Privacy and Personalisation
A Private Sector Perspective
Clive Humby
October 2014
THE LOYALTY MYTH
A brief timeline of customer insights
1955
Social Class
AB
C1
C2
DE
You are the
job you do
1965
1975
1985
Customer
Data
Geodemographics
TESCO
Amex
Visa
Amazon
ACORN
MOSAIC
You are where
You live
Lifestyles
Lists
NDL
Guarantee
Cards
You are what
you say
“Claimed & demographic data”
2005
1995
2015
Big Data
Social Media
Digital Media
Mobile
Behaviours
Browsing
Behaviour
You are what
you buy
You are what
you are
passionate
about
“Actual & behavioural data”
Who wins… the retailer data model
Benefits for the retailer, manufacturers and customers
MANUFACTURERS
• improved Marketing ROI
• better NPD
• effective promotions
• Increased brand loyalty
RETAILERS
• higher footfall
• increased share of wallet
• better retail offer
• new service development
CUSTOMERS
• products I want
• better prices
• Relevant offers
• promotions
• better shopping trip
• new meal solutions
insight enables action that drives behaviour
customer
data
customer
enables...
insight
Data sources
•EPoS data
•Credit & debit card
data
•Loyalty cards
•3rd party data
customer
to inform...
experience
Basket segmentation
•Basket size/value
•Affluence
•Shopping missions
Customer segmentations
•Value & Loyalty
•Lifestyles
•Attitudes
•Lifestage / Lifestyle
to drive...
Enabling Better
Business Decisions
•Great Shopping
Experience
•Meaningful innovation
•Relevant Marketing
Building relationships
with customers
•Retention
•Growth
•Win back /
prospecting
desired
customer
experience
Increased Customer
Lifetime Value
•Same-store sales
growth
•Same-store Margin
growth
•Market share growth
Personal data is only need in small parts of this process
So what do you have to understand?
MOTIVATIONS
Describe customers by
attitudes, influence and
circumstances. Based on
granular behavioural data.
All customers measured on
each motivation.
SEGMENTATIONS
Describe customers by
demographics, usage
behaviour and profit. Each
customer has one segment.
value of insight v value of customer contact
Well put together insight models…
solve real problems
create new co-operative business
need education
are global for global
brands
models
7
value of insight v value of customer contact
Effective customer contact…
creates win-win-win
allows you to build trust
clears a direct path to the
through relevance,
customer by dis-intermediating
content and consent
marketing agencies
8
Big data… shopping, mobile, entertainment, payment cards
9
the data myth: it’s all about big data
What is big? What is useful?
1 Terabyte Solid State Disk
Store c 1,000 transactions
for 10,000,000 people
Or
4 transaction per second for every day
of your life
Read & process the entire dataset in
about 30 minutes
What do we want from it?
Patterns & Decisions
useful data is not big, it’s tiny
When do we need private data in this process
PERSONALISATION & PRIVACY ARE DIFFERENT CONSTRUCTS
Finding patterns, assortment planning, product associations, price optimisation
can all be done with “anonymised” data
Claimed attributes (age, children, car ownership) are all better MODELLED than
actual; you are what you do NOT what you say
Commerce is fundamentally different to government and research objectives:we want to understand the behaviour of groups and tribes
we are not interested in the outliers and exceptions
we are concerned with efficient process, optimising mix
we are data rich; matching data sources less of an imperative
social log-on gives access to a rich public persona of the customer
much personalisation is about what you browse and click not YOU
managing “your data” is often a customer service benefit
Personalisation can be achieved without breaching privacy; only addressable
communication needs to carry this risk
Red & Blue Data
Blue data is analysed
ETL
Process
PIDs
Hashed
Geocodes
Personalsied
Fulfilment
When needed
Red/Blue
Split
Red Data is hidden
Predictive v Descriptive Analytics v Fact Confirmation
Credit Scoring
Insurance Risk
Behavioural Scoring
Motivations
Entitlement (eg Over 18)
Membership
Other processes we employ
Back to “postcode” or small areas
•proving very powerful for passions, like theatre going
•allows merging of multiple venues without personal disclosure
•perturb the data or use “barnardisation” methods
Recognise we have Consent
•develop a customer charter spelling out what you will and will not do
•Always work in the common good
•Example: no switch messages on repertoire
Be cool not creepy
•Apply commonsense rules
•Someone will always take exception.. What is the “Daily Mail” test
It’s only junk when it’s not relevant
•Customers understand the common standards and expect them
•Using data badly or failing to use it carries as much reputational risk as highly
targeted and relevant applications
Emerging Trends
Personal Data Stores & Cloud Verification
I don’t need your DOB, just proof & photo to show you are over 18 to buy
alcohol
User controlled consent & data access
Share just the facts needed to fulfil the transaction
car insurance, proof of entitlement
MONETISE MY OWN DATA..
What will you give me to share my purchase history with you?
Longer Term Benefits
I know my family has a pre-disposition to this genetic disease, I will share my
data with you as an act of philanthropy / self interest
Organisations are avoiding unnecessary data
Moral Dilemma… Consumer fears
Company Reputational Risk
Car telematics… shows me you speed when you drive
Shopping data…you buy more than 50 units of alcohol a week
Smart Meters… you leave your lights on all the time
Mobile phone… movement, location and social circles
ISP… what and where you visit
BUT I can change any of these suppliers at any time
Government is not trusted with data; no consent process
RIPA has damaged consumer trust in government use of data
Spend patterns are evolving towards digital and
social
2014 is set to be the first year that consumers spend more time with digital
media than they do with traditional media
Source: eMarketer March 2014
US ad spending on the internet surpassed ad spending on broadcast
television for the first time last year, increasing 17 per cent in 2013 to a record
$42.8bn
Source: IAB April 2014
Social Media spending is expected to be 21.4% of marketing budgets in five
years
Source: theCMOsurvey August 2014
Starcount’s pioneering Fan
Science Platform tracks...
You should know your customers better
Through Fan Science we created our core
product offering…
Social DNA
Social DNA
Insights
Defines Content
Vibe
Returns Data
Internal Insight Product
External Consumer product
Discover the communities,
influencers and content that
matters most to your
customers
Create intelligent, curated
content streams for you
customers.
Conclusions
 Have a clear customer charter
 Red / Blue split can protect against most risks, except criminality
 Commercial organisations only care about tribes not individuals
 Relevance is the key; personalised fulfilment can be driven from anonymised
analytics
 Be cool not creepy; most commercial organisation are looking at ways of not
storing personal data
 Big data is not a panacea; to be useful it needs to become actionable
 Social Media is rewriting the rules for getting your message to land
 Personal data stores will give the consumer control
 The future for Brands is engaging with customers via their passions