Grace Russell, Marketing Manager, Celerity
As the physical and digital worlds become ever more intertwined through the Internet of Things (IOT), consumers are becoming more aware of their data. In particular, it’s commercial value to brands we engage with.
Within any type of conscious consumerism, be that eco-conscious, health-conscious or socially-conscious consumerism, transparency in how brands interact/ serve us is of the upmost importance. It’s a lack of transparency that fuels our sudden consciousness.
When it comes to data, the same process applies as most disasters/ annoyances that occur due to our data, such as data breaches and spam advertising, drive our desire to understand: ‘how are they using my data?’; ‘how much of my data do they have?’; ‘where are they storing it?’; ‘who are they selling it on to?’.
However, being a data-conscious consumer isn’t just about understanding data security or privacy, but an awareness of what is expected in exchange for personal data. Inaccurate and evasive marketing and advertising has led to three different types of data-conscious consumers, and the Direct Marketing Association (DMA), has defined these three groups: Data Unconcerned, Data Pragmatists and Data Fundamentalists.
Data unconcerned: These customers are generally disinterested in how their data is used. They will usually hand over their data easily and, as a result, end up on a lot of subscriber lists. According to the DMA, these customers make up around 25% of the population.It can appear great to a brand that these consumers want to hand over vital data, however this group is less likely to be affected by re-marketing, limiting any cross-sell/ up-sell or purchase acceleration opportunities.
Data pragmatists: These customers are willing to hand over their data, but only if they can see a benefit in doing so (e.g. a personalised discount or product recommendations), we call this a ‘value exchange’. Per the DMA, these customers make up 50% of the population. These customers may appear annoying for marketers because they demand a certain level of personalised, convenient services, but unlike the group above if you deliver the value exchange promised there can be huge opportunities for cross-sell and up-sell, as well as long term advocacy.
Data fundamentalists: These customers are tough nuts to crack – they’re ardent about protecting their data and are unlikely to share it, no matter how you tempt them. The DMA research suggests this group makes up 25% of the population. This group of consumers cause further challenges too, as they may input incorrect data to avoid the exchange and still get the product/ service. In a data-driven world this can be worrisome. As a marketer you may conclude that your main demographic are 25-year old females, when in fact it’s made up of 45+ year old men.
As time goes on with maybe data breaches continuing and the dream of personalised real-time experiences still not advancing, these numbers could change. But, at the moment, three quarters of the population are still open to personalised, data-driven marketing communications. So, if you can make your offering compelling enough, you’ve got a good chance of securing more sales for your company.
Here are three ways you can start to deliver a promising value exchange for your customer’s data:
- Use preference data
Preference centres are a great way of improving relevancy (with the ultimate aim of improving engagement). In practice, this means using data that a customer has already given about their different preferences, and putting it to good use. If a brand starts providing hyper-relevant information and offers, the idea is that consumers will interact with your platform more and might even switch back on their push notifications (if they’ve turned them off).
One company that does this well is Thread, a clothing manufacturer that asks customers what their favourite types of clothing, colours and fabrics are. They will then pair customers with a stylist, who will email their personal recommendations. This is useful for the consumer as they’ll already be aware that the choices aren’t generic, but have been specifically chosen for them, which helps move them down the sales funnel.
- Make it personal
Personalisation in marketing isn’t new, but it’s more sophisticated and potentially more powerful than ever before. Coinciding with the large proportion of consumers that are now more conscious of how much data companies are collecting on them, companies must be smarter about how they do it.
One of the most popular and effective elements of a value exchange is personalisation: from personalising the journey the customer takes, to the conversation we have with them.
Spotify is a great example of a brand that uses personalisation; it reports data-driven content back to the consumer: ‘Most played song of the year’, ‘Latest new artist you’ve discovered’, ‘New genres you’ve listened to’. Spotify create an air of transparency – openly showing how much data they have collected and in between the lines the awesome experience you’ve had in exchange.
Abercrombie and Fitch do a similar personalisation strategy to fuel transparency. It provides a single customer view within your ‘my account’ section. Whenever you have supplied a piece of data it’s added to a timeline you can see. Also, consumers are still less comfortable with marketers tracking and reporting on their engagement and digital movement, but A&F try to ease this concern by rewarding interactions as well as physical data input and purchases. For merely downloading the app after creating an account via the website you earn 100 points and even more points for completing your whole profile.
- Make it easy
Convenience in marketing is about removing friction for the consumer by making the buying journey easier, and you can do this in exchange for data. For example, pub retailer and brewer Greene King recently personalised and shortened the customer journey through social sign-which allows customers to like, share and comment more easily on content, and be surfaced more relevant advertising that actually benefits you. Tactics like these benefit all parties involved – they give customers a better experience and provide businesses with a better insight into customer behaviour via social channels.
