Prior to the GDPR deadline, I predicted the new law would force marketers to provide more value to their customers due to the threat of people opting out of data sharing. This type of symbiotic relationship has been predicted in the past, but never fully materialized — until now.
As customer data becomes more difficult to obtain thanks to new regulations, brands need to provide more value to customers in exchange for their consent to collect data. This in turn, powers better, more personalized marketing, creating a trust-based relationship as this recent Wall Street Journal article explains very well.
The best method for reaching this new reality will vary by brand, but it is essential that marketers know what customers want from a relationship and then collect data as a way to deliver it, rather than collecting data for the sake of having data, and purely for the brand’s own reason of mass marketing, which just annoys customers and leads to them withholding their data, or the permission to use it. There are a few great examples of value-based marketing already in existence.
Starbucks’ loyalty program shows how brands can build meaningful transactional relationships with customers, delivering a great experience to the customer and yielding valuable data without violating trust. Customers provide purchase and location data to marketers, and in turn earn points redeemable for free drinks. Starbucks also uses this data to send personalized menu challenges to members, which rewards them with extra points for buying their favorite items based on purchase history — adding even more value to the program for customers. These strategies are working for Starbucks; 40% of all in-store mobile payments made by people age 14-plus take place through the Starbucks app.
Another example of value-driven customer data use is Netflix’s personalization strategy. The streaming service collects viewing history and habits to provide more personalized recommendations to users, which compels them to consume more content and generate more data. Users are happy to let the streaming company collect and use their data because it makes the experience better for them. Netflix in turn uses the data to determine which shows to produce, renew and cancel. This gives it content to market to and attract new users, and also nurture current customers without a creep factor.
Leveraging data from interactions among customers can be just as valuable for brands as product use and purchase history data. Sephora’s online community, Beauty Talk, lets customers ask questions, rate products and give advice to other members. Sephora gains insight not only from the profiles customers create but also from the topics they discuss. This exchange of information builds trust in the Sephora brand as a knowledgeable leader in the beauty industry, and gives Sephora data to target their marketing to customers more effectively.
Ultimately, in the post-GDPR world, companies that provide more value to their customers through personalized marketing, and can combine this with delivering a memorable positive experience for the customer, will reap the benefits of the resulting transactional relationship. There is already evidence that this shift is working — a couple of months after GDPR, programmatic ad spend is increasing again, as people opt back into targeted display ads. This is a sign that brands that market to their customers using relevant and useful ad material they actually want to receive will be more successful.