Any businesses still hedging their bets on the impact of the EU’s General Data Protection Regulation (GDPR) may end up getting caught flat-footed if they don’t have the right strategy in place. According to a recent survey, 82 percent of European consumers will likely take advantage of their new data access rights under GDPR, meaning organizations that are mulling over their readiness strategies need to get ready — and quickly.
The big deal? There is a major blind spot that many businesses may not see coming. In an earlier post, I discussed GDPR risk-readiness and the steps that businesses need to take to ensure they — and their systems — are fully ready to comply when the GDPR goes into effect in May.
But this is just one piece of the upcoming legislation’s impact on businesses. GDPR’s impact goes well beyond the challenge of handling people’s requests for their data — it will have a very real effect on revenue as well.
GDPR Revenue-Readiness and Your Bottom Line
GDPR’s financial repercussions encompass much more than the potential fine of up to €20 million or 4 percent of worldwide annual revenue that comes with failure to comply. The regulation can impact a business’s bottom line in an even more substantial way.
Consider that for more than a decade, the thirst for data-driven decisions has exploded. Today, data is the fuel for customer insight practices and downstream offer personalization. Businesses of all shapes and sizes have established highly proficient practices that dissect and analyze customer data, for the purpose of understanding customers better and influencing customer lifetime value (CLV). Over the years, they have acquired customer data — from third parties, as well as the individual customers themselves — in hopes of getting better insight into each individual’s needs and behaviors in order to deliver a better customer experience, and thereby generate more revenue for the business.
But in the GDPR era, this customer data boom may come to an end. Consumers will be able to contact any company and ask for their data to be deleted. A new reality is about to take hold, one in which businesses will, in all likelihood, have less data to work with than they do today. And with less data, it may be more difficult to come up with personalized customer experiences that help generate revenue. So the looming challenge for businesses will be to find ways drive the same revenue results with less customer data at their fingertips.
To rise to the challenge, businesses will have to get the most out of the customer data they do hold. This will mean leveraging the potential of artificial intelligence to improve the accuracy of their insights. Additionally, businesses will have to activate those insights in more customer touchpoints and interactions than ever before.
GDPR and the New Relevance Imperative
Until now, marketers have regarded marketing offers on a scale ranging from potentially relevant to highly relevant, with degrees of variance in between. This meant that any given offer could hold the opportunity to drive revenue, so companies didn’t hold back when it came to making offers.
With GDPR, this logic gets turned on its head. The GDPR consumer survey mentioned earlier also shows that irrelevant marketing offers or questionable customer interactions bring an organization one step closer to a GDPR-driven complaint. The survey revealed that poor brand experiences are among the top five triggers most likely to spur people to use their GDPR rights and ask companies to delete their data. Poor brand experiences include robocalls for irrelevant products or services, poor customer service, and being contacted by companies too frequently and in intrusive ways.
All interactions that make individuals question why companies are engaging with them in certain ways will only increase the probability of a GDPR-based request for data erasure. What many businesses will come to realize is that in most cases, it will be their own actions that trigger such requests — requests that carry associated costs.
Come May, the businesses that best rise to the challenge will be those that reframe the definition of relevance as it pertains to their customers and put in place new processes to ensure that that they curb potentially irrelevant interactions, including offers and the like. Indeed, in order to protect customer lifetime value in the GDPR era, the best action at any given moment may not be to present an offer, but to do nothing at all.
The Silver Lining
For businesses, relief will come when they realize that, if they devise their strategies right, the technology that they put in place to mitigate their GDPR risks can be used to address revenue-readiness in the GDPR era. Quite literally, the same budget that the business is allocating for vanilla compliance may be used to not just close revenue gaps — but exceed them.