Another popular option for hyper-convenience in exchange for data, is replenishment campaigns. This is where a consumer will input their product usage and frequency, letting the brand deliver this product to their schedule and skipping the re-order journey. Lancome provide this service for makeup foundation and it includes free shipping and the latest samples. For the consumer, they get the product they need, when they need it, and a few extra nice to haves; for Lancome, the customer is stickier. Achieving hyper-convenience using data can even remove the consumer’s ‘consideration phase’ entirely.
So what next? Today’s consumers are generally more conscious of how brands use their data, but that doesn’t mean that data needs to take a backseat in your marketing strategy. Use it wisely and with care – and most importantly USE IT during the customer experience – and you’ll stand a good chance of maximising your customers who remain data pragmatists, whilst winning over some consumers that fall into the data-unconcerned and data pragmatists pools.
THE EVOLUTION OF THE TECH CFO
Gavin Fallon,General Manager, UK, Nordics & South Africa Board International
Chief Financial Officers (CFOs) have traditionally been seen as behind the technological curve – the luddite of the boardroom, too attached to their Excel spreadsheets to move with the times. But the role of the CFO is now shifting and becoming more strategically significant to the business, putting them in the ideal situation to make much needed changes in the boardroom.
Despite many business functions being transformed by data, the boardroom remains a place where paper presentations are annotated around the table and, when it comes to finance, the focus is placed on the traditional statutory profit and loss structure. This may remain useful for reviewing historical performance but provides no insight into what may happen in the future. As global events – from political upheaval to health crises – have an impact on organisations, the ability to react in real-time becomes more important than ever. It is here that CFOs have the opportunity to make seismic changes in their business.
CFOs now sit in a unique position
CFOs now sit in a unique position, where the traditional responsibility of keeping an eye on the bottom line is wrapped with analytical and operational knowledge to create a far more strategic role. It is by sitting at this unique crossroads and holding a huge amount of knowledge about every area of the organisation that CFOs have the potential to change many aspects of how the boardroom operates. However, in order to fully realise the potential, CFOs must be empowered to take a digital lead.
A lot of the CFO’s most important work takes place on Excel and Essbase, systems that remain rife with risk. In fact, 56 percent of finance professionals believe the spreadsheets they use in their reporting processes are well-controlled and error free, which may well be why 40 percent also believe their reporting is based on potentially inaccurate information (FSN 2018). Not only prone to human error, spreadsheets are also static and do not allow for real-time forecasting or modelling. While CFOs are well aware of this challenge, the fact they have for too long been tied to legacy systems has led to an unintentional knowledge gap about the technology available to enable them to move away from making decisions based on what happened last year, quarter or week.
Seeing the bigger picture
With a greater understanding of the technology available comes an evolution and expansion of the CFO’s role within a business. It is no longer enough to make decisions based on static reporting, focusing on the traditional statutory profit and loss structure. Instead they need to use the tools available to play a strategic role with a keener eye on the future, seeing the bigger picture, anticipating what is next, and having the correct contingency plans in place to mitigate risk.
Technology can provide CFOs with full visibility of the entire company at a single glance, with data at their fingertips enabling them to take into account everything from KPIs to operations, distilling instant insights. This offers a level of clarify that means the answer to ‘what happened’ is obvious, allowing for more attention to be placed on ‘what will happen?’.
Consider a board meeting that is discussing headcount requirements based on the launch of a new product. Using traditional methods, a business may well make presumptions based on experiences when previous launches took place. But since that time, there is likely to have been a whole host of changes, both within the company itself as well as in the wider market – from market conditions for the product to the salary expectations of potential recruits.
The use of such technology, however, does not solely require the buy-in from the CFO, or even the finance function. To fully realise its potential in fundamentally changing how an organisation operates, the value will need to be seen by the entire board to, in effect, create a digital boardroom. While such technology has an impact on all areas of the business, allowing senior leadership to understand the impact of a factory in the supply chain closing, for example, it is the finance function that is best placed to show the value and drive adoption.
Primed to integrate the business like never before
The CFO is becoming more strategically important, combining analytical, operational and strategic value into a single role. They are primed to integrate the business like never before, acting as the central thread that ties all aspects of decision-making together in a single, unified process. To do so, requires a radical transformation of their role, as the pioneers of new technology. Already a trusted advisor, CFOs can now elevate their role with the ability to effectively forecast and help spearhead the organisational culture change that is required for the shift in mindset that comes with such digital transformation. To maximise the potential of this unique position, the CFO must be equipped with the technology that provides them with the full visibility of the company and clarity in decision-making they require.
