

1. Data For Cash

Younger consumers in the 18-34-year-old age bracket are considerably more willing to share personal data in return for discounts or exclusive offers. Less than a quarter of consumers over the age of 55 were willing to do the same, and when they do, they will do it for cash rewards (35%) and loyalty points (24%) rather than discounts.

2. Sharing Data, Forced Interaction

Unsurprisingly, consumers in all age groups preferred to share their data for some form of reward rather than be forced to interact with the company online. Even those willing to share data want to keep control of how they share that data.

While Forrester says that  consumers should be encouraged to “like," “follow” or “retweet,” forcing them do so for loyalty or discounts will only result in negative sentiments.

Privacy, Policy Statements

It also appears that consumers are looking to privacy and policy statements in a way that they never did before. There was, Forrester says, a significant spike over 2008 in the number of consumers who opted out of transactions after finding something in the statement that they didn’t agree with. It found that:

  • Across the board, 6% more individuals than three years ago opted out of a transaction after accessing the privacy elements. The older the consumer gets, the more pronounced is the opt-out, with 25% of all over 55s opting out after reading the privacy statements.
  • Younger consumers under the age of 24 appear to be a little bit more forgiving than their older counterparts, although less so than they were three years ago. Forrester said it is too early to assess whether this trend will continue, but advises companies to keep it in mind.

The clear conclusion, Forrester says, is that companies need to revisit their privacy policies and that even those that existed three years ago will not be applicable in the future.

Sharing, Relevancy

From this, Forrester concludes that, while there appears to be a contradiction between consumers' lack of willingness to share information with companies online, and their demand for “relevancy," the fault lies with the marketers rather than the consumer for two reasons:

  • Companies have failed to adequately explain their policies on privacy and data use.
  • Companies have failed to live up to the promise of “right offer, right time” personalization.

On the basis of this, the report offers three recommendations:

End Segmentation

Companies need to stop thinking in terms of market segments and think more about personalization. Companies need to discover what motivates individual customers rather than try to push everyone into the same basket. This needs to be written into all CXM strategies, from contact governance, to client interaction, to rewards and loyalty schemes.

Revisit Privacy Policies

Badly formulated privacy statements, or statements that are not relevant to current practice, urgently need to be revised, as failure to do so will result in lost revenues. It needs to developed around companies' core customer base, but also stress-tested against a wider audience.

Data Capture

Age came out of the research as the key consideration in data capture policies. Data needs and sharing habits are extremely variable according to age. Companies' communication methods should be built..