Few things have affected modern business as much as the rise of big data. In the past, businesses had a limited amount of customer data to work with — and often went to great lengths to acquire it. Today, however, virtually all aspects of consumers’ modern lives generate trackable data. According to some estimates, by 2020, 1.7MB of data will be created every second for every single human being on the planet.
This abundance of data has led to a democratization of sorts, in that data can now be accessed by many more employees in an organization rather than exclusively by data specialists. This leads to two issues for business: how to take advantage of this increased access to data and how to reassure consumers concerning the data collected about them. How companies meet these challenges can be critical to their further success.
The Eclipse of the Traditional Role of Data
Previously, data was carefully guarded by companies and typically fell within the realm of data specialists, specially trained individuals who could interpret that data and help executives understand and draw conclusions from it. However, as the amount of data being generated and analyzed has grown at an exponential rate, this old way of dealing with data has become obsolete. This is due not only to the need for more individuals to be involved in understanding the data being collected, but also to the relative ease of gathering and analyzing data thanks to technology. Despite this new reality, some companies continue to restrict data access and impede transparency for both employees and their customers.
Furthering the Democratization of Data
Companies must embrace and encourage proper utilization of the vast amount of data that companies now collect. It’s estimated that companies only utilize 12 percent of the data they collect, missing out on potential benefits the remaining 88 percent of untapped data represents. Even worse, poor data quality and bad data is estimated to cost companies as much as 20 to 35 percent of operating revenue — a total of $600 billion annually for American companies. In this next step in the democratizing data at the company level, businesses build a culture in which all employees are part of the process of data collection and analysis, helping those companies leverage more of their data to gain and share additional insights.
Turning Privacy Concerns into Customer Satisfaction
The other side to the greater availability of data that typified the democratization of data is the heightening of consumer privacy concerns. This must be addressed through enhanced strengthened controls to protect privacy for consumers. Once these controls are in place, though, a solved challenge can be turned into CX (customer experience) gold by being as transparent as possible about the consumer data collection and use process in the company.
Although offering greater transparency for consumers might give pause to most companies, businessmen should consider a surprising side effect of transparency: increased customer satisfaction. One example in another industry: according to one study, customer satisfaction among restaurant customers increased 10 percent when cooks could see the customers, even if the customers could not see the cooks. When the two could see each other, customer satisfaction went up 17.3 percent and service was 13.2 percent faster.
This example illustrates that when businesses are transparent even in seemingly trivial ways, customer satisfaction, customer loyalty, and the overall customer experience are improved. This is in direct contrast to many companies’ conception of transparency as a tool to be used only in times of scandal or crisis. While virtually every company will promise transparency when trying to do damage control, shrewd companies use transparency proactively as a way to improve customer relations and maintain user and consumer bases long-term.
Nowhere is this more true than in informing customers exactly what data a company collects about them, why it’s being collected, and how its collection can help those customers. For example, although most people know that companies collect data about them, only 25 percent of people realize they’re sharing their location data online and only 23 percent know when they’re sharing their web searches — and even those who know their data is being collected may not understand how that data is being used.
While many customers might initially be concerned to discover how much of their data is being collected and analyzed, educating them about the benefits of data sharing can go a long way toward consumers not only accepting but even embracing this trend. To illustrate this point, an Infosys study showed that 86 percent of customers said that personalization — which results from customers sharing their data with companies — had at least some impact on what they bought, while 25 percent said it had a significant impact.
Join the Revolution
Without a doubt, the democratization of data is no passing trend. Companies that embrace these changes at the company level and commit to transparency with their customers will lead the pack as data continues to influence decision-making for all.