Don’t seek to know everything about your customer

I hate customer service surveys. Hotels and retailers spend millions trying to speed our checkout or purchase by helping us avoid having to wait around. Then they undo all of that good work by pestering us with customer service surveys which take longer than any queue that they’ve worked so hard to remove!

Perhaps I’d be less grumpy if all of the data that organisations spend so much time, much of it ours, collecting was actually applied in a way that provided tangible value. The reality is that most customer data simply goes to waste (I argue this in terms of “decision entropy” in chapter 6 of my book, Information-Driven Business).

Customer data is expensive

Many years ago, I interviewed a large bank about their data warehouse. It was the 1990s and the era of large databases was just starting to arrive. The bank had achieved an impressive feat of engineering by building a huge repository of customer data, although they admitted it had cost a phenomenal sum of money to build.

The project was a huge technical success overcoming so many of the performance hurdles that plagued large databases of the time. It was only in the last few minutes of the interview that the real issue started to emerge. The data warehouse investment was in vain, the products that they were passionate about taking to their customers were deliberately generic and there was little room for customisation. Intimate customer data was of little use in such an environment.

Customer data can be really useful but it comes at a cost. There is the huge expense of maintaining the data and there is the good will that you draw upon in order to collect it. Perhaps most importantly, processes to identify a customer and manage the relationship add friction to almost every transaction.

Imagine that you own a clothing or electrical goods store. From your vantage point behind the counter you see a customer run up to you with cash in one hand and a product in the other. They look like they’re in a hurry and thrust the cash at you. Do you a) take the cash and thank them; or b) ask them to stop before they pay and register for your loyalty programme often including a username and password? It’s obvious you should go option a, yet so many retailers go with option b. At least the online businesses have the excuse that they can’t see the look of urgency and frustration in their customers’ eyes, it is impossible to fathom why so many bricks-and-mortar stores make the same mistake!

Commoditised relationships aren’t bad

Many people argue that Apple stores are close to best practice when it comes to retail, yet for most of the customer interaction the store staff member doesn’t know anything about the individual’s identity. It is not until the point of purchase that they actually access any purchase history. The lesson is that if the service is commoditised it is better to avoid cluttering the process with extraneous information.

Arguably the success of discount air travel has been the standardisation of the experience. Those who spend much of their lives emulating the movie Up in the Air want to be recognised. For the rest of the population, who just want to get to their destination at the lowest price possible while keeping a small amount of comfort and staying safe, a commoditised service is ideal. Given the product is not customised there is little need to know much about the individual customers. Aggregate data for demand forecasting can often be gained in more efficient ways including third party sources.

Do more with less

Online and in person, organisations are collecting more data than ever about their customers. Many of these organisations would do better to focus on a few items of data and build true relationships by understanding everything they can from these small number of key data elements. I’ve previously argued for the use of a magic 150 or “Dunbar’s number” (see The rule of 150 applied to data). If they did this, not only would they be more effective in their use of their data, they could also be more transparent about what data they collect and the purposes to which they put it.

People increasingly have a view of the value of their information and they often end-up resenting its misuse. Perhaps, the only thing worse than misusing it is not using it at all. There is so much information that is collected that then causes resentment when the customer doesn’t get the obvious benefit that should have been derived. Nothing frustrates people more than having to tell their providers things that are obvious from the information that they have already been asked for, such their interests, family relationships or location.

Organisations that don’t heed this will face a backlash as people seek to regain control of their own information (see You should own your own data).

Customers value simplicity

In this age of complexity, customers are often willing to trade convenience for simplicity. Many people are perfectly happy to be a guest at the sites they use infrequently, even though they have to re-enter their details each time, rather than having to remember yet another login. They like these relationships to be cheerfully transactional and want their service providers to respect them regardless.

The future is not just more data, it is more tailored data with less creepy insight and a greater focus on a few meaningful relationships.

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About infodrivenbusiness

Robert Hillard is the author of Information-Driven Business, available through John Wiley & Sons. Find out more at www.infodrivenbusiness.com. Robert was an original founder of MIKE2.0 which provides a standard approach for Information and Data Management projects. He has held international consulting leadership roles and provided advice to government and private sector clients around the world. He is a Partner with Deloitte with more than twenty years experience in the discipline, focusing on standardised approaches to Information Management including being one of the first to use XBRL in government regulation and the promotion of information as a business asset rather than a technology problem. Find out more at www.infodrivenbusiness.com. The opinions expressed in this blog are entirely his own.
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