ADAPT OR LOSE – THE BANKING OF 2030
By Frank Zhou, CEO & Founder of Zeux
Fintech, the world over, is rapidly expanding with the global value of fintech deals last year coming in at $53.3 billion. It’s no news that this continued growth can – at least, in part – be attributed to a shift in the financial industry’s mindset to allow and facilitate the integration of digital tools, such as online banking and mobile apps, to help improve the customer experience. But the rate of integration and adoption differs vastly, from continent to continent. So what makes a mindset towards innovation choose ‘caution’ over ‘audacity’ when it comes to the world of fintech, and how are these different approaches shaping the future of the financial landscape? Frank Zhou, CEO and founder of Zeux, shares his insight on the future of banking.
Asia is wearing the fintech crown
Financial innovation and the adoption of fintech in Europe has been slow compared to Asia who has been more open to moving away from traditional banking methods. China is the largest alternative lending market holding around 90% of market share, with the US coming in second place. Together, they dominate 95% of the market. Although the UK is ranked third, the market share is only expected to peak at a value of $4.8bn this year compared to China’s $265.7bn.
At the head of the pack, Chinese investors are similarly quick to put their weight behind fintech start-ups as they seek to improve the operations of their banks and financial institutions. This forward-thinking approach has brought about the adoption of new-gen technology such as AI and Machine Learning to solve serious finance-relevant issues such as assessing risk and identifying fraud.
The US has demonstrated strong commitment towards adopting new digital technology as well. According to Ryan Battles, EY’s Banking and Capital Markets Lead for the Americas, “banking is finally starting to catch the wave that began with Apple and Amazon raising consumer expectations”.
Europe is only catching up with the Silicon Valley mentality
Europe’s fragmented nature – shaped so by its multi-languages, laws and cultures – pushes boundaries in the way of large scale business decisions. And rather than tackle the international markets, an often go-to European approach is to concentrate on developing business within Europe itself.
The Silicon Valley approach of ‘blitzscaling’, a phrase coined by LinkedIn Co-Founder Reid Hoffman, involves scaling at all costs including “doing things that don’t scale” and making deliberate choices without having all of the information—sacrificing efficiency for speed. There are clear risks involved by adopting this method of favouring quick growth on a global scale, but the results can be ground-breaking: think PayPal.
Europe may not have the tech titans that the US or Asia boast, despite having a strong industrial base, but in a ‘hare and tortoise’ style setting, has the potential to become the global fintech frontrunner, because where Europe can truy flex its muscle is in its regulatory prowess when it comes to AI. As with the rollout of GDPR in 2018, Europe wants to be identified as not just a true regulatory superpower but also as a tech superpower. The latest European initiative is to regulate AI through an ‘ecosystem of excellence’ and an ‘ecosystem of trust’. This new legislation will focus on AI applications that are deemed as high risk. Because as we know, Europe is, on the whole, risk averse.
At the same time, the UK itself continues to attract by far the largest share of fintech investment in Europe, with 83% of all European 2019 fintech investment, states Augmentum Fintech.
Bright future for the UK: Embracing the power of crypto
With the latest figures predicting traditional British banks could lose a further £8bn of revenue in the next five years, it’s no wonder there’s been an – albeit slow – shift to adopt tech-powered solutions in order to compete against trailblazer challengers such as Monzo and Revolut. Among the line-up of traditional banks that are rolling out new products are Santander and RBS, both of which are evolving the way they facilitate payments and transfers of funds.
Aside from these relatively ‘standard’ innovation developments around payment technology – that are more evolutionary than revolutionary – what else could help the financial sector catch up to its industry counterparts and drive real change? Does crypto really have a place? And how safe is it?
The US is embracing cryptocurrency as a safe digital currency because it trusts the technology behind it. Blockchain technology is an advanced way of logging and protecting data, which is difficult to manipulate or hack. It has the potential to improve security, productivity and customer experience when adopted by businesses in the financial sector. In spite of the bad press it receives, blockchain technology has been recognised as an emerging technology that could transform the banking sector due to the ability to improve trust, provide transparency and potentially lower costs, reduce transaction times and improve cash flow.
At the beginning of the year, even the Bank of England announced that it would consider adopting a bitcoin style digital currency as part of a global group of central banks. And that’s a big step.
Major financial markets around the world are still ahead of European and British banks when it comes to fintech innovation. AI and blockchain technologies are still in their relative infancies, and the pace of change and innovation is only going to gather even more momentum. Those who have made the smart decision to adopt, will reap the benefits that are to come. So, it’s more important than ever for the cautious approach that the British banking industry has demonstrated for so long to be replaced with a new, fresh hunger to harness digital technologies. Not only to guarantee growth, but also to remain competitive in a global market.
Innovation breeds innovation, it breaks through traditional models, and brings new opportunities to the table. The UK’s banks need to be smart with their next move and pull up a chair.
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