By now, data-driven marketers have lost significant amounts of beauty sleep over the EU’s General Data Protection Regulation (GDPR), which goes into effect on May 25.
Though it originates in Europe, the new regulation — which gives customers full control over how their data is used — applies to any company anywhere that possesses personal data of European Union citizens. The price for noncompliance is steep: Companies can face fines of up to 4 percent of their annual revenue, according to Article 83 of the regulation.
It should be no surprise that brands are scrambling like squirrels in a nut factory to ensure they are GDPR-compliant. But while it is important to take steps to comply with the new law, it’s also important for marketers to get over their panic and focus on the opportunity that the GDPR presents: It is an incentive for brands to take a more strategic approach to how they aggregate and utilize customer data. In the end, this is a good thing for brands and consumers alike for several reasons.
Personalization Is the Heart of the Matter
Let’s start with the basics. Under GDPR, brands need to obtain explicit consent from customers before they can use customer data for any marketing activity (Article 7). But if you plan to ask people for permission to use their data, you should show them that they will get some value out of your use of their data. How would your boss respond if you asked her for ATM PIN number? Customers would likely respond the same way if you asked for permission to use their data without demonstrating that you would do anything worthwhile with it.
But what does this consent actually mean? For consumers, it means they are opting into receiving brand communications that they want. For marketers, it means they can use customer data to tailor customer experience touchpoints down to the individual level. If a certain individual provides consent to receive email offers but does not want to receive mailers, then a brand’s marketers know exactly which channels are most likely to create value for that customer, and what types of communication generate value for the brand.
When brands comply with the GDPR, they will be able to design customer experiences based on individual preferences rather than by broad segmentation. Customers and brands will both get what they want. Win-win.
If the GDPR proves anything, it’s that customers are no longer willing to give companies a free ride on their data. They expect highly tailored and relevant experiences that deliver value. Complying with the GDPR involves a high level of personalization in the way each customer’s data is handled, and brands should apply that level of personalization to a their entire customer bases. The result is a more strategic approach to customer engagement.
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Focus on the ‘Right’ Data
For several years, marketers have been hoarding data the way leprechauns hoard gold, and that mountain of data is one of the biggest roadblocks to a truly individualized customer experience. In the quest to create more personalized campaigns, marketers struggle to balance the quantity and quality of their data, and as they race to collect more and more data, they risk disappointing their customers when they don’t use that data to build trust — or, even worse, when they violate trust by collecting sensitive personal data without a plan to protect it. GDPR flips the switch. In effect, it puts an emphasis on data quality by curbing efforts to blindly scrounge for data and accumulate as much customer information as possible.
With a more focused approach to data collection, marketers eliminate the risk of getting customers trapped in an infinite loop of information that is completely irrelevant to them. Instead, a disciplined data-collection effort adds value and personalization for the brand and will enhance credibility over the long haul.
However, value-generating personalized experiences don’t just rely on intelligent data collection; they require a new level of customer empathy. After all, when deciding how to personalize customer experiences, brands need to ensure that their strategies don’t give customers the creeps. Customers trust brands with their personal information, and it is the brand’s responsibility to use it in an effective way that adds value to the customers’ experiences. Brands shouldn’t ask for data that can’t be used and, alternatively, if brands can prove that they can use specific customer information to deliver a more valuable experience, they will increase engagement and trust and thereby foster a willingness among consumers to offer more data in return. That is the pot of gold at the end of the rainbow.
Related Article: How Will the GDPR Impact Third-Party Lead Generation?
The Bright Side of Regulations
At the end of the day, marketers should see the GDPR compliance as a means of improving the customer experience. The regulation presents companies with an opportunity to give customers full autonomy over their interactions with brands, thereby fostering an environment of mutual respect. Any brand that does not play by the rules will not only face fines (brought down by a scary new regulatory board) but also risk losing the business of customers who are annoyed because their data and preferences are not being respected.
The GDPR will force marketers away from the “capture it all now, figure it out later” mentality that has dominated data collection for the past five years. Now the mission will be to provide the most valuable experience possible using the right data.
Most consumers are going to allow their data to be used by brands they trust; that makes it critical to earn that trust at every stage of the customer journey. GDPR compliance will be a pain in the neck for brands, but it could also be the kick in the butt marketers need to fine-tune their approach to the customer experience.
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